UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-37558

Nabriva Therapeutics plc

(Exact name of registrant as specified in its charter)

Ireland		Not applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

25-28 North Wall Quay
IFSC, Dublin 1, Ireland		Not applicable
(Address of principal executive offices)		(Zip Code)

+353 1 649 2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol (s)	Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share	NBRV	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻		Accelerated filer ⌧

Non-accelerated filer ◻		Smaller reporting company ☒

		Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ⌧

As of July 31, 2020, the registrant had 143,822,279 ordinary shares outstanding.

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NABRIVA THERAPEUTICS plc

INDEX TO REPORT ON FORM 10-Q

		Page
	PART I — FINANCIAL INFORMATION

Item 1:	Financial Statements	5

	Consolidated Balance Sheets as of December 31, 2019 and June 30, 2020 (unaudited)	5

	Consolidated Statements of Operations for the three months and six months ended June 30, 2019 and 2020 (unaudited)	6

	Consolidated Statements of Changes in Stockholders’ Equity for the three months and six months ended June 30, 2019 and 2020 (unaudited)	7

	Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2020 (unaudited)	8

	Notes to the Unaudited Consolidated Financial Statements	9

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4:	Controls and Procedures	44

	PART II — OTHER INFORMATION

Item 1:	Legal Proceedings	45

Item 1A:	Risk Factors	45

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	105

Item 3:	Defaults Upon Senior Securities	105

Item 4:	Mine Safety Disclosures	105

Item 5:	Other Information	105

Item 6:	Exhibits	106

SIGNATURES		107

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Quarterly Report, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate, “around” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The forward-looking statements in this report include, among other things, statements about:

●

our ability to successfully re-commence the commercial activities of XENLETA (lefamulin) for the treatment of community-acquired bacterial pneumonia, or CABP, including the availability of and ease of access to XENLETA through hospital formularies, managed care plans and major U.S. specialty distributors;

●

our ability to re-establish a sales force for the commercialization of XENLETA, SIVEXTRO and CONTEPO, if approved;

●

our ability to successfully commercialize SIVEXTRO and realize value from our agreement with Merck & Co., Inc.;

●

the timing of the resubmission of the NDA for CONTEPO and potential marketing approval of CONTEPO and other product candidates, including the completion of any post marketing requirements with respect to XENLETA and any other product candidates we may obtain;

●

our expectations regarding how far into the future our cash on hand and anticipated revenues from product sales will fund our ongoing operations and the continued availability and cost of capital to sustain our operations on a longer term basis;

●

our expectations regarding our strategy to expand our product pipeline through opportunistically in licensing or acquiring the rights to complementary products, product candidates and technologies for the treatment of a range of infectious diseases or other products, including additional community products;

●

our ability to comply with the restrictive covenants under our debt facility with Hercules Capital, Inc., or Hercules, including but not limited to the ability to maintain minimum cash balance requirements;

●

our ability to satisfy interest and principal payments under our debt facility with Hercules;

●

our sales, marketing and distribution capabilities and strategy;

●

the potential extent of revenues from future sales of XENLETA, SIVEXTRO and/or CONTEPO, if approved;

●

our expectations about the impact of the COVID-19 pandemic on our business operations, ongoing clinical trials and regulatory matters;

●

the uncertainties inherent in the initiation and conduct of clinical trials, availability and timing of data from clinical trials, and whether results of early clinical trials or studies in different disease indications will be indicative of the results of ongoing or future trials;

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●

our ability to resolve the matters set forth in the Complete Response Letter we received from the U.S. Food and Drug Administration, or FDA, in connection with our New Drug Application, or NDA, for CONTEPO for the treatment of complicated urinary tract infections, or cUTIs, including acute pyelonephritis;

●

our plans and the related cost expectations to pursue development of XENLETA for additional indications other than CABP, and of CONTEPO for additional indications other than cUTI;

●

our plans to pursue development of other product candidates;

●

the availability of lefamulin in China and Canada;

●

our expectations regarding the ability of our customers to satisfy the demand for XENLETA with their existing inventory;

●

our expectations with respect to the potential financial impact, synergies, growth prospects and benefits of our acquisition of Zavante Therapeutics, Inc., or Zavante, which was completed on July 24, 2018, or the Acquisition, pursuant to the Agreement and Plan of Merger dated July 23, 2018, or the Merger Agreement, by and among Nabriva, Zuperbug Merger Sub I, Inc., or Merger Sub I, Zuperbug Merger Sub II, Inc., or Merger Sub II, Zavante and the Zavante stockholder representative, including the potential realization of the expected benefits from the Acquisition;

●

our expectations with respect to milestone payments pursuant to the Merger Agreement and expectations with respect to potential advantages of CONTEPO or any other product candidate that we acquired in connection with the Acquisition;

●

our ability to establish and maintain arrangements for manufacture of our product candidates;

●

the potential advantages of XENLETA, SIVEXTRO, CONTEPO, and our other product candidates;

●

our estimates regarding the market opportunities for XENLETA, SIVEXTRO, CONTEPO, and our other product candidates;

●

the rate and degree of market acceptance and clinical benefit of XENLETA for CABP, SIVEXTRO for
acute bacterial skin and skin structure infections, CONTEPO for cUTI and our other product candidates;

●

our ability to establish and maintain collaborations;

●

the future development or commercialization of XENLETA in the greater China region and Canada;

●

the potential benefits under our license agreements with Sinovant Sciences, Ltd., or the Sinovant License Agreement, and with Sunovion Pharmaceuticals Canada Inc., or the Sunovion License Agreement;

●

our future intellectual property position;

●

our ability to effectively manage our anticipated growth;

●

our ability to maintain the level of our expenses consistent with our internal budgets and forecasts;

●

the demand for securities of pharmaceutical and biotechnology companies in general and our ordinary shares in particular;

●

competitive factors;

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●

risks of relying on external parties such as contract manufacturing organizations;

●

compliance with current or prospective governmental regulation;

●

general economic and market conditions;

●

our ability to attract and retain qualified employees and key personnel;

●

our business and business relationships, including with employees and suppliers, following the Acquisition;

●

our ability to satisfy milestone, royalty and transaction revenue payments pursuant to the Stock Purchase Agreement between Zavante and SG Pharmaceuticals, Inc.; and

●

other risks and uncertainties, including those described in the ‘‘Risk Factors’’ section of this Form 10-Q.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.

You should refer to the “Risk Factors” section of this Form 10-Q for a discussion of important factors that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. We do not assume any obligation to update any forward-looking statements, except as required by applicable law.

Throughout this Form 10-Q, unless the context requires otherwise, all references to “Nabriva,” “the Company,” we,” “our,” “us” or similar terms refer to Nabriva Therapeutics plc, together with its consolidated subsidiaries.

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PART I

ITEM 1. FINANCIAL STATEMENTS

NABRIVA THERAPEUTICS plc

Consolidated Balance Sheets (unaudited)


	As of		As of
(in thousands, except share data)	December 31, 2019		June 30, 2020
Assets
Current assets:
Cash and cash equivalents	$	86,019	$	49,660
Restricted cash		392		229
Short-term investments		175		175
Accounts receivable, net and other receivables		2,744		3,228
Inventory		682		5,196
Prepaid expenses		1,158		3,921
Total current assets		91,170		62,409
Property, plant and equipment, net		2,474		2,176
Intangible assets, net		91		97
Long-term receivables		378		368
Total assets	$	94,113	$	65,050
Liabilities and equity
Current liabilities:
Accounts payable	$	4,673	$	2,620
Accrued expense and other current liabilities		11,966		8,376
Total current liabilities		16,639		10,996
Non-current liabilities
Long-term debt		34,502		7,477
Other non-current liabilities		1,698		2,116
Total non-current liabilities		36,200		9,593
Total liabilities		52,839		20,589
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Ordinary shares, nominal value $0.01, 1,000,000,000 ordinary shares authorized at June 30, 2020; 94,545,116 and 142,965,483 issued and outstanding at December 31, 2019 and June 30, 2020, respectively		945		1,430
Preferred shares, par value $0.01, 100,000,000 shares authorized at June 30, 2020; None issued and outstanding		—		—
Additional paid in capital		517,044		558,446
Accumulated other comprehensive income		27		27
Accumulated deficit		(476,742)		(515,442)
Total stockholders’ equity		41,274		44,461
Total liabilities and stockholders’ equity	$	94,113	$	65,050

The accompanying notes form an integral part of these consolidated financial statements.

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NABRIVA THERAPEUTICS plc

Consolidated Statements of Operations (unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except share and per share data)	2019		2020		2019		2020
Revenues:
Product revenue, net	$	—		(48)	$	—	$	108
Collaboration revenue		—		7		1,000		152
Research premium and grant revenue		525		528		1,228		1,016
Total revenue		525		487		2,228		1,276
Operating expenses:
Cost of product sales		—		(368)		—		(376)
Research and development expenses		(8,074)		(6,500)		(15,612)		(11,444)
Selling, general and administrative expenses		(13,427)		(8,072)		(26,836)		(24,097)
Total operating expenses		(21,501)		(14,940)		(42,448)		(35,917)
Loss from operations		(20,976)		(14,453)		(40,220)		(34,641)
Other income (expense):
Other income (expense), net		56		(634)		126		164
Interest income		72		16		82		80
Interest expense		(904)		(251)		(1,803)		(1,275)
Loss on extinguishment of debt		—		—		—		(2,757)
Loss before income taxes		(21,752)		(15,322)		(41,815)		(38,429)
Income tax benefit (expense)		45		(119)		(109)		(271)
Net loss	$	(21,707)		(15,441)	$	(41,924)	$	(38,700)

Loss per share
Basic and Diluted ($ per share)	$	(0.30)		(0.14)	$	(0.59)	$	(0.37)
Weighted average number of shares:
Basic and Diluted		72,526,441		112,778,258		70,624,583		103,686,706

The accompanying notes form an integral part of these consolidated financial statements.

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NABRIVA THERAPEUTICS plc

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)


						Accumulated
				Additional		other				Total
	Ordinary Shares			paid in		comprehensive		Accumulated		Stockholders'
(in thousands)	Number of Shares	Amount		capital		income		deficit		Equity
January 1, 2019	67,019	$	670	$	461,911	$	27	$	(393,978)	$	68,630
Issuance of ordinary shares	4,317		43		10,014		—		—		10,057
Equity transaction costs	—		—		(270)		—		—		(270)
Stock-based compensation expense	—		—		1,907		—		—		1,907
Net loss	—		—		—		—		(20,217)		(20,217)
March 31, 2019	71,336		713		473,562		27		(414,195)		60,107
Issuance of ordinary shares	1,570		16		3,691		—		—		3,707
Equity transaction costs	—		—		(523)		—		—		(523)
Stock-based compensation expense	—		—		1,821		—		—		1,821
Net loss	—		—		—		—		(21,707)		(21,707)
June 30, 2019	72,906	$	729	$	478,551	$	27	$	(435,902)	$	43,405


						Accumulated
				Additional		other				Total
	Ordinary Shares			paid in		comprehensive		Accumulated		Stockholders'
(in thousands)	Number of Shares	Amount		capital		income		deficit		Equity
January 1, 2020	94,545	$	945	$	517,044	$	27	$	(476,742)	$	41,274
Issuance of ordinary shares	479		5		181		—		—		186
Equity transaction costs	—		—		(39)		—		—		(39)
Shares issued in connection with the vesting of restricted stock units	85		1		(1)		—		—		—
Stock-based compensation expense	—		—		1,752		—		—		1,752
Net loss	—		—		—		—		(23,259)		(23,259)
March 31, 2020	95,109		951		518,937		27		(500,001)		19,914
Issuance of ordinary shares	47,578		476		40,891		—		—		41,367
Equity transaction costs	—		—		(2,709)		—		—		(2,709)
Shares issued in connection with the employee stock purchase plan	93		1		42		—		—		43
Shares issued in connection with the vesting of restricted stock units	185		2		(2)		—		—		—
Stock-based compensation expense	—		—		1,287		—		—		1,287
Net loss	—		—		—		—		(15,441)		(15,441)
June 30, 2020	142,965	$	1,430	$	558,446	$	27	$	(515,442)	$	44,461

The accompanying notes form an integral part of these consolidated financial statements.

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NABRIVA THERAPEUTICS plc

Consolidated Statements of Cash Flows (unaudited)


	Six Months Ended June 30,
(in thousands)	2019		2020
Cash flows from operating activities
Net loss	$	(41,924)	$	(38,700)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash other income/expense, net		(3)		(15)
Non-cash interest income		28		3
Non-cash interest expense		371		218
Loss on extinguishment of debt		—		2,757
Depreciation and amortization expense		245		209
Amortization of right-of-use assets		211		171
Stock-based compensation		3,728		3,103
Other, net		(20)		39
Changes in operating assets and liabilities:
Increase in long-term receivables		(282)		10
Increase in accounts receivable, net and other receivables and prepaid expenses		470		(3,247)
Increase in inventory		—		(4,514)
Increase/(decrease) in accounts payable		(346)		(1,950)
Decrease in accrued expenses and other liabilities		(4,106)		(3,427)
Increase/(decrease) in other non-current liabilities		(52)		4
Increase/(decrease) in income tax liabilities		10		(33)
Net cash used in operating activities		(41,670)		(45,372)
Cash flows from investing activities
Purchases of plant and equipment and intangible assets		(57)		(85)
Changes in restricted cash		—		(163)
Net cash used in investing activities		(57)		(248)
Cash flows from financing activities
Proceeds from equity offerings and warrants		—		38,414
Proceeds from at-the-market facility		13,592		3,688
Proceeds from long-term debt, net of issuance costs		80		—
Proceeds from employee stock purchase plan		170		43
Repayments of long-term borrowings		—		(30,000)
Equity transaction costs		(414)		(2,977)
Net cash provided by financing activities		13,428		9,168

Effects of foreign currency translation on cash and cash equivalents		40		(70)
Net decrease in cash, cash equivalents and restricted cash		(28,259)		(36,522)
Cash, cash equivalents and restricted cash at beginning of period		102,003		86,411
Cash, cash equivalents and restricted cash at end of period	$	73,744	$	49,889
Supplemental disclosure of cash flow information:
Interest paid	$	1,109	$	1,147
Equity transaction costs included in accounts payable and accrued expenses	$	498	$	319

The accompanying notes form an integral part of these consolidated financial statements.

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

1. Organization and Business Activities

Nabriva Therapeutics plc (“Nabriva Ireland”), together with its wholly owned and consolidated subsidiaries, Nabriva Therapeutics GmbH (“Nabriva Austria”), Nabriva Therapeutics US, Inc., Zavante Therapeutics, Inc., and Nabriva Therapeutics Ireland DAC, (collectively, “Nabriva”, or the “Company”) is a biopharmaceutical company engaged in the commercialization and development of novel anti-infective agents to treat serious infections. The Company’s headquarters are located at 25-28 North Wall Quay, Dublin, Ireland. Throughout these notes to the consolidated financial statements, unless the context requires otherwise, all references to “Nabriva,” “the Company,” or similar terms refer to Nabriva Therapeutics plc, together with its consolidated subsidiaries.

On July 28, 2020, the Company announced that the European Commission (“EC”) issued a legally binding decision for approval of the marketing authorization application for XENLETA™ (lefamulin) for the treatment of community-acquired pneumonia (“CAP”) in adults following a review by the European Medicines Agency (“EMA”). The EMA approval of XENLETA in CAP patients when it is considered inappropriate to use antibacterial agents that are commonly recommended for initial treatment or when these agents have failed paves the way for the launch of XENLETA across Europe. The Company previously announced that the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA adopted a positive opinion recommending approval of XENLETA for the treatment of CAP. The EC approved XENLETA for all 28 countries of the European Union (“E.U.”), Norway, Iceland, and Liechtenstein. Nabriva intends to work with a commercial partner to make XENLETA available to patients in the E.U.

On July 16, 2020, the Company announced that Sunovion Pharmaceuticals Canada Inc. (“Sunovion”), received approval from Health Canada to market oral and intravenous (IV) formulations of XENLETA® (lefamulin) for the treatment of CAP in adults, with the Notice of Compliance from Health Canada dated July 10, 2020. Nabriva entered into a license and commercialization agreement in March 2019 with Sunovion Pharmaceuticals Canada Inc. for XENLETA in Canada.

On July 15, 2020, the Company announced that it entered into a Sales Promotion and Distribution Agreement (the “Distribution Agreement”) with MSD International GmbH (“MSD”) and Merck Sharp & Dohme Corp. (“Supplier”), each a subsidiary of Merck & Co. Under the Distribution Agreement, MSD appointed the Company as its sole and exclusive distributor of certain products containing tedizolid phosphate as the active ingredient previously marketed and sold by Supplier and MSD under the trademark SIVEXTRO® for injection, intravenous use and oral use in the United States and its territories. SIVEXTRO is an oxazolidinone-class antibacterial indicated in adults and pediatric patients 12 years of age and older for the treatment of acute bacterial skin and skin structure infections caused by certain susceptible Gram-positive microorganisms. Nabriva has also engaged Amplity Health, a leading pharmaceutical contract commercial organization, to provide community-based commercial and sales services for SIVEXTRO and XENLETA® in the United States.

On June 30, 2020 the Company announced that WEP Clinical (“WEP”), a specialist pharmaceutical services company, has signed an exclusive agreement with the Company to supply XENLETA® (lefamulin) on a named patient or expanded access basis in certain countries outside of the US, China and Canada. The Named Patient Program (“NPP”) is designed to ensure that physicians, contingent on meeting the necessary eligibility criteria and receiving approval, can request IV or oral XENLETA on behalf of patients who live in certain countries where it is not yet available and have an unmet medical need.

On September 9, 2019, the Company announced that the oral and intravenous (“IV”) formulations of XENLETA (lefamulin) are available in the United States for the treatment of community-acquired bacterial pneumonia (“CABP”) through major specialty distributors. This followed the approval by the U.S. Food and Drug Administration (FDA) of the Company’s New Drug Application (NDA) for XENLETA on August 19, 2019 for the treatment of adults with community-acquired bacterial pneumonia. XENLETA is the first oral and IV treatment in the pleuromutilin class of antibiotics available for the systematic administration in humans.

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On July 23, 2018, the Company acquired Zavante Therapeutics Inc. (“Zavante”), a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection), and entered into an Agreement and Plan of Merger (the “Merger Agreement”). CONTEPO is potentially a first-in-class epoxide antibiotic for IV administration in the United States. The Company is developing CONTEPO IV for complicated urinary tract infections (“cUTI”) and may potentially develop XENLETA and CONTEPO for additional indications. In April 2019, the FDA issued a Complete Response Letter (“CRL”) in connection with the Company’s NDA for CONTEPO for the treatment of cUTIs, including acute pyelonephritis, stating that it was unable to approve the application in its current form. The CRL requests that issues related to facility inspections and manufacturing deficiencies at Nabriva’s active pharmaceutical ingredient contract manufacturer be addressed prior to the FDA approving the NDA. The Company requested a “Type A” meeting with the FDA to discuss its findings and this meeting occurred in July 2019. As the FDA did not request any new clinical data and did not raise any other concerns with regard to the safety or efficacy of CONTEPO in the CRL, the purpose of the meeting was to discuss and gain clarity on the issues related to facility inspections and manufacturing deficiencies at one of Nabriva's contract manufacturers that were described in the CRL and other matters pertaining to the steps required for the resubmission of the NDA for CONTEPO. The Company resubmitted its NDA in December 2019 and the FDA acknowledged the resubmission in January 2020. On June 19, 2020, the FDA issued a second CRL on the NDA for CONTEPO. Although the Company’s European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at the Company’s manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions caused by the COVID-19 pandemic. In general, previously identified product quality and facility inspection related observations at the Company’s contract manufacturing partners are required to be satisfactorily resolved before the NDA may be approved. The FDA did not request any new clinical data and did not raise any other concerns with regard to the safety or efficacy of CONTEPO in the second CRL. The Company’s contract manufacturers plan to interact with FDA to discuss its plans for conducting inspections at their sites. The Company plans to request a Type A meeting with the FDA to discuss appropriate next steps and the FDA’s plans for completing foreign facility inspections. CONTEPO has been granted Qualified Infectious Disease Product (“QIDP”) and Fast Track designations by the FDA for the treatment of serious infections, including cUTI. However, the Company cannot predict when the CONTEPO NDA will be resubmitted or when CONTEPO would receive marketing approval, if at all.

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Liquidity

Since its inception, the Company has incurred net losses and generated negative cash flows from its operations which has resulted in a significant accumulated deficit to date. The Company has financed its operations through the sale of equity securities, convertible and term debt financings and research and development support from governmental grants and proceeds from its licensing agreements. As of June 30, 2020, the Company had cash and cash equivalents, restricted cash and short-term investments of $50.1 million.

The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements — Going Concern (“ASC 205-40”), which requires management to assess the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued.

The Company expects to continue to invest in critical commercial and medical affairs activities, its commitments per the agreement with Merck & Co., Inc., as well as investing in its supply chain for the commercialization of XENLETA, SIVEXTRO and the potential launch of CONTEPO. The Company expects to seek additional funding in future periods to support these activities. While the Company has raised capital in the past, the ability to raise capital in future periods is not considered probable, as defined under the accounting standards. As such, under the requirements of ASC 205-40, management may not consider the potential for future capital raises in their assessment of the Company’s ability to meet its obligations for the next twelve months.

In April 2020, the Company announced a restructuring of its hospital-based commercial sales force and transition to a community-based sales effort. The restructuring has reduced costs to align with the capabilities of the Company’s sales effort with its strategic re-focus on making sales of XENLETA to community health care professionals. The Company has incurred $676,000 of selling, general and administrative expense related to the reduction in personnel, consisting of severance, benefits and related costs, all of which were incurred in the second quarter of 2020. As of June 30, 2020, there were no outstanding liabilities associated with the restructuring. The termination of the sales force was timed, in part, to coincide with operational changes that have been implemented by the Company in response to the outbreak of the novel coronavirus, SARS-CoV-2, causing the disease referred to as “COVID-19”. In response to the COVID-19 pandemic, the Company closed its administrative offices and shifted to a remote working business model. The Company implemented a work-from-home policy for all of its employees. The commercial and medical organizations suspended in-person interactions with physicians and customers and are restricted to conducting educational and promotional activities virtually for the foreseeable future. The Company has secured a new virtual and in-person sales effort with community-based expertise with Amplity Health, who is a Contract Sales Organization, to replace its hospital-based sale force, however the Company has not determined when it would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect.

The Company’s expenses will increase if it suffers any regulatory delays or is required to conduct additional clinical trials to satisfy regulatory requirements. The Company has incurred and expects to continue to incur significant commercialization expenses related to its commitments per the agreement with Merck & Co., Inc., product sales, marketing, distribution and manufacturing for XENLETA, SIVEXTRO and CONTEPO, if approved. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, future sales in 2020 are uncertain. It is also uncertain when, if ever, the Company will generate sufficient revenues from product sales to achieve profitability.

As a result, based on the Company’s available cash resources, the minimum cash required under the Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc., and in accordance with the requirements of ASC 205-40, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for one year from the date these consolidated financial statements are issued. A failure to raise the additional funding or to effectively implement cost reductions could harm the Company’s business, results of operations and future prospects. If the Company is not able to secure adequate additional funding in future periods, the Company may make additional reductions in certain expenditures. This may include liquidating assets and suspending or curtailing planned programs. The Company may also have to delay, reduce the scope of, suspend or eliminate one or more research and development programs or its commercialization efforts.

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As discussed in Note 6, the Company repaid $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement with Hercules in March 2020. Based on its current operating plans, the Company expects that its existing cash, cash equivalents and short-term investments as of June 30, 2020, will be sufficient to enable the Company to fund its operating expenses, debt service obligations and capital expenditure requirements into the first quarter of 2021. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could use its capital resources sooner than expected. This estimate assumes, among other things, that the Company does not obtain any additional funding through grants and clinical trial support, collaboration agreements or equity or debt financings. This estimate also assumes that the Company remains in compliance with the covenants and no event of default occurs under the Loan Agreement. The consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

On June 25, 2019, the Company entered into an Open Market Sale Agreement^SM (the “Jefferies ATM Agreement”) with Jefferies, pursuant to which, from time to time, the Company may offer and sell ordinary shares, for aggregate gross sale proceeds of up to $50.0 million through Jefferies by any method permitted that is deemed an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company also filed a prospectus supplement with the Securities and Exchange Commission in connection with the Offering under the Company’s shelf Registration Statement on Form S-3 (File No. 333-219567), which became effective on August 10, 2017.

As of June 30, 2020, the Company has issued and sold an aggregate of 13,117,034 ordinary shares pursuant to the Jefferies ATM Agreement and received gross proceeds of $18.0 million and net proceeds of $17.2 million, after deducting commissions to Jefferies and other offering expenses. During the three months ended June 30, 2020, the Company issued and sold an aggregate of 6,133,108 ordinary shares pursuant to the Jefferies ATM Agreement and received gross proceeds of $3.4 million and net proceeds of $3.3 million, after deducting commissions to Jefferies and other offering expenses. The Company has not sold or issued any ordinary shares pursuant to the Jefferies ATM Agreement from June 30, 2020 and through the date of this filing. As of the date of this filing, the Company may issue and sell ordinary shares for gross proceeds of up to $32.0 million under the Jefferies ATM Agreement.

In December 2019, the Company sold to certain institutional investors in a registered direct offering an aggregate of 13,793,106 ordinary shares, and accompanying warrants to purchase up to an aggregate of 13,793,106 ordinary shares. Each share was issued and sold together with an accompanying warrant at a combined price of $1.45 per security. The gross proceeds to the Company from the offering, before deducting the placement agent’s fees and other offering expenses payable by the Company were $20.1 million. Each warrant has an exercise price of $1.90 per share, is initially exercisable six months following the date of issuance (the “Initial Exercise Date”) and will expire on the three-year anniversary of the Initial Exercise Date.

In May 2020, the Company sold to certain institutional investors, including Fidelity Management & Research Company, LLC, in a registered direct offering an aggregate of 41,445,373 ordinary shares and accompanying warrants to purchase up to an aggregate of 41,445,373 ordinary shares at a combined price of $0.91686 per security. The gross proceeds to the Company from the offering, before deducting the placement agent’s fees and other estimated offering expenses payable by the Company, were $38.0 million. Each warrant has an exercise price of $0.792 per share, is immediately exercisable and will expire on the two-year anniversary of the issuance date.

2. Summary of Significant Accounting Policies

Basis of Preparation

The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and U.S. Securities and Exchange Commission (“SEC”) regulations for quarterly reporting. The unaudited consolidated financial

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statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial information as of June 30, 2020 and for the three and six months ended June 30, 2019 and 2020 are unaudited. The December 31, 2019 balance sheet was derived from audited consolidated financial statements but does not include all disclosures required by US GAAP. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2020 and results of operations for the three and six months ended June 30, 2019 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2019 and 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, any other interim periods or any future year or period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 contained in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 12, 2020.

The Company’s significant accounting policies are described in Note 2 of the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company has not adopted any new accounting pronouncements for the six months ended June 30, 2020.

3. Inventory

Inventory is stated at the lower of cost or net realizable value. Inventory is valued on a first-in, first-out basis and consists primarily of material costs, third-party manufacturing costs, and related transportation costs along the Company's supply chain. The Company capitalizes inventory upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are recorded as research and development expense. Costs of drug product to be consumed in any current or future clinical trials will continue to be recognized as research and development expense and costs of sample inventory is recorded as selling, general and administrative expense. The Company reviews inventories for realization on a quarterly basis and would record provisions for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of net realizable value when necessary. During the three and six months ended June 30, 2020, the Company recorded a $0.4 million non-cash reserve for excess and obsolete inventory due to the uncertainty of commercial activities underlying XENLETA product sales. Inventory reported at December 31, 2019 and June 30, 2020 consisted of the following:


		As of		As of
		December 31, 2019		June 30, 2020
(in thousands)		2019		2020
Raw materials	$	—	$	1,783
Work in process		498		3,180
Finished goods		184		233
Total Inventory	$	682	$	5,196

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4. Fair Value Measurement

US GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

●

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

●

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (as exchange rates).

●

Level 3: Valuation techniques that include inputs for the asset or liability that are not based on observable market data (those are unobservable inputs) and significant to the overall fair value measurement.

The following table presents the financial instruments measured at fair value and classified by level according to the fair value measurement hierarchy:


(in thousands)	Level 1		Level 2		Level 3		Total
December 31, 2019
Assets:
Cash equivalent:
Money market fund	$	15,050	$	—	$	—	$	15,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	15,225	$	—	$	—	$	15,225


(in thousands)	Level 1		Level 2		Level 3		Total
June 30, 2020
Assets:
Cash equivalent:
Money market fund	$	8,050	$	—	$	—	$	8,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	8,225	$	—	$	—	$	8,225

There were no transfers between Level 1 and 2 in the six months ended June 30, 2020 or the year ended December 31, 2019. There were no changes in valuation techniques during the six months ended June 30, 2020.

As of June 30, 2020, and December 31, 2019, the Company did not hold any financial instruments as liabilities that were held at fair value. Other receivables and accounts payable are carried at their historical cost which approximates fair value due to their short-term nature.

5. Accrued Expenses and Other Liabilities


	As of		As of
(in thousands)	December 31, 2019		June 30, 2020
Research and development related costs	$	1,347	$	1,084
Payroll and related costs		6,327		3,800
Accounting, tax and audit services		420		575
Manufacturing and inventory		639		757
Other		3,233		2,160
Total other current liabilities	$	11,966	$	8,376

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6. Debt

In December 2018, the Company entered into the Loan Agreement by and among the Company, Nabriva Therapeutics Ireland DAC, and certain other subsidiaries of the Company and Hercules Capital, Inc. (“Hercules”), pursuant to which a term loan of up to an aggregate principal amount of $75.0 million was available to the Company. The Loan Agreement initially provided for an initial term loan advance of $25.0 million, which was funded in December 2018, and, at the Company’s option and subject to the occurrence of certain funding conditions, several additional tranches of which $5.0 million became available upon the approval by the FDA of the NDA for XENLETA, which was drawn down. The other Tranches are no longer available as their contingencies were not achieved. The Company may request a term loan advance of $5.0 million prior to December 31, 2021 subject to Hercules’s sole discretion.

The term loan bears interest at an annual rate equal to the greater of 9.80% or 9.80% plus the prime rate of interest minus 5.50%. The Loan Agreement provided for interest-only payments through July 1, 2021 and repayment of the outstanding principal balance of the term loan thereafter in monthly installments through June 1, 2023 (the “Maturity Date”). In addition, the Company is required to pay a fee of 6.95% of the aggregate amount of advances under the Loan Agreement at the Maturity Date (the “End of Term Fee”). At the Company’s option, the Company may elect to prepay any portion of the outstanding term loan that is greater than or equal to $5.0 million by paying such portion of the principal balance and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: (i) 3.0% if the term loan is prepaid during the first 12 months following the initial closing, (ii) 2.0% if the term loan is prepaid after 12 months following the initial closing but before 24 months following the initial closing and (iii) 1.0% if the term loan is prepaid any time thereafter but prior to the Maturity Date.

On March 11, 2020, the Company entered into an amendment, or the Amendment, to its Loan Agreement with Hercules. Pursuant to the Amendment, the Company repaid $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement (the “Prepayment”). The Company determined to enter into the Amendment following the effectiveness of a performance covenant in February 2020 under which it became obligated to either (1) achieve 80% of its net product revenue sales target over a trailing six-month period, or (2) maintain an amount of cash and cash equivalents in accounts pledged to Hercules plus a specified amount of eligible accounts receivables equal to the greater of the amount outstanding under the Loan Agreement or $40.0 million (the “Liquidity Requirement”). Under the Amendment, the Company and Hercules agreed to defer the end of term loan charge payment of $2.1 million that would have otherwise become payable on the date of the Prepayment and to reduce the prepayment charge with respect to the Prepayment from $600,000 to $300,000 and to defer its payment, in each case, until June 1, 2023 or such earlier date on which all loans under the Loan Agreement are repaid or become due and payable. The Amendment also reset the revenue performance covenant to 70% of targeted revenue based on a revised net product revenue forecast and lowered the minimum liquidity requirement to $3.0 million in cash and cash equivalents, in each case, following the Prepayment. The new minimum liquidity requirement will not apply if CONTEPO receives regulatory approval from the U.S. Food and Drug Administration and the Company achieves at least 70% of its revised net product revenue targets under the Loan Agreement. The Company was in compliance with all of its Loan Agreement covenants at June 30, 2020.

The Company’s obligations under the Loan Agreement are guaranteed by all current and future subsidiaries of the Company, and each of the Company and its subsidiaries has granted Hercules a security interest in all of their respective personal property, intellectual property and other assets owned or later acquired. The Loan Agreement also contains certain events of default, representations, warranties and covenants of the Company and its subsidiaries. For example, the Loan Agreement contains representations and covenants that, subject to exceptions, restrict the Company’s and its subsidiaries’ ability to do the following, among other things: declare dividends or redeem or repurchase equity interests; incur additional indebtedness and liens; make loans and investments; engage in mergers, acquisitions and asset sales; certain transactions with affiliates; undergo a change in control; and add or change business locations or settle in cash potential milestone payment obligations that may become payable by the Company in the future to former security holders of Zavante.

The Loan Agreement also grants Hercules or its nominee an option to purchase up to an aggregate of $2.0 million of the Company’s equity securities, or instruments exercisable for or convertible into equity securities, sold to

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investors in any private financing upon the same terms and conditions afforded to such other investors for as long as there are amounts outstanding under the Loan Agreement.

The Company incurred $1.3 million of costs in connection with the Loan Agreement which along with the initial fee of $0.7 million paid to Hercules were recorded as debt issuance cost and are being amortized as interest expense using the effective interest method over the term of the loan. In connection with the Amendment, the Company recognized a non-cash $2.7 million loss on the extinguishment of debt which represents the excess of the reacquisition price of the $30.0 million debt repaid over the net carrying amount of the extinguished debt. The carrying value of the term loan payable at June 30, 2020 includes the present value of the End of Term Fee and the Prepayment Fee. The End of Term Fee on the remaining $5.0 million principal balance is being accrued as additional interest expense using the effective interest method over the term of the loan.

Long-term debt as December 31, 2019 and June 30, 2020 consisted of the following:


	As of		As of
	December 31		June 30
(in thousands)	2019		2020
Term loan payable	$	35,000	$	5,000
End of term fee		443		1,905
Unamortized debt issuance costs		(1,742)		(244)
Carrying value of term loan		33,701		6,661
Other long-term debt		801		816
Total long-term debt	$	34,502	$	7,477

Maturities of long-term debt as of June 30, 2020 were as follows:


(in thousands)		June 30, 2020
2020	$	—
2021		1,156
2022		2,493
2023		1,351

7. Revenue


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2020		2019		2020
Product revenue, net	$	—	$	(48)	$	—	$	108
Collaboration revenues		—		7		1,000		152
Research premium		351		301		744		591
Government grants		174		227		484		425
Total	$	525	$	487	$	2,228	$	1,276

The $1.0 million of collaboration revenue for the six months ended June 30, 2019 reflects the upfront payment under the Sunovion License Agreement received in April 2019 (see Note 11).

We sell our products to pharmaceutical wholesalers/distributors (i.e., our customers). Our wholesalers/distributors in turn sell our products directly to clinics, hospitals, and private practices. Revenue from our product sales is recognized as physical delivery of product occurs (when our customer obtains control of the product), in return for agreed-upon consideration.

For the three and six months ended June 30, 2020 product revenues, gross were $0.1 million and $0.4 million, respectively. Our product revenues, gross (i.e., delivered units multiplied by the contractual price per unit) are reduced by our corresponding gross-to-net (“GTN”) estimates, resulting in our reported “product revenues, net” in the

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accompanying consolidated statements of operations. These GTN estimates are based upon information received from external sources (such as written or oral information obtained from our customers with respect to their period-end inventory levels and sales to end-users during the period), in combination with management’s informed judgments. Due to the inherent uncertainty of these estimates, the actual amount incurred may be materially above or below the amount initially estimated when product revenues are originally recorded, then requiring prospective adjustments to our reported product revenues, net.

The following tables summarizes gross-to-net (“GTN”) adjustments for the periods presented:


	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2020		June 30, 2020
Product revenue, gross	$	149	$	398
GTN accruals
Chargebacks and cash discounts		5		13
Medicaid and Medicare rebates		18		46
Other returns, rebates, discounts and adjustments		35		92
Total GTN accruals		58		151
Product revenue		91		247
Adjustments to prior period accruals
Returns reserve (1)		(349)		(349)
GTN accrual adjustments		210		210
Product revenue, net	$	(48)	$	108

(1) The Company recorded a returns reserve adjustment for slow-moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors as of June 30, 2020.

8. Share-Based Payments

Stock Option Plan 2015

On April 2, 2015, the Company’s shareholders, management board and supervisory board adopted the Stock Option Plan 2015 (the “SOP 2015”) and the shareholders approved an amended and restated version of the SOP 2015 on June 30, 2015. An amendment to the amended and restated SOP 2015 was approved by the shareholders on July 22, 2015. The SOP 2015 became effective on July 3, 2015 upon the registration with the commercial register in Austria of the conditional capital increase approved by the shareholders on June 30, 2015. The SOP 2015 initially provided for the grant of options for up to 95,000 Nabriva Austria common shares to the Company’s employees, including members of the management board, and to members of the supervisory board. Following the closing of the initial public offering of the Company, the overall number of options increased to 177,499 Nabriva Austria common shares. Following approval by the Company’s shareholders at its 2016 annual general meeting, the number of shares available for issuance under the SOP 2015 was increased to 346,235 Nabriva Austria common shares. In connection with the Redomiciliation Transaction, the SOP 2015 was amended to take account of certain requirements under Irish law and assumed by Nabriva Ireland, with each option to acquire one Nabriva Austria common share becoming an option to acquire ten ordinary shares of Nabriva Ireland on the same terms and conditions.

Each vested option grants the beneficiary the right to acquire one share in the Company. The vesting period for the options is four years following the grant date. On the last day of the last calendar month of the first year of the vesting period, 25% of the options attributable to each beneficiary are automatically vested. During the second, third and fourth years of the vesting period, the remaining 75% of the options vest on a monthly pro rata basis (i.e. 2.083% per month). Options granted under the SOP 2015 have a term of no more than ten years from the beneficiary’s date of participation.

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The following table summarizes information regarding the Company’s stock option awards under the SOP 2015 for the six months ended June 30, 2020:


		Weighted
		average
		exercise	Aggregate
		price in	intrinsic
Stock Option Plan 2015	Options	$ per share	value
Outstanding as of January 1, 2020	2,290,594	8.33
Granted	—	—
Exercised	—	—
Forfeited	63,179	9.02
Outstanding as of June 30, 2020	2,227,415	8.31	$	—
Vested and exercisable as of June 30, 2020	2,073,469	8.23	$	—

Stock-based compensation expense under the SOP 2015 was $0.7 million and $1.6 million for the three and six months ended June 30, 2019, respectively, and $0.3 million and $0.6 million for the three and six months ended June 30, 2020, respectively.

The weighted average remaining contractual life of the options as of June 30, 2020 is 5.9 years.

As of June 30, 2020, there was $0.8 million of total unrecognized compensation expense, related to unvested options granted under the SOP 2015, which will be recognized over the weighted-average remaining vesting period of 0.5 years.

2017 Share Incentive Plan

On July 26, 2017, the Company’s board of directors adopted the 2017 Share Incentive Plan (the “2017 Plan”) and the shareholders approved the 2017 Plan at the Company’s Extraordinary General Meeting of Shareholders on September 15, 2017. Following shareholder approval of the 2017 Plan, the Company ceased making awards under the SOP 2015. However, all outstanding awards under SOP 2015 will remain in effect and continue to be governed by the terms of the SOP 2015. The 2017 Plan permits the award of share options (both incentive and nonstatutory options), share appreciation rights (“SARs”), restricted shares, restricted share units (“RSUs”), and other share-based awards to the Company’s employees, officers, directors, consultants and advisers. The 2017 Plan is administered by the Company’s board of directors.

Under the 2017 Plan, the number of ordinary shares that will be reserved for issuance will be the sum of (1) 3,000,000 ordinary shares; plus (2) a number of ordinary shares (up to 3,438,990 ordinary shares) which is equal to the sum of the number of the Company’s ordinary shares then available for issuance under the SOP 2015 and the number of ordinary shares subject to outstanding awards under the SOP 2015 that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right; plus (3) an annual increase, to be added on the first day of each fiscal year beginning in the fiscal year ended December 31, 2018 and continuing until, and including, the fiscal year ending December 31, 2027, equal to the least of (i) 2,000,000 ordinary shares, (ii) 4% of the number of outstanding ordinary shares on such date and (iii) an amount determined by the board of directors.

At June 30, 2020, 1,829,811 ordinary shares were available for future issuance under the 2017 Plan.

Options and SARs granted will be exercisable at such times and subject to such terms and conditions as the board may specify in the applicable option agreement; provided, however, that no option or SAR will be granted with a term in excess of ten years. The board will also determine the terms and conditions of restricted shares and RSUs, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

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The following table summarizes information regarding the Company’s stock option awards under the 2017 Plan for the six months ended June 30, 2020:


		Weighted
		average
		exercise		Aggregate
		price in $		intrinsic
2017 Plan	Options	per share		value
Outstanding as of January 1, 2020	4,422,664	3.55
Granted	1,290,500	1.35
Exercised	—	—
Forfeited	(748,874)	2.56
Outstanding as of June 30, 2020	4,964,290	3.13	$	—
Vested and exercisable as of June 30, 2020	1,968,950	4.21	$	—

Stock-based compensation expense for stock options granted under the 2017 Plan was $0.8 million and $1.3 million for the three and six months ended June 30, 2019 and $0.5 million and $1.1 million for the three and six months ended June 30, 2020, respectively. The weighted average fair value of the options granted during the six months ended June 30, 2020 was $0.80 per share. The options granted in the six months ended June 30, 2020 were valued based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:


Input parameters
Range of expected volatility		63.8% - 64.0%
Expected term of options (in years)		6.1
Range of risk-free interest rate		0.8% - 1.5%
Dividend yield		—

The expected price volatility is based on historical trading volatility for the publicly traded peer companies under consideration of the remaining life of the options. The risk-free interest rate is based on the average of five and seven-year market yield on U.S. treasury securities in effect at the time of grant.

The weighted average remaining contractual life of the options as of June 30, 2020 is 8.7 years.

As of June 30, 2020, there was $3.9 million of total unrecognized compensation expense, related to unvested options granted under the 2017 Plan, which will be recognized over the weighted-average remaining vesting period of 1.1 years.

Restricted Stock Units (“RSUs”)

Under the 2017 Plan, the Company granted RSUs which vest over a period of four years with 25% vesting upon the first anniversary of the grant date and on a monthly pro rata basis thereafter over the remaining three years. The Company also granted RSUs to certain employees that vest over a period of four years with 25% vesting upon the first anniversary of the grant date and on a monthly pro rata basis thereafter over the remaining three years.

During 2018, the Company granted RSUs to certain employees where vesting of the RSUs was subject to FDA approval of an NDA for XENLETA. Fifty percent (50%) of each RSU award vested upon FDA approval, and the remaining fifty percent (50%) will vest on the one- year anniversary of such approval. In connection with the FDA approval that was received in August 2019, the Company started recognizing compensation expense, as there was no compensation expense recognized on these awards prior to the FDA approval as it was determined that approval was not probable since it was outside of the Company’s control. Also during 2018, the Company granted RSUs to certain employees that have vested in three six-month increments beginning in May 2019 and ending in May 2020. Lastly, the Company granted RSUs in 2018 to certain employees where vesting of the RSUs is subject to FDA approval of an NDA for CONTEPO. Fifty percent (50%) of each RSU award will vest upon FDA approval, and the remaining fifty percent (50%) will vest on the one- year anniversary of such approval.

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The following table summarizes information regarding our restricted stock unit awards under the 2017 Plan at June 30, 2020:


		Weighted
		average fair
2017 Plan	RSUs	value per share
Outstanding as of January 1, 2020	901,686	3.69
Granted	1,557,300	1.35
Vested and issued	(334,210)	2.03
Forfeited	(230,792)	1.83
Outstanding as of June 30, 2020	1,893,984	1.83

For the three and six months ended June 30, 2019, $0.4 million and $0.6 million, respectively, of stock-based compensation expense was recognized for RSUs. Stock-based compensation expense for RSUs granted under the 2017 Plan was $0.4 million and $1.0 million for the three and six months ended June 30, 2020, respectively.

The Company has total unrecognized compensation costs of $2.6 million associated with RSUs which are expected to be recognized over the awards average remaining vesting period of 1.3 years. The fair value of RSU’s that vested during the six months ended June 30, 2020 was $0.4 million.

2019 Inducement Share Incentive Plan

On March 12, 2019, the Company’s board of directors adopted the 2019 Inducement Share Incentive Plan (the “2019 Inducement Plan”) and, subject to the adjustment provisions of the 2019 Inducement Plan, reserved 2,000,000 ordinary shares for issuance pursuant to equity awards granted under the 2019 Inducement Plan. In accordance with Nasdaq Listing Rule 5635(c)(4), awards under the 2019 Inducement Plan may only be made to individuals who were not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company.

On April 28, 2020, the board of directors resolved not to make any further awards under the 2019 Inducement Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2019 Inducement Plan for the six months ended June 30, 2020:


		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2019 Inducement Plan	Options	per share	value
Outstanding as of January 1, 2020	605,650	2.14
Granted	182,000	1.35
Exercised	—	—
Forfeited	(392,000)	2.02
Outstanding as of June 30, 2020	395,650	1.96	$	—
Vested and exercisable as of June 30, 2020	40,224	2.64		—

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Stock-based compensation expense under the 2019 Inducement Plan was less than $0.1 million for both the three and six months ended June 30, 2019 and less than $0.1 million for the three and six months ended June 30, 2020, respectively. The weighted average fair value of the options granted during the six months ended June 30, 2020 was $0.79 per share. The options granted in the six months ended June 30, 2020 were valued based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:


Input parameters
Expected volatility		63.7% - 64.0%
Expected term of options (in years)		6.1
Risk-free interest rate		1.0% - 1.4%
Dividend yield		—

The weighted average remaining contractual life of the options as of June 30, 2020 is 9.2 years.

As of June 30, 2020, there was $0.4 million of total unrecognized compensation expense, related to unvested options granted under the 2019 Inducement Plan, which will be recognized over the weighted-average remaining vesting period of 1.5 years.

Inducement Awards Outside of the 2019 Inducement Plan

On July 25, 2018, the Company granted a non-statutory option to purchase 850,000 of its ordinary shares and 150,000 performance-based RSUs to the Company’s newly appointed Chief Executive Officer (the “CEO”). These equity awards were granted outside of the 2017 Plan and the 2019 Inducement Plan, were approved by the Company’s compensation committee and board of directors and were made as an inducement material to the CEO entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). The exercise price per share for the share option is $3.53 per share, and the option award has a ten-year term and will vest over a four-year period, with 25% of the shares underlying the award vesting on the first anniversary of the grant date and the remaining 75% of the shares underlying the option award to vest monthly over the subsequent 36-month period. The performance-based restricted share units are subject to vesting as follows: 50% will vest upon certification by the board of directors of the receipt of approval by the FDA of an NDA for each of lefamulin and CONTEPO for any indication, and 50% will vest on the first anniversary of such certification by the board of directors, provided, in each case, the CEO is performing services to the Company on the applicable vesting dates. Since the FDA did not approve an NDA for both XENLETA and CONTEPO by January 31, 2020, the award was forfeited and the performance-based restricted share units terminated in full. The Company also issues non-statutory options to new employees upon the commencement of their employment

Stock-based compensation expense for the inducement awards granted outside of the 2019 Inducement Plan was $0.1 million and $0.2 million for the three and six months ended June 30, 2019, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2020, respectively. The performance-based RSUs had a grant date fair value of $3.53 per share and the options had a grant date fair value of $2.05 per share based on a Black Scholes option pricing model using the following assumptions. No expense has been recognized to date on the performance based RSUs. The significant inputs into the model were as follows:


Input parameters
Expected volatility	59.8	%
Expected term of options (in years)	6.1
Range of risk-free interest rate	2.9	%
Dividend yield	—

The weighted average remaining contractual life of the options as of June 30, 2020 is 8.1 years.

As of June 30, 2020, there was $0.9 million of total unrecognized compensation expense, related to unvested inducement award options granted, which will be recognized over the weighted-average remaining vesting period of 1.1 years.

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2020 Share Incentive Plan

On March 4, 2020, the Company´s board of directors, adopted the 2020 Share Incentive Plan (the “2020 Plan”), which was approved by the Company´s shareholders at the 2020 Annual General Meeting of Shareholders in July 2020 (“AGM”). As of the date of the 2020 AGM, plus the total number of ordinary shares reserved for issuance under the 2020 Plan was for the sum of 9,300,000 ordinary shares, the number of our ordinary shares that remained available for grant under the 2017 Plan as of immediately prior to the AGM and the number of ordinary shares subject to awards granted under the 2017 Plan and our Amended and Restated Stock Option Plan 2015, that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right. Following shareholder approval of the 2020 Plan, no further awards will be made under the 2017 Plan.

The 2020 Plan provides for the grant of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share units, other share-based and cash-based awards and performance awards.

During the six months ended June 30, 2020, option awards to purchase 1,837,500 ordinary shares with an exercise price of $1.35 per share were granted under the 2020 Plan. Such awards would have automatically converted to cash-settled share appreciation rights if our shareholders did not approve the 2020 Plan at our AGM. As a result, the grants awarded under the 2020 Plan were liability classified until such shareholder approval was obtained. Stock-based compensation expense for the option awards under the 2020 Plan was $51 thousand and $65 thousand for the three and six months ended June 30, 2020, respectively.

Employee Stock Purchase Plan

The Company’s board of directors adopted, and in August 2018 Company’s stockholders approved, the 2018 employee stock purchase plan (the “2018 ESPP”). The maximum aggregate number of shares of ordinary shares that may be purchased under the 2018 ESPP is 500,000 shares, (the “ESPP Share Pool”), subject to adjustment as provided for in the 2018 ESPP. The ESPP Share Pool available as of June 30, 2020, represented 0.1% of the total number of shares of ordinary shares outstanding as of June 30, 2020. The 2018 ESPP allows eligible employees to purchase shares at a 15% discount to the lower of the closing share price at the beginning and end of the six-month offering periods commencing November 1 and ending April 30 and commencing May 1 and ending October 31 of each year. As of the date of this filing, the Company has suspended the 2018 ESPP until further notice.

9. Income Tax Expense

For the three and six months ended June 30, 2019 the Company recorded a tax benefit of $45 thousand, and a tax expense of $0.1 million, respectively. For the three and six months ended June 30, 2020 the Company recorded a tax expense of $0.1 million, and $0.3 million, respectively.

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of its deferred tax assets. On the basis of this evaluation the Company has recorded a valuation allowance against all of its deferred tax assets at June 30, 2020 and December 31, 2019.

10. Earnings (Loss) per Share

Basic and diluted loss per share

For the three and six months ended June 30, 2019 and 2020, basic and diluted net loss per share was determined by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period. Diluted net loss per share is the same as basic net loss per share during the periods presented as the effects of the

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Company’s potential ordinary share equivalents are antidilutive since the Company had net losses for each period presented below.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2019		2020		2019		2020
Net loss for the period	$	(21,707)	$	(15,441)	$	(41,924)	$	(38,700)
Weighted average number of shares outstanding		72,526,441		112,778,258		70,624,583		103,686,706
Basic and diluted loss per share	$	(0.30)	$	(0.14)	$	(0.59)	$	(0.37)

The following ordinary share equivalents were excluded from the calculations of diluted earnings per share as their effect would be anti-dilutive since the Company had net losses for each period presented below:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2020	2019	2020
Stock option awards	8,363,789	10,274,855	8,363,789	10,274,855
Restricted stock units	1,524,642	1,893,984	1,524,642	1,893,984

11. Sinovant and Sunovion License Agreements

Sinovant License Agreement

In March 2018, the Company entered into a license agreement (the “Sinovant License Agreement”), with Sinovant Sciences, Ltd. (“Sinovant”), an affiliate of Roivant Sciences, Ltd., to develop and commercialize lefamulin in the greater China region. As part of the Sinovant License Agreement, Nabriva Therapeutics Ireland DAC and Nabriva Therapeutics GmbH, the Company’s wholly owned subsidiaries, granted Sinovant an exclusive license to develop and commercialize, and a non-exclusive license to manufacture, certain products containing lefamulin (the “Sinovant Licensed Products”), in the People’s Republic of China, Hong Kong, Macau, and Taiwan (together the “Territory”).

Under the Sinovant License Agreement, Sinovant and the Company’s subsidiaries have established a joint development committee (the “JDC’), to review and oversee development and commercialization plans in the Territory. The Company received a non-refundable $5.0 million upfront payment pursuant to the terms of the Sinovant License Agreement and will be eligible for up to an additional $91.5 million in milestone payments upon the achievement of certain regulatory and commercial milestone events related to lefamulin for CABP, plus an additional $4.0 million in milestone payments if any Sinovant Licensed Product receives a second or any subsequent regulatory approval in the People’s Republic of China. The first milestone was a $1.5 million payment for the submission of a clinical trial application (“CTA”), by Sinovant to the Chinese Food and Drug Administration, which was received in the first quarter of 2019. Additionally, in connection with the FDA approval for lefamulin the Company received a $5.0 million milestone payment in the third quarter of 2019. The remaining milestone payments of up to $86.5 million are tied to additional regulatory approvals and annual sales targets. The Company will also be eligible to receive low double-digit royalties on sales, if any, of Sinovant Licensed Products in the Territory. The Company has recorded the payments received to date as collaboration revenue in the consolidated statements of operations. The future regulatory and commercial milestone payments will be recorded during the period the milestones become probable of achievement.

Sinovant will be solely responsible for all costs related to developing, obtaining regulatory approval of and commercializing Sinovant Licensed Products in the Territory and is obligated to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize Sinovant Licensed Products in the Territory. The Company is obligated to use commercially reasonable efforts to supply, pursuant to supply agreements to be negotiated by the parties, to Sinovant a sufficient supply of XENLETA for Sinovant to manufacture finished drug products for development and commercialization of the Sinovant Licensed Products in the Territory.

Unless earlier terminated, the Sinovant License Agreement will expire upon the expiration of the last royalty term for the last Sinovant Licensed Product in the Territory, which the Company expects will occur in 2033. Following the expiration of the last royalty term, the license granted to Sinovant will become non-exclusive, fully-paid, royalty-free

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and irrevocable. The Sinovant License Agreement may be terminated in its entirety by Sinovant upon 180 days’ prior written notice at any time. Either party may, subject to specified cure periods, terminate the Sinovant License Agreement in the event of the other party’s uncured material breach. Either party may also terminate the Sinovant License Agreement under specified circumstances relating to the other party’s insolvency. The Company has the right to terminate the Sinovant License Agreement immediately if Sinovant does not reach certain development milestones by certain specified dates (subject to specified cure periods). The Sinovant License Agreement contemplates that the Company will enter into ancillary agreements with Sinovant, including clinical and commercial supply agreements and a pharmacovigilance agreement.

Sunovion License Agreement

In March 2019, the Company entered into the Sunovion License Agreement with Sunovion. As part of the Sunovion License Agreement, Nabriva Therapeutics Ireland DAC, the Company’s wholly owned subsidiary, granted Sunovion an exclusive license under certain patent rights, trademark rights and know-how to commercialize the Licensed Products in Canada in all uses in humans in community-acquired bacterial pneumonia and in any other indication for which the Licensed Products have received regulatory approval in Canada. Under the Sunovion License Agreement, Sunovion and DAC will establish a joint development committee (the “Sunovion JDC”), to review and oversee regulatory approval and commercialization plans in the Territory. Sunovion will be solely responsible for all costs related to obtaining regulatory approval of and commercializing Licensed Products in the Territory and is obligated to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize Licensed Product in the Territory. On November 7, 2019, the Company, through Sunovion, submitted a NDS. Health Canada determined there was a screening deficiency in December 2019 and a response from the Company/Sunovion was provided on December 18, 2019 and acknowledged by Health Canada on January 13, 2020. The NDS approval occurred on July 10, 2020.

The Company has identified two performance obligations at inception: (1) the delivery of the exclusive license to Sunovion, which the Company has determined is a distinct license of functional intellectual property that Sunovion has obtained control of; and, (2) the participation in the Sunovion JDC. The $1.0 million non-refundable upfront payment was allocated entirely to the delivery of the license as the Sunovion JDC deliverable was deemed to be de minimis. With the NDS approval that occurred on July 10, 2020, a regulatory milestone payment of $0.5 million became payable to the Company. Any future regulatory and commercial milestone payments under the Sunovion License Agreement will be recorded during the period the milestones become probable of achievement.

12. Commitments and Contingencies

Leases

The Company leases office spaces in King of Prussia, Pennsylvania, San Diego, California, Dublin, Ireland and laboratory and office space in Vienna, Austria under agreements previously classified as operating leases.

The lease agreement in King of Prussia, Pennsylvania expires on December 15, 2023 and does not include any renewal options. The agreement provides for an initial monthly base amount plus annual escalations through the term of the lease.

The lease agreement in San Diego, California expired on June 30, 2019 and was not renewed by the Company. In May 2019, the Company entered into a month-to-month sublease agreement for office space for two employees in San Diego, California.

For the lease agreement in Vienna Austria, the Company can terminate the lease without the landlord’s consent and without paying a termination penalty by giving six months’ notice to the landlord. The agreement provides for a monthly base fixed amount. The Company is in the process of determining the appropriate space needed in the building based on its needs. As a result, the Company may negotiate a new lease or evaluate additional or alternate spaces. As such, the Company has classified the agreement as a short-term lease. Starting in the third quarter of 2019, the Company subleased certain space at its leased cost.

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In March 2019, the Company entered into a lease agreement for office space in Dublin, Ireland which expires on April 30, 2021. The agreement can be automatically renewed by both parties equal to the current lease term but for no less than three months. The agreement provides for a monthly based fixed amount of 7,000 euros beginning on the commencement date which was in May 2019.

In addition to the monthly base amounts under the lease agreements, the Company is required to pay its proportionate share of real estate taxes and operating expenses during the lease term for the King of Prussia lease.

For the six months ended June 30, 2020, the Company’s operating lease expense was $0.8 million.

As of June 30, 2020, the lease term of the King of Prussia operating leases was 3.4 years and the discount rate was 9.8%.

As of June 30, 2020, other information related to the operating leases were as follows:

Operating Cash Flow Supplemental Information:


(in thousands)	June 30, 2020
Cash paid for amounts included in the measurement of the operating lease liabilities	$	252
Right-of-use assets obtained in exchange for operating lease obligations	$	1,476

The following table sets forth by year the required future payments of operating lease liabilities:


(in thousands)	June 30, 2020
2020	$	255
2021		515
2022		522
2023		533
Total lease payments		1,825
Less imputed interest		(327)
Present value of operating lease liabilities	$	1,498

Legal Proceedings

On May 8, 2019, a putative class action lawsuit was filed against the Company and its Chief Executive Officer in the United States District Court for the Southern District of New York, captioned Larry Enriquez v. Nabriva Therapeutics PLC, and Ted Schroeder, No. 19-cv-04183. The complaint purported to be brought on behalf of shareholders who purchased the Company's securities between November 1, 2018 and April 30, 2019. The complaint generally alleged that the Company and its Chief Executive Officer violated Sections 10(b) and/or 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements and omitting to disclose material facts concerning the Company's submission of an NDA to the FDA for marketing approval of CONTEPO for the treatment of cUTI in the United States and the likelihood of such approval. The complaint sought unspecified damages, attorneys' fees, and other costs.

On May 22, 2019, a second putative class action lawsuit was filed against the Company and its Chief Executive Officer in the United States District Court for the Southern District of New York, captioned Anthony Manna v. Nabriva Therapeutics PLC, and Ted Schroeder, No. 19-cv-04713. The complaint purported to be brought on behalf of shareholders who purchased the Company's securities between November 1, 2018 and April 30, 2019. The allegations made in the Manna complaint were similar to those made in the Enriquez complaint, and the Manna complaint sought similar relief. On May 24, 2019, these two lawsuits were consolidated by the court. The court appointed a lead plaintiff and approved plaintiff's selection of lead counsel on July 22, 2019.

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On September 23, 2019, plaintiff filed an amended complaint, adding the Company's Chief Financial Officer and Chief Medical Officer as defendants; the amended complaint purports to be brought on behalf of shareholders who purchased the Company's securities between January 4, 2019 through April 30, 2019, and otherwise includes allegations similar to those made in the original complaints and seeks similar relief. The Company's pre-motion letter to dismiss the amended complaint was due to plaintiff on October 21, 2019, and plaintiff responded to the Company via a letter on November 4, 2019. On November 18, 2019, the Company filed a pre-motion letter to dismiss with the Court, seeking leave to move to dismiss and setting forth why a motion to dismiss is warranted. On April 28, 2020, the Court dismissed the amended complaint without prejudice and granted plaintiff twenty days to show cause why the lawsuit should not be dismissed with prejudice. On May 8, 2020, the Court granted plaintiff a 21-day extension to show cause. On June 8, 2020, plaintiff filed a letter application to the court seeking leave to file a proposed second amended complaint, and on June 23, 2020, the court directed plaintiff to file the proposed second amended complaint. Plaintiff did so on June 24, 2020. The Company filed an answer to the second amended complaint on July 8, 2020. This case is currently in the discovery phase.

The Company denies any and all allegations of wrongdoing and intends to vigorously defend against this lawsuit. The Company is unable, however, to predict the outcome of this matter at this time. Moreover, any conclusion of this matter in a manner adverse to the Company and for which it incurs substantial costs or damages not covered by the Company's directors' and officers' liability insurance would have a material adverse effect on its financial condition and business. In addition, the litigation could adversely impact the Company's reputation and divert management's attention and resources from other priorities, including the execution of its business plan and strategies that are important to the Company's ability to grow its business, any of which could have a material adverse effect on the Company's business.

Other Commitments and Contingencies

The Company has other contractual commitments related primarily to contracts entered into with contract research organizations and contract manufacturing organizations in connection with the conduct of clinical trials and other research and development activities. During the six months ended June 30, 2020, there were no material changes outside the ordinary course of the Company’s business to its contractual obligations relating to contract research organizations and contract manufacturing organizations.

The Company has no contingent liabilities in respect of legal claims arising in the ordinary course of business.

13. Subsequent Events

On July 15, 2020, the Company entered into a Sales Promotion and Distribution Agreement (the “Distribution Agreement”) with MSD International GmbH (“MSD”) and Merck Sharp & Dohme Corp. (“Supplier”), each a subsidiary of Merck & Co., Inc., Kenilworth, NJ, USA. Under the Distribution Agreement, upon satisfaction of certain specified conditions, MSD appointed the Company as its sole and exclusive distributor of certain products containing tedizolid phosphate as the active ingredient (marketed and sold by Supplier and MSD prior to the effective date of the Distribution Agreement under the trademark SIVEXTRO®) for injection, intravenous use and oral use (the “Products”) in final packaged form labeled with the Company’s National Drug Code numbers in the United States and its territories (the “Territory”). SIVEXTRO is an oxazolidinone-class antibacterial indicated in adults and pediatric patients 12 years of age and older for the treatment of acute bacterial skin and skin structure infections caused by certain susceptible Gram-positive microorganisms. Under the Distribution Agreement and subject to the fulfillment of certain conditions, including the Company having engaged sufficient sales representatives, restrictions relating to travel and physician office access in the Territory due to COVID-19 having continued to decrease in a sufficient portion of the Territory so as not to hinder the successful detailing of SIVEXTRO, the Company is granted the right by MSD initially to promote the Products in the Territory and, upon satisfaction of additional conditions, including an increase in sales representatives, the right to exclusively distribute the Products in the Territory, including the sole right and responsibility to fill orders with respect to the Products in the Territory. Subject to applicable law, the Company is entitled to determine the final

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selling prices of the Products charged by the Company to its customers at its sole discretion, subject to an overall annual limit on price increases, and will be solely responsible for sales contracting and all market access activities, including bidding, hospital listing and reimbursement. The Company is responsible for all costs related to the promotion, sale and distribution of the Products by the Company, as well as all costs required to meet the Company’s staffing obligations under the Distribution Agreement. The Company is obligated to use commercially reasonable efforts to promote and distribute the Products and to maximize the sales of the Products throughout the Territory. The Company has agreed to employ a sales force or retain the services of a contract sales organization to fulfill its obligations under the Distribution Agreement. The Company also secured a virtual and in-person community-based sales effort with Amplity Health who is a Contract Sales Organization, however the Company has not determined when it would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our historical consolidated financial statements and the related notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission on March 12, 2020. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. These risks and uncertainties include risks relating to the impact of the COVID-19 pandemic on our business. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company engaged in the commercialization and research and development of novel anti-infective agents to treat serious infections. We have the commercial right to two approved products, XENLETA and SIVEXTRO, as well as one product candidate, CONTEPO. In August 2019, our first product was approved by the U.S. Food and Drug Administration, or FDA, and we made it available in the United States in September 2019 under the brand name XENLETA. XENLETA (lefamulin) is a first-in-class semi-synthetic pleuromutilin antibiotic for systematic administration in humans discovered and developed by our team. It inhibits the synthesis of bacterial protein, which is required for bacteria to grow by binding with high affinity, high specificity and at molecular targets that are different than other antibiotic classes. Based on results from two global, Phase 3 clinical trials, we believe that XENLETA is well-positioned for use as a first-line monotherapy for the treatment of CABP due to its novel mechanism of action, targeted spectrum of activity, resistance profile, achievement of substantial drug concentration in lung tissue and fluid, availability of oral and intravenous, or IV, formulations and a generally well-tolerated safety profile. We believe XENLETA represents a potentially important new treatment option for the five million adults in the United States diagnosed with CABP each year.

On July 28, 2020, we announced that the European Commission, or EC, issued a legally binding decision for approval of the marketing authorization application for XENLETA™ (lefamulin) for the treatment of community-acquired pneumonia, or CAP, in adults following a review by the European Medicines Agency, or EMA. The EMA approval of XENLETA in CAP patients when it is considered inappropriate to use antibacterial agents that are commonly recommended for initial treatment or when these agents have failed paves the way for the potential launch of XENLETA across Europe. We previously announced that the Committee for Medicinal Products for Human Use, or CHMP, of the EMA adopted a positive opinion recommending approval of XENLETA for the treatment of CAP. The EC approved XENLETA for all 28 countries of the European Union, or E.U., Norway, Iceland, and Liechtenstein. Nabriva intends to work with a commercial partner to make XENLETA available to patients in the E.U.

We submitted a new drug application, or NDA, for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States, utilizing the FDA’s 505(b)(2) pathway, in October 2018. The FDA has granted fast track designation to CONTEPO under the Generating Antibiotics Incentives Now Act, or the GAIN Act. In April 2019, the FDA issued a Complete Response Letter, or CRL, in connection with our NDA for CONTEPO for the treatment of cUTI, including AP, stating that is was unable to approve the application in its current form. Specifically, the CRL requested that we address issues related to facility inspections and manufacturing deficiencies at our API contract manufacturer. We held a “Type A” meeting with the FDA in July 2019 to discuss its findings and resubmitted our NDA seeking marketing approval for CONTEPO in December 2019. In June 2020, the FDA issued a second CRL. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the second CRL cited observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. In general, previously identified product quality and facility inspection related observations at our contract manufacturing partners are required to be satisfactorily resolved before the NDA may be approved. The FDA did not request any new clinical data and did not raise any other concerns with regard to the safety or efficacy of CONTEPO in the second CRL. Our contract manufacturers plan to interact with FDA to discuss its plans

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for conducting inspections at their sites. We plan to request a Type A meeting with the FDA to discuss appropriate next steps and the FDA’s plans for completing foreign facility inspections. CONTEPO has been granted Qualified Infectious Disease Product (QIDP) and Fast Track designations by the FDA for the treatment of serious infections, including cUTI. However, we cannot predict when the CONTEPO NDA will be resubmitted, or when CONTEPO would receive marketing approval, if at all.

Since inception, we have incurred significant operating losses. As of June 30, 2020 we had an accumulated deficit of $515.4 million. To date, we have financed our operations primarily through equity offerings, convertible and term debt financings and research and development support from governmental grants and proceeds from our licensing agreements. We have devoted substantially all of our efforts to research and development, including clinical trials as well as preparing for the commercial launch of XENLETA. Our ability to generate profits from operations and remain profitable depends on our ability to successfully develop and commercialize drugs that generate significant revenue.

We expect to continue to incur significant expenses and have negative cash flows for at least the next several years. Our expenses will increase if we suffer any regulatory delays or are required to conduct additional clinical trials to satisfy regulatory requirements. If we obtain marketing approval for CONTEPO or any other product candidate that we develop, in-license or acquire, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, the timing and amount of sales of XENLETA, SIVEXTRO or other product candidates are uncertain. Under the Distribution Agreement, we will be required to secure a sales force and the restrictions related to COVID-19 must be eased in a sufficient manner to permit us to promote and distribute SIVEXTRO. Re-securing a sales force for the promotion and distribution of SIVEXTRO will result in significant additional expense and our efforts to secure a sales force may not be successful. Based on our current forecasts and plans, we will need to obtain substantial additional funding in connection with our continuing operations. Adequate additional capital may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs and commercialization efforts.

Market conditions for antibiotic companies continue to be challenging as evidenced by the bankruptcy of two organizations engaged in the research and development and commercialization of antibiotics in 2019. The cost of capital has risen significantly for others and us. On December 20, 2019, we issued 13.8 million ordinary shares and 13.8 million warrants with an exercise price of $1.90 per share that generated gross proceeds of $20.1 million. In addition, on March 11, 2020, we entered into an amendment, or the Amendment, to our Loan and Security Agreement, or the Loan Agreement, with Hercules Capital, Inc., or Hercules, as administrative agent, collateral agent and lender. Pursuant to the Amendment, we repaid Hercules in March 2020, $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement, which we refer to as the Prepayment. On May 29, 2020, we issued in a registered direct offering an aggregate of 41,445,373 ordinary shares with 41,445,373 warrants at a combined price of $0.91686 per security. The gross proceeds were $38.0 million. Each warrant has an exercise price of $0.792 per share, is exercisable immediately and will expire on the two-year anniversary of the issuance date.

As part of our corporate strategy, we continue to evaluate business development opportunities and potential collaborations. We may further expand our product pipeline through opportunistically in licensing or acquiring the rights to complementary products, product candidates and technologies for the treatment of a range of infectious diseases or other products that we would market with our commercial infrastructure, including additional community products, which could involve an acquisition of or combination or other strategic transaction with another operating business. In addition, we plan to continue to evaluate the merits of entering into collaboration agreements with other pharmaceutical or biotechnology companies that may contribute to our ability to efficiently advance our product candidates, build our product pipeline, concurrently advance a range of research and development programs and leverage our commercial infrastructure.

Business Update Regarding COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19, which continues to spread throughout the U.S. and the world, as a pandemic. The outbreak is having an impact on the global economy,

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resulting in rapidly changing market and economic conditions. National and local governments around the world instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain non-essential businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, communities and business operations, as well as the U.S. economy and financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. The impact of COVID-19 is unknown and may continue as the rates of infection have increased in many states in the U.S., thus additional restrictive measures may be necessary. Federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 have resulted in, among other things, a significant reduction in physician office visits, the cancellation of elective medical procedures, and the adoption of work-from-home policies, all of which have had, and we believe will continue to have, an impact on our consolidated results of operations, financial position, and cash flows.

In response to the COVID-19 pandemic, we closed our administrative offices and shifted to a remote working business model. We have implemented a work-from-home policy for all of our employees, and we may take further actions that alter our operations as may be required by federal, state, or local authorities, or which we determine are in our best interests. The commercial and medical organizations have suspended in-person interactions with physicians and customers and are restricted to conducting educational and promotional activities virtually for the foreseeable future. The impact of the COVID-19 pandemic could continue to have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects in the near-term and beyond 2020. While we have used all currently available information in our forecasts, the ultimate impact of the COVID-19 pandemic and our product sales for XENLETA and SIVEXTRO, on our results of operations, financial condition and cash flows is highly uncertain, and cannot currently be accurately predicted. Our results of operations, financial condition and cash flows are dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy, such as a lengthy or severe recession or any other negative trend in the U.S. or global economy and any new information that may emerge concerning the COVID-19 outbreak and the actions to contain it or treat its impact, which at the present time are highly uncertain and cannot be predicted with any accuracy.

COVID-19 has demonstrated the devastating impact that infectious diseases can have on public health and the economy. Similar to other acute respiratory virus infections, including influenza virus, patients infected with SARS-CoV-2 are at increased risk of developing concomitant bacterial pneumonia. In published reports, bacterial pneumonia has been shown to affect nearly 50% of hospitalized patients with COVID-19, with an associated mortality of almost 50%. As a result, the World Health Organization currently recommends empiric antimicrobials to treat all likely pathogens causing severe acute respiratory infections and sepsis as soon as possible in patients with COVID-19.

SIVEXTRO is approved for the treatment of acute bacterial skin and skin structure infections, or ABSSIs, caused by certain susceptible Gram-positive microorganisms. Before we are permitted to sell SIVEXTRO under the Distribution Agreement, we will be required to secure a sales force and the restrictions related to COVID-19 must be eased in a sufficient manner to permit us to promote and distribute SIVEXTRO. Re-securing a sales force for the promotion and distribution of SIVEXTRO will result in significant additional expense and our efforts to secure a sales force may not be successful.

XENLETA is approved for the treatment of CABP in adults in the United States. In addition to XENLETA’s potential role in treating COVID-19 patients with superimposed bacterial pneumonia, we are assessing the anti-inflammatory and antiviral activity of XENLETA and what role, if any, these characteristics may play in the management of patients with COVID-19. The National Institute for Allergy and Infectious Diseases, or NIAID, has identified that secondary bacterial pneumonia caused by common upper respiratory tract bacteria plays a predominant role in the cause of death in pandemic influenza. NIAID recommends that the prevention, diagnosis, prophylaxis, and treatment of secondary bacterial pneumonia, as well as the stockpiling of antibiotics and bacterial vaccines, be high priorities for pandemic planning. We believe there is a potential for XENLETA to be considered for U.S. government stockpiling for pandemic influenza.

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Two ongoing pediatric phase 1 clinical trials for lefamulin and IV fosfomycin were temporarily closed for enrollment as hospitals suspended access and non-essential clinical research to focus on health care delivery to COVID-19 patients. As of July 2020, both trials have started to re-open and initiate screening of potential subjects at sites.

In collaboration with the Global Antibiotic Research & Development Partnership, we are assessing XENLETA for the treatment of sexually transmitted infections, including N. gonorrhoeae, C. trachomatis, and M. genitalium. XENLETA has been shown to possess potent in vitro activity against all three of these organisms, which is maintained in the presence of resistance to all standard of care treatment options (aminoglycoside, cephalosporin, fluoroquinolone, macrolide, penicillin, and tetracycline antibiotic classes). Importantly, XENLETA has been shown to be bactericidal in vitro against both N. gonorrhoeae and M. genitalium.

Acquisition of Zavante

On July 24, 2018, we acquired Zavante, or the Acquisition, a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection) to improve the outcomes of hospitalized patients pursuant to the Agreement and Plan of Merger dated July 23, 2018, or the Merger Agreement.

CONTEPO is a potentially first-in-class epoxide IV antibiotic in the United States with a broad spectrum of bactericidal Gram-negative and Gram-positive activity, including activity against many contemporary multi-drug resistant, or MDR, strains that threaten hospitalized patients. IV fosfomycin has an extensive commercial history in markets outside the United States, where it has been used broadly for over 45 years to treat a variety of indications, including cUTIs, bacteremia, pneumonia and skin infections. CONTEPO inhibits the bacteria’s ability to form a cell wall, which is critical for the cell’s survival and growth. It works at an earlier and different stage of cell wall synthesis than other injectable antibiotics, differentiating its mechanism of action from approved injectable antibiotics. CONTEPO utilizes a dosing approach developed by Zavante for the United States that is designed to optimize the product candidate’s pharmacokinetics and pharmacodynamics in order to improve treatment outcomes. The CONTEPO development program has focused on obtaining marketing approval in the United States for the treatment of cUTIs, including AP.

License Agreement with Sinovant Sciences, Ltd.

In March 2018, we entered into a license agreement, or the Sinovant License Agreement, with Sinovant, to develop and commercialize XENLETA in the greater China region. As part of the Sinovant License Agreement, Nabriva Therapeutics Ireland DAC and Nabriva Therapeutics GmbH, our wholly owned subsidiaries, granted Sinovant an exclusive license to develop and commercialize, and a non exclusive license to manufacture, certain products containing XENLETA, or the Sinovant Licensed Products, in the People’s Republic of China, Hong Kong, Macau, and Taiwan, which we refer to collectively as the Sinovant Territory. We retain development and commercialization rights in the rest of the world.

Under the Sinovant License Agreement, Sinovant and our subsidiaries have established a joint development committee, or the JDC, to review and oversee development and commercialization plans in the Sinovant Territory. We received a $5.0 million upfront payment pursuant to the terms of the Sinovant License Agreement and were initially eligible for up to an additional $91.5 million in milestone payments upon the achievement of certain regulatory and commercial milestone events related to lefamulin for CABP, plus an additional $4.0 million in milestone payments if any Sinovant Licensed Product receives a second or any subsequent regulatory approval in the People’s Republic of China. The first milestone was a $1.5 million payment for the submission of a Clinical Trial Application, or CTA, by Sinovant to the Chinese Food and Drug Administration that was received in February 2019. We received an additional $5.0 million milestone payment from Sinovant in the third quarter of 2019 due to the receipt of approval for XENLETA from the FDA in August 2019. The remaining milestone payments of up to $86.5 million are tied to additional regulatory approvals and annual sales targets. In addition, we are eligible to receive low double-digit royalties on sales, if any, of Sinovant Licensed Products in the Sinovant Territory.

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Sinovant will be solely responsible for all costs related to developing, obtaining regulatory approval of and commercializing Sinovant Licensed Products in the Sinovant Territory and is obligated to use commercially reasonable efforts to develop, obtain regulatory approval for, and commercialize Sinovant Licensed Product in the Sinovant Territory. We are obligated to use commercially reasonable efforts to supply, pursuant to supply agreements to be negotiated by the parties, to Sinovant sufficient supply of lefamulin for Sinovant to manufacture finished drug products for development and commercialization of the Sinovant Licensed Products in the Sinovant Territory.

Unless earlier terminated, the Sinovant License Agreement will expire upon the expiration of the last royalty term for the last Sinovant Licensed Product in the Sinovant Territory, which we expect will occur in 2033. Following the expiration of the last royalty term, the license granted to Sinovant will become non-exclusive, fully-paid, royalty-free and irrevocable. The Sinovant License Agreement may be terminated in its entirety by Sinovant upon 180 days’ prior written notice at any time. Either party may, subject to specified cure periods, terminate the Sinovant License Agreement in the event of the other party’s uncured material breach. Either party may also terminate the Sinovant License Agreement under specified circumstances relating to the other party’s insolvency. We have the right to terminate the Sinovant License Agreement immediately if Sinovant does not reach certain development milestones by certain specified dates (subject to specified cure periods). The Sinovant License Agreement contemplates that the we will enter into ancillary agreements with Sinovant, including clinical and commercial supply agreements and a pharmacovigilance agreement.

In recognition of the rising rates of bacterial resistance in China and because CABP is commonly associated with acute respiratory viruses infections, including influenza and coronavirus, and based on XENLETA’s robust safety and efficacy data in the treatment of patients with CABP generated globally and in China, Sinovant is in active discussions with China’s National Medical Products Administration to expedite development activities and regulatory filings for lefamulin in mainland China.

License Agreement with Sunovion Pharmaceutics Canada Inc.

In March 2019, we entered into a license and commercialization agreement, or the Sunovion License Agreement, with Sunovion Pharmaceuticals Canada Inc., or Sunovion. As part of the Sunovion License Agreement, Nabriva Therapeutics Ireland DAC, our wholly owned subsidiary, granted Sunovion an exclusive license under certain patent rights, trademark rights and know-how to commercialize certain products containing XENLETA in the forms clinically developed by us or any of our affiliates, or the Sunovion Licensed Products, in Canada in all uses in humans in CABP and in any other indication for which the Sunovion Licensed Products have received regulatory approval in Canada.

We have identified the delivery of the exclusive license to Sunovion as the one material performance obligation at inception. We have determined that the Sunovion License Agreement provides for a distinct license of functional intellectual property that Sunovion has obtained control of. The non-refundable upfront payment of $1.0 million that we received in connection with the Sunovion License Agreement was allocated entirely to the delivery of the license.

On November 7, 2019, through Sunovion, we have submitted a New Drug Submission (“NDS”). Health Canada determined there was a screening deficiency in December 2019 and a response from us/Sunovion was provided on December 18, 2019 and acknowledged by Health Canada on January 13, 2020. The NDS approval has occurred on July 10, 2020 and a regulatory milestone payment of $0.5 million has become payable to us. Any future regulatory and commercial milestone payments under the Sunovion License Agreement will be recorded during the period the milestone is probable of achievement.

Sales Promotion and Distribution Agreement with Merck & Co., Inc.

In July 2020, we entered into a Sales Promotion and Distribution Agreement, or the Distribution Agreement, with subsidiaries of Merck pursuant to which we licensed the right, subject to specified conditions, to promote, distribute and sell SIVEXTRO for acute bacterial skin and skin structure infections, or ABSSIs, caused by certain susceptible Gram-positive microorganisms in the United States and its territories, or the Territory.

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Under the Distribution Agreement and subject to the fulfillment of certain conditions, including our engaging sufficient sales representatives, restrictions relating to travel and physician office access in the Territory due to COVID-19 having continued to decrease in a sufficient portion of the Territory so as not to hinder the successful detailing of SIVEXTRO, we have been granted the right to initially promote SIVEXTRO in the Territory and, upon satisfaction of additional conditions, including an increase in the number of our sales representatives, the right to exclusively distribute SIVEXTRO in the Territory, including the sole right and responsibility to fill orders with respect to SIVEXTRO in the Territory.

Before we are permitted to sell SIVEXTRO under the Distribution Agreement, we will be required to secure a sales force and the restrictions related to COVID-19 must be eased in a sufficient manner to permit us to promote and distribute SIVEXTRO. Re-securing a sales force for the promotion and distribution of SIVEXTRO will result in significant additional expense and our efforts to secure a sales force may not be successful.

Financial Operations Overview

Revenue

In September 2019 we had our commercial launch of XENLETA. For the six months ended June 30, 2020, we recorded $0.4 million of product revenue, gross and $0.2 million of product revenues, net of gross-to-net accruals. In the second quarter of 2020, we recorded a $0.3 million returns reserve adjustment for slow moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors, partly offset by a $0.2 million reversal of gross-to-net accruals, resulting in $0.1 million product revenue, net for the six months ended June 30, 2020. Future product revenues will be generated by the amount and frequency of reorders from our wholesale customers based on the ultimate consumption patterns from the end users of XENLETA. Our distribution partners continue to primarily utilize their existing inventory to satisfy product demand which in turn impacted sales in the first six months of 2020. In response to the COVID-19 pandemic, we closed our administrative offices and shifted to a remote working business model. We have implemented a work-from-home policy for all of our employees, and we may take further actions that alter our operations as may be required by federal, state, or local authorities, or which we determine are in our best interests. The commercial and medical organizations have suspended in-person interactions with physicians and customers and are restricted to conducting educational and promotional activities virtually for the foreseeable future. In addition, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort. The restructuring resulted in the termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales force leadership team. Following the termination of the operational restrictions related to COVID-19, we plan to implement a new sales initiative for the community to replace our hospital-based sale force. However, we have not determined when we would retain such a community-based effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, future sales in 2020 are uncertain.

Our revenues for the six months ended June 30, 2020 included governmental research premiums, non-refundable government grants, collaboration revenues and the benefit of government loans at below-market interest rates, which are more fully described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2019.

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Research and Development Expenses

Research and development expenses represented 36.8% and 31.9% of our total operating expenses for the six months ended June 30, 2019 and 2020, respectively.

For each of our research and development programs, we incur both direct and indirect expenses. Direct expenses include third party expenses related to these programs such as expenses for manufacturing services (prior to our products receiving FDA approval, after which time these costs are capitalized in inventory until product is sold), non clinical and clinical studies and other third party development services. Indirect expenses include salaries and related costs, including stock based compensation, for personnel in research and development functions, infrastructure costs allocated to research and development operations, costs associated with obtaining and maintaining intellectual property associated with our research and development operations, laboratory consumables, consulting fees related to research and development activities and other overhead costs. We utilize our research and development staff and infrastructure resources across multiple programs, and many of our indirect costs historically have not been specifically attributable to a single program. Accordingly, we cannot state precisely our total indirect costs incurred on a program by program basis.

The following table summarizes our direct research and development expenses by program and our indirect costs.


	Six Months Ended
	June 30,
(in thousands)	2019		2020
Direct Costs
XENLETA	$	5,659	$	3,868
CONTEPO		2,115		496
NDA filing fee refund		(2,589)		—
Other programs and initiatives		505		641
Indirect Costs		9,922		6,439
Total	$	15,612	$	11,444

We expect to continue to incur research and development expenses in connection with required regulatory activities, our activities related to our ongoing pediatric studies of lefamulin for the treatment of CABP and of CONTEPO for the treatment of cUTI, and may incur costs related to the pursuit of the clinical development of lefamulin and CONTEPO for additional indications and engagement in earlier stage research and development activities. It is difficult to estimate the duration and completion costs of our research and development programs.

The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of:

●

the efficacy and potential advantages of our product candidates compared to alternative treatments, including any standard of care, and our ability to achieve market acceptance for any of our product candidates that receive marketing approval;

●

the costs and timing of commercialization activities, including product sales, marketing, distribution and manufacturing, for any of our product candidates that receive marketing approval;

●

the costs, timing and outcome of regulatory review of our product candidates;

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the scope, progress, costs and results of clinical trials and other research and development activities; and

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the costs and timing of preparing, filing and prosecuting patent applications, maintaining, enforcing and protecting our intellectual property rights and defending against any intellectual property-related claims.

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A change in the outcome of any of these variables with respect to the development of our product candidates could result in a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or another regulatory authority were to require us to conduct clinical trials or other testing beyond those that we have completed or currently contemplate will be required for the completion of clinical development of any product candidate, we could be required to expend significant additional resources and time on the completion of clinical development of that product candidate.

Selling, General and Administrative Expenses

Selling, general and administrative expenses represented 63.2% and 67.1% of our total operating expenses for the six months ended June 30, 2019 and 2020, respectively.

Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation not related to research and development activities for personnel in our finance, information technology, commercial, medical affairs and administrative functions. Selling, general and administrative expenses also include costs related to professional fees for auditors, lawyers and tax advisors and consulting fees not related to research and development operations, as well as functions that are partly or fully outsourced by us, such as accounting, payroll processing and information technology.

We expect selling, general and administrative costs to decrease for the remainder of 2020 primarily due to the recent downsizing of our field selling staff. We expect our reduction in sales personnel to result in a savings of approximately $4.5 million in quarterly cash operating expenses, until we replace the hospital-based sales force with a community-based sales effort. We have incurred $676,000 of selling, general and administrative expense related to the reduction in personnel, consisting of severance, benefits and related costs, all of which occurred in the second quarter of 2020. As of the date of this filing, we have substantially completed the workforce reduction. We recently secured a virtual and in-person community-based sales effort with Amplity Health for the promotion of XENLETA and SIVEXTRO, however we have not determined when we would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2019. During the six months ended June 30, 2020, there were no material changes to our critical accounting policies.

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Results of Operations

Comparison of Three Months Ended June 30, 2019 and 2020


	Three Months Ended June 30,
(in thousands)	2019		2020		Change
Consolidated Operations Data:
Revenues	$	525	$	487	$	(38)
Costs and Expenses:
Cost of product sales		—		(368)		(368)
Research and development expenses		(8,074)		(6,500)		1,574
Selling, general and administrative expenses		(13,427)		(8,072)		5,355
Total operating expenses		(21,501)		(14,940)		6,561
Loss from operations		(20,976)		(14,453)		6,523
Other income (expense):
Other income (expense), net		56		(634)		(690)
Interest income (expense), net		(832)		(235)		597
Loss before income taxes		(21,752)		(15,322)		6,430
Income tax benefit (expense)		45		(119)		(164)
Net loss	$	(21,707)	$	(15,441)	$	6,266

Revenues

Revenues were $0.5 million for the three months ended June 30, 2019 and $0.5 million for the three months ended June 30, 2020, primarily due to grant revenues. For the three months ended June 30, 2020 we recorded $0.1 million of product revenue, net of gross-to-net accruals. In addition, we recorded a $0.3 million returns reserve adjustment for slow moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors, partly offset by a favorable $0.2 million gross-to-net adjustment, resulting in $48 thousand of negative product revenue, net for the three months ended June 30, 2020.

Cost of Product Sales

Cost of product sales primarily represents direct and indirect manufacturing costs of our XENLETA product. Prior to the FDA approval of XENLETA on August 19, 2019, the inventory costs for the product were expensed as research and development expenses since the approval was outside of our control and therefore not considered probable. As such, the majority of the expenses incurred for our initial inventories of XENLETA has been previously expensed. As a result, we anticipate that our cost of product sales will remain at relatively low levels for a period of time until our initial pre-launch inventory stock has been distributed by our customers based on end user consumption demand. During the three months ended June 30, 2020 we recorded a $0.4 million non-cash reserve for excess and obsolete inventory due to the uncertainty of commercial activities underlying XENLETA sales.

Research and Development Expenses

Research and development expenses decreased by $1.6 million from $8.1 million for the three months ended June 30, 2019 to $6.5 million for the three months ended June 30, 2020. The decrease was primarily due to a $0.9 million decrease in staff costs, a $0.5 million decrease in research consulting fees, and a $0.1 million decrease in travel costs.

Selling, General and Administrative Expenses

Selling, general and administrative expense decreased by $5.3 million from $13.4 million for the three months ended June 30, 2019 to $8.1 million for the three months ended June 30, 2020. The decrease was primarily due to a $4.5 million decrease in advisory and external consultancy expenses primarily related to pre-commercialization activities and

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professional service fees in 2019, a $0.5 million decrease in staff costs due to the termination of employees, a $0.4 million decrease in travel expenses and a $0.4 million decrease in infrastructure costs, partly offset by a $0.4 million increase in legal fees.

Other Income (Expense), net

Other income (expense), net, increased by $0.7 million for the three months ended June 30, 2020, primarily due to remeasurements of our foreign currency account balances.

Interest Income (Expense), net

Interest income (expense), net decreased by $0.6 million due the incurrence of indebtedness under our term loan, or the Loan Agreement, with Hercules in December 2018 and the reduction of related interest expenses. See Note 6 to the unaudited consolidated financial statements included elsewhere in this Form 10-Q for further information.

Income Tax Benefits (Expense)

Our income tax benefit was $45 thousand for the three months ended June 30, 2019 and our income tax expense was $0.1 million for the three months ended June 30, 2020.

Comparison of Six Months Ended June 30, 2019 and 2020


	Six Months Ended June 30,
(in thousands)	2019		2020		Change
Consolidated Operations Data:
Revenues	$	2,228	$	1,276	$	(952)
Costs and Expenses:
Cost of product sales		—		(376)		(376)
Research and development expenses		(15,612)		(11,444)		4,168
Selling, general and administrative expenses		(26,836)		(24,097)		2,739
Total operating expenses		(42,448)		(35,917)		6,531
Loss from operations		(40,220)		(34,641)		5,579
Other income (expense):
Other income (expense), net		126		164		38
Interest income (expense), net		(1,721)		(1,195)		526
Loss on extinguishment of debt		—		(2,757)		(2,757)
Loss before income taxes		(41,815)		(38,429)		3,386
Income tax expense		(109)		(271)		(162)
Net loss	$	(41,924)	$	(38,700)	$	3,224

Revenues

Revenues decreased by $1.0 million from $2.2 million for the six months ended June 30, 2019 to $1.3 million for the six months ended June 30, 2020, primarily due a $0.8 million decrease in collaboration revenue and a $0.2 million decrease in grant revenue, offset by a $0.1 million increase in product revenue, net associated with the launch of XENLETA. For the six months ended June 30, 2020 we recorded $0.2 million of product revenue, net of gross-to-net accruals. In addition, we recorded a $0.3 million returns reserve adjustment for slow moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors, partly offset by a favorable $0.2 million gross-to-net adjustment, resulting in $0.1 million product revenue, net for the six months ended June 30, 2020.

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Cost of Product Sales

Cost of product sales primarily represents direct and indirect manufacturing costs of our XENLETA product. Prior to the FDA approval of XENLETA on August 19, 2019, the inventory costs for the product were expensed as research and development expenses since the approval was outside of our control and therefore not considered probable. As such, the majority of the expenses incurred for our initial inventories of XENLETA has been previously expensed. As a result, we anticipate that our cost of product sales will remain at relatively low levels for a period of time until our initial pre-launch inventory stock has been distributed by our customers based on end user consumption demand. During the six months ended June 30, 2020 we recorded a $0.4 million non-cash reserve for excess and obsolete inventory due to the uncertainty of commercial activities underlying XENLETA sales.

Research and Development Expenses

Research and development expenses decreased by $4.2 million from $15.6 million for the six months ended June 30, 2019 to $11.4 million for the six months ended June 30, 2020. The decrease was primarily due to a $3.0 million decrease in research materials and purchased services related to the development of XENLETA, a $1.7 million decrease in research consulting fees, a $1.8 million decrease in staff costs and a $0.2 million decrease in travel and infrastructure costs, partly offset by a $2.6 million refund of NDA filing fees for our product candidate, CONTEPO in 2019.

Selling, General and Administrative Expenses

Selling, general and administrative expense decreased by $2.7 million from $26.8 million for the six months ended June 30, 2019 to $24.1 million for the six months ended June 30, 2020. The decrease was primarily due to a $5.2 million decrease in advisory and external consultancy expenses primarily related to pre-commercialization activities and professional service fees in 2019, a $0.7 million decrease in stock-based compensation expense and a $0.1 million decrease in other corporate costs, partly offset by a $0.3 million increase in legal fees and a $3.0 million increase in staff costs due to the addition of employees, prior to our reduction in sales force in April 2020.

Other Income (Expense), net

Other income (expense), net, decreased by $38 thousand for the six months ended June 30, 2020, primarily due to remeasurements of our foreign currency account balances.

Interest Income (Expense), net

Interest income (expense), net decreased by $0.5 million due the incurrence of indebtedness under our term loan, or the Loan Agreement, with Hercules in December 2018 and the reduction of related interest expenses. See Note 6 to the unaudited consolidated financial statements included elsewhere in this Form 10-Q for further information.

Income Tax Expense

Our income tax expense was $0.1 million for the six months ended June 30, 2019 and $0.3 million for the six months ended June 30, 2020, respectively.

Loss on Extinguishment of Debt

In connection with the third amendment to our Loan Agreement with Hercules, we recognized a non-cash $2.7 million loss on the extinguishment of debt during the six months ended June 30, 2020, which represents the excess of the reacquisition price of the $30.0 million debt repaid over the net carrying amount of the extinguished debt.

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Liquidity and Capital Resources

Since our inception, we have incurred net losses and generated negative cash flows from our operations. To date, we have financed our operations through the sale of equity securities, convertible and term debt financings, research and development support from governmental grants and loans and proceeds from licensing agreements.

In May 2020, we entered into a securities purchase agreement with certain institutional investors, including Fidelity Management & Research Company, LLC, pursuant to which we issued and sold in a registered direct offering an aggregate of 41,445,373 ordinary shares and accompanying warrants to purchase up to an aggregate of 41,445,373 ordinary shares. Each share was issued and sold together with an accompanying warrant at a combined price of $0.91686 per security. The gross proceeds to us from the offering, before deducting the placement agent’s fees and other estimated offering expenses payable by us were $38.0 million. Each warrant has an exercise price of $0.792 per share, is immediately exercisable and will expire on the two-year anniversary of the issuance date.

In December 2019, we entered into a securities purchase agreement with certain institutional investors pursuant to which we agreed to issue and sell in a registered direct offering an aggregate of 13,793,106 ordinary shares and accompanying warrants to purchase up to an aggregate of 13,793,106 ordinary shares. Each share in the offering was issued and sold together with an accompanying warrant at a combined price of $1.45 per security. The gross proceeds to us from the offering, before deducting the placement agent’s fees and other offering expenses payable by us, was $20.0 million. Each warrant has an exercise price of $1.90 per share, is initially exercisable six months following the date of issuance, which was December 24, 2019, and will expire on the three-year anniversary of the date on which the warrant becomes initially exercisable.

On June 25, 2019, we entered into an Open Market Sale Agreement^SM, or the Jefferies ATM Agreement, with Jefferies LLC, or Jefferies, as agent, pursuant to which, from time to time, we may offer and sell ordinary shares for aggregate gross sale proceeds of up to $50.0 million through Jefferies by any method permitted that is deemed an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. As of June 30, 2020, we sold and issued an aggregate of 13,117,034 ordinary shares pursuant to the Jefferies ATM Agreement and received gross proceeds of $18.0 million and net proceeds of $17.2 million, after deducting commissions to Jefferies and other offering expenses. During the three months ended June 30, 2020, we sold and issued an aggregate of 6,133,108 ordinary shares pursuant to the Jefferies ATM Agreement and received gross proceeds of $3.4 million and net proceeds of $3.3 million, after deducting commissions to Jefferies and other offering expenses. We have not sold or issued any ordinary shares pursuant to the Jefferies ATM Agreement from June 30, 2020 and through the date of this filing.

In December 2018, we announced the closing of up to a $75.0 million term loan with Hercules, or the Loan Agreement, $25.0 million of which was funded on the day of closing. Under the terms of the loan, in addition to the $25.0 million received at closing, we borrowed an additional $10.0 million in connection with the approval by the FDA of the NDA for XENLETA. In March 2020, we repaid Hercules $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement. See Note 6 to the unaudited consolidated financial statements included elsewhere in this Form 10-Q for additional information on the terms associated with the remaining term loans potentially available to us and the costs and other conditions associated with this funding source.

As of June 30, 2020, we had cash and cash equivalents, restricted cash and short-term investments of $50.1 million.

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Cash Flows

The following table summarizes our cash flows for the six months ended June 30, 2019 and 2020:


	Six Months Ended June 30,
(in thousands)	2019		2020
Net cash (used in) provided by:
Operating activities	$	(41,670)	$	(45,372)
Investing activities		(57)		(248)
Financing activities		13,428		9,168
Effects of foreign currency translation on cash		40		(70)
Net decrease in cash, cash equivalents and restricted cash	$	(28,259)	$	(36,522)

Operating Activities

Cash flow used in operating activities increased by $3.7 million from $41.7 million for the six months ended June 30, 2019 to $45.4 million for the six months ended June 30, 2020 primarily due to a $5.2 million decrease in net loss, after adjustments for the impact of non-cash amounts included in net loss in both periods, offset by a higher working capital of $8.9 million primarily due to decreases in accrued expenses and other current liabilities.

Investing Activities

Cash flow used in investing activities for the purchase of property and equipment was $0.1 million for the six months ended June 30, 2020.

Financing Activities

Cash flow generated from financing activities for the six months ended June 30, 2020 was $9.2 million, primarily from total net proceeds of approximately $39.1 million from the securities purchase agreement entered into in May 2020, as well as our ATM Agreement, partly offset by the repayment of $30.0 million of long-term borrowings on our debt facility in the six months ended June 30, 2020.

Operating and Capital Expenditure Requirements

We anticipate that our expenses will increase as we expect to incur additional significant commercialization expenses related to product sales, marketing, distribution and manufacturing. In addition, our expenses will increase if we suffer any regulatory delays or are required to conduct additional clinical trials to satisfy regulatory requirements.

In addition, our expenses will increase if and as we:

●

expand our medical affairs, sales, marketing and distribution infrastructure and build up inventory of finished product and its components to commercialize any product candidates for which we have or may receive marketing approval, including for SIVEXTRO;

●

establish and expand manufacturing arrangements with third parties;

●

initiate or continue the research and development of lefamulin and CONTEPO for additional indications and of our other product candidates;

●

seek to discover and develop additional product candidates;

●

seek marketing approval for any product candidates that successfully complete clinical development

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in-license or acquire other products, product candidates or technologies, including additional community products;;

●

maintain, expand and protect our intellectual property portfolio;

●

expand our physical presence in the United States and Ireland; and,

●

add operational, financial and management information systems and personnel, including personnel to support our product development, our operations as a public company and our planned commercialization efforts.

As described above, on March 11, 2020, we entered into an Amendment to our Loan Agreement with Hercules. Pursuant to the Amendment, we repaid Hercules in March 2020, $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement, which we refer to as the Prepayment. Under the Amendment, we and Hercules agreed to defer the end of term loan charge payment in the amount of approximately $2.1 million that would have otherwise become payable on the date of the Prepayment and to reduce the prepayment charge with respect to the Prepayment from $600,000 to $300,000 and to defer its payment, in each case, until June 1, 2023 or such earlier date on which all loans under the Loan Agreement are repaid or become due and payable. The Amendment also reset the revenue performance covenant to 70% of targeted revenue based on a revised net product revenue forecast and lowered our minimum liquidity requirement to $3.0 million in cash and cash equivalents, in each case, following the Prepayment. The new minimum liquidity requirement will not apply if CONTEPO receives regulatory approval from the U.S. Food and Drug Administration and we achieve at least 70% of our revised net product revenue targets under the Loan Agreement. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, future sales in 2020 are uncertain. Based on our current operating plans, we expect that our existing cash resources will be sufficient to enable us to fund our operations, debt service obligations and capital expenditure requirements into the first quarter of 2021. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. This estimate assumes, among other things, that we do not obtain any additional funding through grants and clinical trial support, collaboration agreements, or equity or debt financings. This estimate also assumes that we remain in compliance with the covenants and no event of default occurs under the Loan Agreement.

Our future capital requirements will depend on many factors, including:

●

the costs and timing of process development and manufacturing scale-up activities associated with XENLETA and CONTEPO;

●

the costs to secure supply of SIVEXTRO and costs to sell and market the product in the U.S.;

●

the costs, timing and outcome of regulatory review of lefamulin in Europe and for any other indications and CONTEPO;

●

the costs of commercialization activities for XENLETA, SIVEXTRO and potentially CONTEPO if we receive marketing approval, including the costs and timing of establishing product sales, marketing, distribution and outsourced manufacturing capabilities, including the costs of building finished product inventory and its components in preparation of initial marketing of CONTEPO, if approved;

●

the commercial success of XENLETA and SIVEXTRO and the amount and frequency of reorders by our wholesale customers;

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subject to the resubmission of the CONTEPO NDA and potential receipt of marketing approval, revenue received from commercial sales of CONTEPO;

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the costs of developing XENLETA and CONTEPO for the treatment of additional indications;

●

the impact of the COVID-19 pandemic;

●

our ability to establish collaborations on favorable terms, if at all;

●

the scope, progress, results and costs of product development of any other product candidates that we may develop;

●

the extent to which we in-license or acquire rights to other products, product candidates or technologies, including additional community products;

●

the costs related to the promotion, sale and distribution of the products under our distribution agreement with Merck & Co., Inc.;

●

the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property-related claims;

●

the continued availability of Austrian governmental grants;

●

the need to satisfy interest and principal obligations under our Loan Agreement with Hercules as well as the covenants contained in our Loan Agreement;

●

the rate of the expansion of our physical presence in the United States and Ireland; and

●

the costs of operating as a public company in the United States.

Our commercial revenues, if any, will be derived from sales of XENLETA, SIVEXTRO, CONTEPO or any other products that we successfully develop, in-license or acquire. In addition, XENLETA, SIVEXTRO and, if approved, CONTEPO or any other product candidate that we develop, in-license or acquire may not achieve commercial success. Accordingly, we will need to obtain substantial additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, and funding from local and international government entities and non-government organizations in the disease areas addressed by our product candidates and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity, warrants or convertible debt securities, the ownership interest of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our shareholders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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In addition, as part of our corporate strategy, we continue to evaluate business development opportunities and potential collaborations. We may further expand our product pipeline through opportunistically in licensing or acquiring the rights to complementary products, product candidates and technologies for the treatment of a range of infectious diseases or other products that we would market with our commercial infrastructure, including additional community products, which could involve an acquisition of or combination or other strategic transaction with another operating business. To the extent any additional business development opportunity is consummated, our capital expenditures may increase significantly.

Capital Expenditures

Capital expenditures were $57 thousand and $85 thousand for the six months ended June 30, 2019 and 2020, respectively. We made no significant investments in intangible assets during the six months ended June 30, 2019 and 2020.

Currently, there are no material capital projects planned in 2020.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, other than our operating lease obligations for our facilities in Austria and the United States.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a variety of financial risks in the ordinary course of our business: market risk, credit risk and liquidity risk. Our overall risk management program focuses on preservation of capital given the unpredictability of financial markets. These market risks are principally limited to interest rate and foreign currency fluctuations.

Market Risk

We do not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds (bank accounts, cash balances, marketable securities and term deposits) is limited because the counterparties are banks with high credit ratings from international credit rating agencies. The primary objective of our investment activities is to preserve principal and liquidity while maximizing income without significantly increasing risk. We do not enter into investments for trading or speculative purposes.

We are exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the euro and the British pound. Our functional currency is the U.S. dollar, but we receive payments and acquire materials, in each of these other currencies. We have not established any formal practice to manage the foreign exchange risk against our functional currency. However, we attempt to minimize our net exposure by buying or selling foreign currencies at spot rates upon receipt of new funds to facilitate committed or anticipated foreign currency transactions.

Interest rate risk may arise from short-term or long-term debt. Our outstanding indebtedness with Hercules bears interest at the greater of 9.80% and 9.80% plus the prime rate of interest minus 5.50%. Based on the current prime rate, our outstanding indebtedness with Hercules bears interest at 9.80%. If the prime rate increases to over 5.50%, the interest on our loan with Hercules will increase.

Liquidity Risk

Since our inception, we have incurred net losses and generated negative cash flows from our operations. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, future sales in 2020 are uncertain. We anticipate based on our current operating plans, that our existing cash, cash equivalents and short-term investments as of the date of this filing will be sufficient to enable us to fund our operating expenses, debt service obligations and capital expenditure requirements into the first quarter of 2021.

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We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. This estimate assumes, among other things, that we do not obtain any additional funding through grants and clinical trial support, collaboration agreements or equity or debt financings.

We expect to continue to invest in critical commercial and medical affairs activities, as well as investing in our supply chain for the commercialization of XENLETA, SIVEXTRO and the potential launch of CONTEPO. We expect to seek additional funding in future periods to support these activities.

If we obtain marketing approval for CONTEPO or any other product candidate that we develop, in-license or acquire, we expect to incur significant additional commercialization expenses related to distribution and manufacturing. Our expenses will increase if we suffer any delays in our clinical programs, including regulatory delays, or are required to conduct additional clinical trials to satisfy regulatory requirements.

There can be no assurance that we will be successful in acquiring additional capital at a level sufficient to fund our operations or on terms favorable to us. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce to eliminate our research and development programs or our commercialization efforts.

ITEM 4. CONTROLS AND PROCEDURES

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) under the supervision and the participation of the company’s management, which is responsible for the management of the internal controls, and which includes our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation of our disclosure controls and procedures as of June 30, 2020, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that occurred during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

You should consider carefully the risks and uncertainties described below, together with all of the other information in this Form 10-Q. If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected. The risks described below are not the only risks facing us. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, results of operations and/or prospects.

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Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception. We expect to incur losses for at least the next several years and may never generate profits from operations or maintain profitability.

Since inception, we have incurred significant operating losses. Our net losses were $38.7 million for the six months ended June 30, 2020, $82.8 million for the year ended December 31, 2019 and $114.8 million for the year ended December 31, 2018. As of June 30, 2020, we had an accumulated deficit of $515.4 million. To date, we have financed our operations primarily through the sale of our equity securities, convertible and term debt financings and research and development support from governmental grants and loans and proceeds from our licensing agreements. We have devoted most of our efforts to research and development, including clinical trials and preparation for the commercial sale of our products. We have only recently begun to commercialize our first product, XENLETA (lefamulin), and have not developed any other drugs that have received regulatory approval. XENLETA is approved in the United States for the treatment of community-acquired bacterial pneumonia, or CABP, in adults. In July 2020, we entered into a Sales Promotion and Distribution Agreement, with subsidiaries of Merck pursuant to which we licensed the right, subject to specified conditions, to promote, distribute and sell SIVEXTRO for acute bacterial skin and skin structure infections, or ABSSIs, caused by certain susceptible Gram-positive microorganisms in the United States and its territories, or the Territory. We recently terminated our entire sales force and we secured a virtual and in-person community-based sales effort with Amplity Health, however we have not determined when we would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years, including in connection with our regulatory approval efforts, supply chain investments and commercialization of XENLETA, the promotion and distribution efforts for SIVEXTRO, and, if it receives marketing approval, CONTEPO. The net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year.

We expect to continue to invest in critical commercial promotion and distribution, medical affairs and other commercialization activities, as well as investing in our supply chain for the commercialization of XENLETA, SIVEXTRO and the potential launch of CONTEPO. We expect to seek additional funding in future periods to support these activities. In December 2019, we resubmitted the NDA for CONTEPO. On June 19, 2020 we received a second Complete Response Letter from the FDA. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. We cannot predict the outcome of any interactions with the FDA or when CONTEPO will receive marketing approval, if at all. Our contract manufacturers plan to interact with FDA to discuss its plans for conducting inspections at their sites. If we obtain marketing approval of CONTEPO for cUTI, including AP, or another indication, we also expect to incur significant additional sales, marketing, distribution and manufacturing expenses.

On July 24, 2018, we completed our acquisition, or the Acquisition of Zavante. Upfront consideration in connection with the Acquisition was 8,152,092 of our ordinary shares, including the 815,186 ordinary shares that were initially held back but which were issued in July 2019 upon release of the Holdback Shares pursuant to the terms of the Agreement and Plan of Merger, dated July 23, 2018, or the Merger Agreement. Pursuant to the Merger Agreement, former Zavante stockholders are also entitled to receive from us up to $97.5 million in contingent consideration, consisting of the Approval Milestone Payment and the Net Sales Milestone Payment (each as defined below), subject to the terms and conditions of the Merger Agreement. In connection with the Acquisition, we assumed certain payment obligations under the Stock Purchase Agreement and Zavante manufacturing agreements acquired in the Acquisition. See “— Risks Related to Our Acquisition of Zavante—We may fail to realize the anticipated benefits of our Acquisition of Zavante, those benefits may take longer to realize than expected, and we may encounter significant integration difficulties.”

In addition, our expenses will increase if and as we:

●

initiate or continue the research and development of XENLETA and CONTEPO for additional indications and of our other product candidates;

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seek to develop additional product candidates;

●

seek marketing approval for any product candidates that successfully complete clinical development;

●

are required by the FDA, EMA or other regulators to conduct additional clinical trials prior to or after approval;

●

continue to build or re-build a medical affairs, sales, marketing and distribution infrastructure and scale up manufacturing capabilities to commercialize XENLETA, SIVEXTRO and any other product candidates for which we receive marketing approval;

●

in-license or acquire other products, product candidates or technologies, including additional community products;

●

maintain, expand and protect our intellectual property portfolio;

●

expand our physical presence in the United States and Ireland;

●

incur additional debt;

●

establish and expand manufacturing arrangements with third parties; and

●

add operational, financial and management information systems and personnel, including personnel to support our product development, our operations as a larger company following the Acquisition and our operations as a public company in addition to our commercialization efforts.

Our ability to generate profits from operations, and to become and remain profitable, depends on our ability to successfully develop and commercialize drugs that generate significant revenue. Based on our current plans, we do not expect to generate significant revenue unless and until we obtain marketing approval for CONTEPO, and successfully commercialize XENLETA and CONTEPO and begin to actively promote SIVEXTRO. On June 19, 2020 we received a second Complete Response Letter from the FDA in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. Our contract manufacturers plan to interact with FDA to discuss its plans for conducting inspections at their sites. We cannot predict the outcome of any interactions with the FDA or when CONTEPO will receive marketing approval, if at all. In April 2020, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort. This restructuring is intended to reduce costs and to align the capabilities of our sales effort with our strategic re-focus on making sales of XENLETA to community health care professionals, This restructuring resulted in the termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales force leadership team. Our ability to generate significant revenue will require us to be successful in a range of challenging activities, including:

●

securing a community-based sales effort;

●

obtaining marketing approval for CONTEPO;

●

establishing and maintaining medical affairs, sales, marketing and distribution capabilities to effectively market and sell XENLETA, SIVEXTRO and CONTEPO, if approved, in the United States;

●

establishing and maintaining collaboration, distribution or other marketing arrangements with third parties to commercialize XENLETA in markets outside the United States;

●

protecting our rights to our intellectual property portfolio related to XENLETA and CONTEPO;

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establishing and maintaining arrangements for the manufacture of and obtaining commercial quantities of XENLETA, SIVEXTRO and CONTEPO, if approved; and

●

negotiating and securing adequate reimbursement from third-party payors for XENLETA, SIVEXTRO and CONTEPO, if approved.

We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to generate profits from operations. Even if we do generate profits from operations, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to generate profits from operations, and to become and remain profitable, would decrease the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings, conduct commercial activities, maintain our commercial efforts or continue our operations. A decline in the value of our company could also cause our shareholders to lose all or part of their investment.

We will need substantial additional funding. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We expect to continue to incur substantial costs in connection with our ongoing activities, particularly for the commercialization of XENLETA, SIVEXTRO and seek marketing approval for CONTEPO and, possibly, other product candidates and continue our research activities. Our expenses will increase if we suffer any regulatory delays or are required to conduct additional clinical trials to satisfy regulatory requirements.

Furthermore, we expect to continue to incur additional costs to service our current debt and any potential future draws on the Loan Agreement (as defined below) and costs associated with operating as a public company and as a company with a commercial rather than a research and development focus. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. We terminated our entire sales force in April 2020 and cannot predict when we will resume in-person selling efforts. If we are unable to raise capital when needed or on attractive terms, we could be forced to further delay, reduce or eliminate our research and development programs or reduce our commercialization efforts.

On March 11, 2020, we entered into an amendment, or the Amendment, to our Loan and Security Agreement, or the Loan Agreement, with Hercules Capital, Inc., or Hercules, as administrative agent, collateral agent and lender. Pursuant to the Amendment, we repaid Hercules in March 2020, $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement, which we refer to as the Prepayment. We determined to enter into the Amendment following the effectiveness of a performance covenant in February 2020 under which we became obligated to either (1) achieve 80% of our net product revenue sales target over a trailing six-month period, or (2) maintain an amount of cash and cash equivalents in accounts pledged to Hercules plus a specified amount of eligible accounts receivables equal to the greater of the amount outstanding under the Loan Agreement or $40.0 million, which we refer to as the liquidity requirement. Under the Amendment, we and Hercules agreed to defer the end of term loan charge payment in the amount of approximately $2.1 million that would have otherwise become payable on the date of the Prepayment and to reduce the prepayment charge with respect to the Prepayment from $600,000 to $300,000 and to defer its payment, in each case, until June 1, 2023 or such earlier date on which all loans under the Loan Agreement are repaid or become due and payable. The Amendment also reset the revenue performance covenant to 70% of targeted revenue based on a revised net product revenue forecast and lowered our minimum liquidity requirement to $3.0 million in cash and cash equivalents, in each case, following the Prepayment. The new minimum liquidity requirement will not apply if CONTEPO receives regulatory approval from the U.S. Food and Drug Administration and we achieve at least 70% of our revised net product revenue targets under the Loan Agreement. In light of the COVID-19 pandemic, the associated disruption to the healthcare delivery and the uncertainty of resuming direct physician promotion, future sales in 2020 are uncertain. Based on our current operating plans, we expect that our existing cash resources will be sufficient to enable us to fund our operations, debt service obligations and capital expenditure requirements into the first quarter of 2021. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. This estimate assumes, among other things, that we do not obtain any additional funding through grants and clinical trial support, collaboration agreements, or equity or debt financings. This estimate

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also assumes that we remain in compliance with the covenants and no event of default occurs under the Loan Agreement.

Our future capital requirements will depend on many factors, including:

●

the costs and timing of process development and manufacturing scale-up activities associated with XENLETA and CONTEPO;

●

the costs, timing and outcome of regulatory review of CONTEPO;

●

the costs of commercialization activities for XENLETA, SIVEXTRO and CONTEPO if we receive marketing approval for CONTEPO, including the costs and timing of establishing product sales, marketing distribution and outsourced manufacturing capabilities, including the costs of building finished product inventory and its components in preparation of initial marketing of CONTEPO;

●

revenue received from commercial sales of XENLETA, SIVEXTRO and, subject to the resubmission of the CONTEPO NDA and potential receipt of marketing approval, CONTEPO;

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the costs of developing XENLETA and CONTEPO for the treatment of additional indications;

●

the impact of the COVID-19 pandemic;

●

our ability to establish collaborations on favorable terms, if at all;

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the scope, progress, results and costs of product development of any other product candidates that we may develop;

●

the extent to which we in-license or acquire rights to other products, product candidates or technologies, including additional community products;

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the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property-related claims;

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the continued availability of Austrian governmental grants;

●

the costs of our physical presence in the United States and Ireland;

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interest expense on our debt and the eventual repayment of our debt obligations;

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the requirement to keep minimum cash balances per the terms of our debt obligations as well as our ability to remain in compliance with our debt covenants;

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the costs of operating as a company with a commercial rather than a research and development focus; and

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the costs of operating as a public company in the United States.

Our commercial revenues will be derived from sales of XENLETA, SIVEXTRO, and from CONTEPO, if approved, or any other products that we successfully develop, in-license or acquire. XENLETA is our only product that

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is commercially available. XENLETA, SIVEXTRO or, if approved, CONTEPO or any other product candidate that we develop, in-license or acquire may not achieve commercial success. Additionally, the termination of our sales force may adversely impact our sales of XENLETA. If we fail to generate sufficient revenues from the sale of XENLETA, SIVEXTRO or the commercialization of CONTEPO or any other product candidate that we successfully develop, in-license or acquire, we will need to obtain substantial additional financing to achieve our business objectives.

Adequate additional financing may not be available to us on acceptable terms, or at all.

Raising additional capital may cause dilution to our security holders, restrict our operations or require us to relinquish certain rights to our technologies, products or product candidates.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, and funding from local and international government entities and non-government organizations in the disease areas addressed by our products or product candidates and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our security holders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our security holders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. In addition, debt service obligations under any debt financings may limit the availability of our cash for other purposes, and we may be unable to make interest payments or repay the principal of such debt financings when due.

On June 25, 2019, we entered into an Open Market Sale Agreement^SM, or the Jefferies ATM Agreement, with Jefferies LLC, or Jefferies, as agent, pursuant to which we may offer and sell ordinary shares, nominal value $0.01 per share, for aggregate gross sale proceeds of up to $50.0 million from time to time through Jefferies under an “at-the-market” offering program. As of the date of this filing, we have issued and sold an aggregate of 13,117,034 ordinary shares under the Jefferies ATM Agreement, for gross proceeds of $18.0 million, and net proceeds of $17.2 million, after deducting commissions and offering costs. We previously entered into a Controlled Equity Offering SM Sales Agreement, or the Cantor ATM Agreement, with Cantor Fitzgerald & Co. that we terminated effective as of June 24, 2019. The approximately $12.2 million of ordinary shares that had been available for sale pursuant to the Cantor ATM Agreement remained unsold at the time of its termination. If a large number of our ordinary shares is sold in the public market after they become eligible for sale or if we make additional sales under our “at-the-market” offering program, the sales could cause dilution to our security holders, reduce the trading price of our ordinary shares and impede our ability to raise future capital.

On May 29, 2020, we entered into a securities purchase agreement with certain institutional investors, including Fidelity Management & Research Company, LLC pursuant to which we issued and sold in a registered direct offering an aggregate of 41,445,373 ordinary shares and accompanying warrants to purchase up to an aggregate of 41,445,373 ordinary shares. Each share we issued and sold together with an accompanying warrant at a combined price of $0.91686. The gross proceeds to us from the offering, before deducting the placement agent’s fees and other offering expenses payable by the Company were $38.0 million. Each warrant has an exercise price of $0.792 per share, was immediately exercisable and will expire on the two-year anniversary of the exercise date.

In addition, in connection with the closing of the Acquisition, we issued 7,336,906 of our ordinary shares to former Zavante stockholders as initial upfront consideration and following the one year anniversary of the closing of the Acquisition on July 25, 2019, we issued an additional 815,186 ordinary shares to the former Zavante stockholders that

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had been subject to reduction in respect of certain indemnification and other obligations pursuant to the Merger Agreement. Such shares are able to be freely sold in the public market, subject to any requirements and restrictions, including any applicable volume limitations, imposed by Rule 144 under the Securities Act. In addition, the Merger Agreement provides that we may issue up to an additional $97.5 million in our ordinary shares to former Zavante stockholders upon the achievement of specified regulatory and commercial milestones in the future, and obligates us to provide registration rights with respect to the registration for resale of such additional ordinary shares that may become issuable upon the achievement of such milestones. The issuance of our ordinary shares to satisfy the milestone payments will cause dilution to our security holders, and the sale or resale of these shares in the public market, or the market’s expectation of such sales, may result in an immediate and substantial decline in our stock price. Such a decline would adversely affect our investors and also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

Our operations to date have been limited to organizing and staffing our company, developing and securing our technology, raising capital, undertaking preclinical studies and clinical trials of our product candidates, preparing and filing NDAs for our product candidates, and the commercial launch of XENLETA. We have not yet demonstrated our ability to conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

In addition, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. Also, we may encounter delays or difficulties in our efforts to, or fail to, successfully integrate the operations of Zavante into our business and CONTEPO into our business strategy. Moreover, we are in the process of transitioning from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make it more difficult for us to fund our operations.

As of December 31, 2019, under our Loan Agreement with Hercules, we had drawn down on the initial term loan advance under the Loan Agreement of $25.0 million and an additional $10.0 million advance that we became eligible to borrow following the approval by the FDA of the NDA for XENLETA. On March 11, 2020, we entered into the Amendment to the Loan Agreement, pursuant to which we repaid Hercules in March, $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement. As of June 30, 2020, there remains outstanding $5.0 million in principal amount under the Loan Agreement, and we may request to borrow an additional $5.0 million subject to the lender’s sole discretion.

All obligations under the Loan Agreement are secured by substantially all of our personal property, intellectual property and other assets owned or later acquired by us and our subsidiaries. This indebtedness may create additional financing risk for us, particularly if our business or prevailing financial market conditions are not conducive to paying

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off or refinancing our outstanding debt obligations at maturity. This indebtedness could also have important negative consequences, including:

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the need to repay our indebtedness by making payment of interest only initially and then interest and principal, which will reduce the amount of funds available to finance our operations, our research and development efforts and our general corporate activities; and

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our failure to comply with the restrictive covenants in the Loan Agreement or the occurrence of an event that has a material adverse effect on our business, operations, properties, assets, condition, our ability to pay any amounts due, the collateral securing our obligations under the Loan Agreement or the ability of Hercules to enforce any of its rights under the Loan Agreement could result in an event of default that, if not cured or waived, would accelerate our obligation to repay this indebtedness, and the lender could seek to enforce its security interest in the assets securing such indebtedness; and

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the need to maintain minimum cash balances under specified circumstances, which restricts our ability to invest in the business and fund our operations.

To the extent additional debt is added to our current debt levels, the risks described above could increase.

We may not have cash available to us in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due or to comply with minimum cash balance requirements.

Failure to satisfy our current and future debt obligations under the Loan Agreement, or the occurrence of a material adverse effect as defined in the Loan Agreement, could result in an event of default and, as a result, the lender under the Loan Agreement could accelerate all of the amounts due. In the event of an acceleration of amounts due under the Loan Agreement as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness. In addition, the lender could seek to enforce their security interests in the assets securing such indebtedness.

We are subject to certain restrictive covenants which, if breached, could have a material adverse effect on our business and prospects.

The Loan Agreement imposes operating and other restrictions on us. Such restrictions will affect, and in many respects limit or prohibit, our ability and the ability of any future subsidiary to, among other things:

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declare dividends or redeem or repurchase equity interests;

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incur additional indebtedness and liens;

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make loans and investments;

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engage in mergers, acquisitions and asset sales;

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undertake certain transactions with affiliates;

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undergo a change in control;

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add or change business locations; and

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settle in cash potential milestone payment obligations that may become payable by us in the future to former security holders of Zavante.

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We are also required to satisfy certain financial covenants, including an obligation to maintain specified minimum amounts of cash and cash equivalents in accounts pledged to Hercules. The Loan Agreement contained a performance covenant that became effective in February 2020 under which we became obligated to either (1) achieve 80% of our net product revenue sales target over the trailing six month period, or (2) maintain an amount of cash and cash equivalents in accounts pledged to Hercules plus a specified amount of eligible accounts receivables equal to the greater of the amount outstanding under the Loan Agreement or $40.0 million. Since we did not achieve our net product sales targets, we became obligated to maintain compliance with the liquidity requirement under the Loan Agreement. As a result, we entered into an Amendment to the Loan Agreement with Hercules. Under the Amendment, we and Hercules agreed to defer the end of term loan charge payment in the amount of approximately $2.1 million that would have otherwise become payable on the date of the Prepayment and to reduce the prepayment charge with respect to the Prepayment from $600,000 to $300,000 and to defer its payment, in each case, until June 1, 2023 or such earlier date on which all loans under the Loan Agreement are repaid or become due and payable. The Amendment also reset the revenue performance covenant to 70% of targeted revenue based on a revised net product revenue forecast and lowered our minimum liquidity requirement to $3.0 million in cash and cash equivalents. The new minimum liquidity requirement will not apply if CONTEPO receives regulatory approval from the U.S. Food and Drug Administration and we achieve at least 70% of our revised net product revenue targets under the Loan Agreement.

These restrictive covenants may prevent us from undertaking an action that we feel is in the best interests of our business. In addition, if we were to breach any of these restrictive covenants, Hercules could accelerate our indebtedness under the Loan Agreement or enforce its security interest against our assets, either of which would materially adversely affect our ability to continue to operate our business.

We and our Chief Executive Officer, Chief Medical Officer and Chief Financial Officer have been named as defendants in a lawsuit that could result in substantial costs and divert management’s attention.

On May 8, 2019, a putative class action lawsuit was filed against us and our Chief Executive Officer. The complaint generally alleged that we and our Chief Executive Officer violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements and omitting to disclose material facts concerning our submission of an NDA to the FDA for marketing approval of CONTEPO for the treatment of cUTI in the United States and the likelihood of such approval. The complaint sought unspecified damages, attorneys’ fees, and other costs. On May 22, 2019, a second putative class action lawsuit was filed against us and our Chief Executive Officer. The allegations made in that complaint were similar to those made in the May 8 complaint, and the complaint sought similar relief. On May 24, 2019, the two actions were consolidated by the court. The court appointed a lead plaintiff and approved plaintiff’s selection of lead counsel on July 22, 2019. On September 23, 2019, the plaintiff filed an amended complaint, adding our Chief Financial Officer and Chief Medical Officer as defendants. The amended complaint includes allegations similar to those made in the original complaints and seeks similar relief. Our pre-motion letter to dismiss the amended complaint was due to plaintiff on October 21, 2019, and plaintiff responded to us via letter on November 4, 2019. On November 18, 2019, we filed a pre-motion letter to dismiss with the Court, seeking leave to move to dismiss and setting forth why a motion to dismiss is warranted. On April 28, 2020, the Court dismissed the amended complaint without prejudice and granted plaintiff twenty days to show cause why the lawsuit should not be dismissed with prejudice. On May 8, 2020, the Court granted plaintiff a 21-day extension to show cause. On June 8, 2020, plaintiff filed a letter application to the court seeking leave to file a proposed second amended complaint, and on June 23, 2020, the court directed plaintiff to file the proposed second amended complaint. Plaintiff did so on June 24, 2020. We filed an answer to the second amended complaint on July 8, 2020.

We and our Chief Executive Officer, Chief Financial Officer and Chief Medical Officer deny any and all allegations of wrongdoing and intend to vigorously defend against this lawsuit. We are unable, however, to predict the outcome of this matter at this time. Moreover, any conclusion of this matter in a manner adverse to us and for which we incur substantial costs or damages not covered by our directors’ and officers’ liability insurance would have a material adverse effect on our financial condition and business. In addition, the litigation could adversely impact our reputation and divert management and our board of directors’ attention and resources from other priorities, including the execution of our business plan and strategies that are important to our ability to grow our business, any of which could have a material adverse effect on our business. Additional lawsuits may be filed.

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We have relied on, and expect to continue to rely on, certain government grants and funding from the Austrian government. Should these funds cease to be available, or our eligibility be reduced, or if we are required to repay any of these funds, this could impact our ongoing need for funding and the timeframes within which we currently expect additional funding will be required.

As a company that carried out extensive research and development activities, we have benefited from the Austrian research and development support regime, under which we were eligible to receive a research premium from the Austrian government equal to 14% (12% for the fiscal years 2016 and 2017 and 10%, in the case of fiscal years prior to 2016) of a specified research and development cost base. Qualifying expenditures largely comprised research and development activities conducted in Austria, however, the research premium was also available for certain related third-party expenses with additional limitations. We received research premiums of $2.4 million for the year ended December 31, 2018 and $4.7 million for the year ended December 31, 2017. We have not received any research premium for our qualified 2019 and 2020 expenditures as of June 30, 2020. As we expand our business outside of Austria, we may not be able to continue to claim research premiums to the same extent as we have in previous years or at all, as some research and development activities may no longer be considered to occur in Austria. As research premiums that have been paid out already may be audited by the tax authorities, there is a risk that parts of the submitted cost base may not be considered as eligible and therefore repayments may have to be made.

The intended efficiency of our corporate structure depends on the application of the tax laws and regulations in the countries where we operate, and we may have exposure to additional tax liabilities or our effective tax rate could change, which could have a material impact on our results of operations and financial position.

As a company with international operations, we are subject to income taxes, as well as non-income based taxes, in both the United States and various foreign jurisdictions. We have designed our corporate structure, the manner in which we develop and use our intellectual property, and our intercompany transactions between our subsidiaries in a way that is intended to enhance our operational and financial efficiency. The application of the tax laws and regulations of various countries in which we operate and to our global operations is subject to interpretation. We also must operate our business in a manner consistent with our corporate structure to realize such efficiencies. The tax authorities of the countries in which we operate may challenge our methodologies for valuing developed technology or for transfer pricing. If, for one or more of these reasons, tax authorities determine that the manner in which we operate results in our business not achieving the intended tax consequences, our effective tax rate could increase and harm our financial position and results of operations.

A change in the tax law in the jurisdictions in which we do business, including an increase in tax rates, an adverse change in the treatment of an item of income or expense, a decrease in tax rates in a jurisdiction in which we have significant deferred tax assets, or a new or different interpretation of applicable tax law could result in a material increase in tax expense.

Risks Related to Product Development and Commercialization

Business interruptions resulting from the SARS-CoV-2 infection causing COVID-19 outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.

Beginning in 2019, a novel strain of a virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China and has spread to countries across the world, including Ireland, Austria and the United States, where our offices and laboratory space are located. COVID-19 is causing federal, state and local governments to implement measures to slow the spread of the outbreak through quarantines, strict travel restrictions and bans, heightened border scrutiny and other measures. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services has fallen significantly.

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Public health crises such as pandemics or similar outbreaks could adversely impact our business. The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, business closures, school closures, travel restrictions and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers across the United States and in other countries including Ireland and Austria. The extent to which COVID-19 further impacts our operations or those of our third-party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, additional or modified government actions, new information that will emerge concerning the severity and impact of COVID-19 and the actions to contain COVID-19 or address its impact in the short and long term, among others.

Additionally, timely completion of clinical trials is dependent upon the availability of, for example, clinical trial sites, researchers and investigators, site monitors, screening of study subjects, regulatory agency personnel, and materials, which may be adversely affected by global health matters, such as pandemics. We are conducting a clinical trial that has been delayed by COVID-19.

In particular, shelter-in-place orders and other mandated local travel prohibitions restricted the activities of our sales force and caused us to determine to terminate our entire sales force until such prohibitions are lifted. Furthermore, while the majority of our day-to-day operations are continuing while our employees are working remotely.

We have implemented a work-from-home policy for all of our U.S. employees, and we may take further actions that alter our operations as may be required by federal, state, or local authorities, or which we determine are in our best interests. While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such as looking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work. Decreased effectiveness of our team could adversely affect our results due to our inability to meet in person with customers and physicians, or other decreases in productivity that could seriously harm our business.

The effects of COVID-19 disrupted the FDA’s review of our NDA for CONTEPO. On March 10, 2020, the FDA announced that it would restrict travel of its employees to Europe for inspections as a result of the spread of COVID-19. On June 19, 2020 we received a Complete Response Letter for CONTEPO in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. We do not have a forecasted date for the resubmission of the CONTEPO NDA.

Additionally, certain of the activities of our collaborator, Sinovant, have been delayed in China. If these delays continue and impact Sinovant’s efforts to develop and commercialize lefamulin in China, our receipt of future milestone payments or potential royalties on sales of the Sinovant Licensed Products may be delayed. Also, the spread of COVID-19 may affect the ability of our third-party manufacturers to supply XENLETA, CONTEPO or any future product candidates. Before we are permitted to sell SIVEXTRO, we will be required to secure a sales force and the restrictions related to COVID-19 must be eased in a sufficient manner to permit us to promote and distribute SIVEXTRO. Re-securing a sales force for the promotion and distribution of SIVEXTRO will result in significant additional expense and our efforts to secure a sales force may not be successful.

The COVID-19 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds through public offerings and may also impact the volatility of our ordinary share price and trading in our ordinary shares. Moreover, the significant ongoing impact of the pandemic on economies worldwide could result in more extensive adverse effects on our business and operations. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business and it has the potential to significantly and adversely affect our business, financial condition, results of operations and prospects.

In April 2020, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort.

In April 2020, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort. This restructuring reduced costs to align the capabilities of our sales efforts with our strategic re-focus on making sales of XENLETA to community health care professionals, This restructuring resulted in

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the termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales force leadership team. This restructuring has resulted and may continue to result in less revenue during the time when we have no sales efforts.

We depend heavily on the success of XENLETA, which the FDA has approved for oral and intravenous use for the treatment of CABP, SIVEXTRO, approved by the FDA for oral and intravenous use of adults and adolescents for the treatment of ABSSSI, and CONTEPO, which we are developing for cUTI, including AP. If we are unable to obtain marketing approval for CONTEPO, or if we fail in our commercialization efforts for XENLETA, SIVEXTRO or CONTEPO, or experience significant delays in doing so, our business will be materially harmed.

We have invested a significant portion of our efforts and financial resources in the development of XENLETA and, more recently, in CONTEPO. There remains a significant risk that we will fail to successfully develop CONTEPO for cUTI or any other indication and that we may fail to successfully commercialize XENLETA for CABP.

On August 19, 2019, the FDA approved the oral and intravenous formulations of XENLETA. On July 28, 2020, the European Commission issued a legally binding decision for approval of the marketing authorization application for XENLETA for the treatment of community-acquired pneumonia in adults following a review by the European Medicines Agency. Sunovion Pharmaceuticals Canada Inc. additionally received approval from Health Canada to market oral and intravenous formulations of XENLETA for the treatment of community-acquired pneumonia in adults, with the Notice of Compliance from Health Canada dated July 10, 2020. We have entered into a license and commercialization agreement in March 2019 with Sunovion Pharmaceuticals Canada Inc. for XENLETA in Canada. In mid-2018, we initiated a Phase 1, non-comparative, open-label study of the pharmacokinetics and safety of a single dose of IV XENLETA in pediatric subjects from birth to 18 years of age. Due to the COVID-19 pandemic, this clinical trial is not currently enrolling subjects.

In June 2016, Zavante initiated the ZEUS Study. In April 2017, Zavante announced positive topline results of the ZEUS Study. We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States, utilizing the FDA’s 505(b)(2) pathway, in October 2018. In April 2019, the FDA issued a Complete Response Letter in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP, stating that it was unable to approve the application in its current form. In December 2019, we resubmitted the NDA for CONTEPO. On June 19, 2020 we received a second Complete Response Letter from the FDA. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. We do not have a forecasted date for the resubmission of the CONTEPO NDA.

In June 2018, we initiated a Phase 1, non-comparative, open label study of the pharmacokinetics and safety of a single dose of CONTEPO in pediatric subjects less than 12 years of age receiving standard of care antibiotic therapy for proven or suspected infection or peri operative prophylaxis. Completion remains uncertain due to delays related to the COVID 19 pandemic. We also intend to continue to characterize the clinical pharmacology of CONTEPO.

We expect to incur significant additional sales, marketing, distribution and manufacturing expenses for the commercialization of XENLETA, SIVEXTRO and CONTEPO, if approved. We expect to continue to invest in critical commercial promotion and distribution, medical affairs and other commercialization activities, as well as investing in our supply chain for the commercialization of XENLETA, SIVEXTRO and the potential launch of CONTEPO. We expect to seek additional funding in future periods to support these activities.

Our ability to generate meaningful product revenues will depend heavily on the successful commercialization of XENLETA and SIVEXTRO and our obtaining marketing approval for CONTEPO. In April 2020, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort. This

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restructuring was intended to reduce costs and to align the capabilities of our sales efforts with our strategic re-focus on making sales of XENLETA to community health care professionals, This restructuring resulted in the termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales force leadership team. This restructuring may result in less revenue during the time when we have no sales efforts. The success of XENLETA, SIVEXTRO and, if approved, CONTEPO will depend on a number of factors, including the following:

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establishing and maintaining arrangements with third-party manufacturers for commercial supply and receiving regulatory approval of our manufacturing processes and our third-party manufacturers’ facilities from applicable regulatory authorities;

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the resubmission of the CONTEPO NDA and potential receipt of marketing approval from the FDA for CONTEPO for the treatment of cUTI, including AP;

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re-establishing an effective sales and marketing organization to successfully generate recurring sales of XENLETA, SIVEXTRO and, if and when approved, CONTEPO;

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acceptance of XENLETA, SIVEXTRO and, if and when approved, CONTEPO by patients, the medical community and third-party payors, including hospital formularies;

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achieving approval of favorable prescribing information;

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effectively competing with other therapies;

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maintaining a continued acceptable safety profile of XENLETA, SIVEXTRO and CONTEPO following approval;

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securing contracts to allow XENLETA, SIVEXTRO and, if approved, CONTEPO to be paid for by private and public health insurance plans;

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obtaining and maintaining patent and trade secret protection and regulatory exclusivity;

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protecting our rights in our intellectual property portfolio;

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obtaining and maintaining adequate distribution levels of XENLETA, SIVEXTRO and CONTEPO at all appropriate trade channels; and

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resolution of the COVID-19 pandemic.

Successful development of XENLETA and CONTEPO for the treatment of additional indications, if any, or for use in other patient populations and our ability to broaden the labels for XENLETA and, if approved, CONTEPO will depend on similar factors. If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize XENLETA for CABP or for any other indication or CONTEPO for cUTI, including AP or for any other indication, which would materially harm our business.

XENLETA, SIVEXTRO and any other product candidate that receives marketing approval may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success and the market opportunity for such products and product candidates, if approved, may be smaller than we estimate.

XENLETA, SIVEXTRO and any other product candidate that receives marketing approval may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current treatments for CABP, ABSSSI and cUTI, including generic options, are well established in the medical community, and doctors may continue to rely on these treatments without XENLETA, SIVEXTRO, CONTEPO or any

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of our other product candidates. In addition, our efforts to effectively communicate the differentiating characteristics and key attributes of XENLETA, SIVEXTRO, CONTEPO or any of our other product candidates to clinicians and hospital pharmacies with the goal of establishing favorable formulary status for XENLETA, SIVEXTRO, CONTEPO or any of our other product candidates may fail or may be less successful than we expect. If XENLETA, SIVEXTRO, CONTEPO or any of our other product candidates does not achieve an adequate level of acceptance, we may not generate significant product revenues or any profits from operations. The degree of market acceptance of our products and product candidates, if approved for commercial sale, will depend on a number of factors, including:

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the efficacy and potential advantages compared to alternative treatments;

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the ability of XENLETA, SIVEXTRO, CONTEPO or any other anti-infective product candidate to limit the development of bacterial resistance in the pathogens it targets;

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the prevalence and severity of any side effects;

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the ability to offer our product candidates for sale at competitive prices, including in comparison to generic competition;

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convenience and ease of administration compared to alternative treatments;

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the willingness of the target patient population to try new therapies, physicians to prescribe these therapies and hospitals to approve the cost and use by their physicians of these therapies;

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our investment in and the strength of sales, marketing, patient access and distribution capabilities;

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the availability of third-party coverage and adequate reimbursement;

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the timing of any marketing approval in relation to other approvals of competitive products; and

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obtaining and maintaining adequate distribution of our products to the appropriate trade channels.

Bacteria might develop resistance to XENLETA, SIVEXTRO, CONTEPO or any future product candidates more rapidly or to a greater degree than we anticipate. If bacteria develop resistance or if XENLETA, SIVEXTRO, CONTEPO or any future product candidates is not effective against drug-resistant bacteria, the efficacy of these product candidates would decline, which would negatively affect our potential to generate revenues from these product candidates.

Our ability to negotiate, secure and maintain third-party coverage and reimbursement may be affected by political, economic and regulatory developments in the United States, the European Union and other jurisdictions. Governments continue to impose cost containment measures, and third-party payors are increasingly challenging prices charged for medicines and examining their cost effectiveness, in addition to their safety and efficacy. If the level of reimbursement is below our expectations, our revenue and gross margins would be adversely affected.

Hospital formulary approval of XENLETA, SIVEXTRO, CONTEPO or any future product candidates is an important component of our commercialization strategy. Accordingly, sales of IV formulations of XENLETA, SIVEXTRO, CONTEPO or any future IV product candidates will depend substantially on the extent to which hospital formulary approval is obtained. Hospital formulary approval may depend upon several factors, including the determination that use of a product is:

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safe, effective and medically necessary;

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appropriate for the specific patient population;

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cost-effective; and

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neither experimental nor investigational.

Obtaining formulary approval from third-party payors can be an expensive and time-consuming process that will require us to provide supporting scientific, clinical and cost-effectiveness data. We may not be able to provide data sufficient to gain acceptance with respect to hospital formulary approval. We cannot be certain if and when we will obtain hospital formulary approval to allow us to sell XENLETA, SIVEXTRO, CONTEPO or any future product candidates into our target markets. Even if we do obtain hospital formulary approval, third-party payors, such as government or private health care insurers, carefully review and increasingly question the coverage of, and challenge the prices charged for, drugs. Increasing efforts by hospitals in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit formulary approval. We have experienced and expect to continue to experience pricing pressures in connection with the sale of XENLETA in the hospital setting due to the trend toward reducing hospital costs, managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. These and other similar developments could significantly limit the degree of market acceptance of XENLETA, SIVEXTRO, CONTEPO or any of our other product candidates that receive marketing approval. To address this uncertainty, in early 2020 we began to utilize our hospital based sales force to call upon approximately 6,000 high prescriber community doctors in an effort to potentially increase our penetration rates in the community setting while maintaining sales efforts in the hospital setting before determining to terminate our entire sales force. This effort ceased with the termination of our entire hospital-based sales force in April 2020. We recently secured a community-based sales effort with Amplity Health who is a Contract Sales Organization, however we have not determined when we would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect.

If we are unable to establish or maintain sales, marketing and distribution capabilities or enter into or maintain sales, marketing and distribution agreements with third parties, we may not be successful in commercializing XENLETA, SIVEXTRO, CONTEPO or any other product candidate if and when they are approved.

We have a limited sales, marketing, patient access and distribution infrastructure, and as a company we have limited experience in the sale, marketing or distribution of pharmaceutical products and XENLETA is the first product that we are commercializing. To achieve commercial success for XENLETA, SIVEXTRO and any other approved product, we must re- establish and maintain an adequate sales, marketing, commercial operations, patient access and distribution organization or outsource these functions to third parties. We recently secured a community-based sales effort with Amplity Health, a Contract Sales Organization. However we have not determined when we would begin utilizing such a community-based sales effort, as it is currently unknown how long the operational restrictions related to COVID-19 will remain in effect. In addition, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize XENLETA in markets outside the United States. We plan to commercialize CONTEPO, if approved, on our own in the United States with targeted sales efforts, but we do not have the right to commercialize CONTEPO in any markets outside the United States.

There are risks involved with establishing our own sales, marketing, commercial operations, patient access and distribution capabilities and entering into arrangements with third parties to perform these services. If we do not establish adequate sales, marketing, commercial operations, patient access and distribution capabilities prior to or in connection with the commercial launch of any of our products, such products may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community and may fail commercially or be less successful than we expect. If the commercial launch of a product candidate for which we establish marketing and distribution capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

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our inability to recruit, train and retain adequate numbers of effective sales, patient access, commercial operations and marketing personnel;

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our inability to recruit, train and retain adequate numbers of effective headquarter and field personnel;

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the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe XENLETA, SIVEXTRO or any future products;

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the lack of complementary products to be offered by sales personnel, which may put our sales representatives at a competitive disadvantage relative to sales representatives from companies with more extensive product lines;

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the COVID-19 pandemic;

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unforeseen costs and expenses associated with creating an independent sales, marketing, commercial operations, patient access and distribution organization; and

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a change in strategy resulting in the decrease or elimination of sales personnel.

If we enter into arrangements with third parties to perform sales, marketing, commercial operations, patient access and distribution services, our product revenues or the profitability of these product revenues to us are likely to be lower than if we were to market, sell and distribute ourselves any products that we develop. In addition, we may not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unable to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not re-establish and maintain sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing XENLETA, SIVEXTRO, or, if approved, CONTEPO.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of new drug products is highly competitive. We face competition with respect to XENLETA, SIVEXTRO, CONTEPO and any other products we may seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

There are a variety of available therapies marketed for the treatment of CABP, ABSSSI and cUTI. Currently the treatment of CABP, ABSSSI and cUTI is dominated by generic products. For hospitalized patients, combination therapy is frequently used in CABP, ABSSSI and cUTI. Many currently approved drugs are well-established therapies and are widely accepted by physicians, patients, medical association guidelines and third-party payors for the treatment of CABP and ABSSSI. We also are aware of various drugs under development or recently approved by the FDA for the treatment of CABP and ABSSSI, including omadacycline (approved by the FDA in October 2018 on behalf of Paratek Pharmaceuticals Inc. for both CABP and ABSSSI), delafloxacin (approved by the FDA for ABSSSI in June 2017 and expanded for CABP in October 2019 on behalf of Melinta Therapeutics Inc.), and oral nafithromycin (under Phase 2 clinical development by Wockhardt Ltd. for CABP). If approved, we expect CONTEPO will face competition from commercially available branded antibiotics such as ceftazidime-avibactam, meropenem-vaborbactam, tigecycline and plazomicin, from other products recently approved for the treatment of cUTI, including AP, such as imipenem-relebactam (Recarbrio approved by the FDA in July 2019 on behalf of Merck & Co., Inc. ), cefiderocol (Fetroja approved by the FDA in November 2019 on behalf of Shionogi Inc.), cefepime-taniborbactam (under Phase 3 clinical development by Venatorx Pharmaceuticals), Cefepime-enmetazobactam (under Phase 3 clinical development by Allecra Therapeutics), ETX0282-cefpodoxime proxetil (under Phase 1 clinical development by Entasis Therapeutics), and LYS228 (under development by Novartis), as well as generically available agents including piperacillin-tazobactam, carbapenems, aminoglycosides, and polymyxins.

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Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are approved for broader indications or patient populations, are more convenient or are less expensive than any products that we may develop. Our competitors may also obtain marketing approvals for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected because in some cases insurers or other third-party payors seek to encourage the use of generic products. This may have the effect of making branded products less attractive, from a cost perspective, to buyers. We expect that XENLETA, SIVEXTRO and if approved for cUTI, including AP, CONTEPO will be priced at a significant premium over competitive generic products. This pricing difference may make it difficult for us to replace existing therapies with XENLETA, SIVEXTRO and CONTEPO. The key competitive factors affecting the success of our products and product candidates are likely to be their efficacy, safety, convenience, price and the availability of coverage and reimbursement from government and other third-party payors.

Many of our competitors may have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining approvals from regulatory authorities and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to or necessary for our programs.

Even if we are able to successfully commercialize XENLETA, SIVEXTRO, CONTEPO or any other product candidate that we develop, the product may become subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, which would harm our business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products, including XENLETA, vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.

Our ability to commercialize XENLETA, SIVEXTRO, CONTEPO or any other product candidate successfully also will depend in part on its availability on hospital formularies and the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and other third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A major trend in the healthcare industries in the European Union and the United States and elsewhere is cost containment. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. We cannot be sure that coverage and reimbursement will be available for XENLETA, SIVEXTRO, CONTEPO or any other product that we commercialize and, if coverage and reimbursement are available, the level of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. Obtaining and maintaining adequate reimbursement for XENLETA, SIVEXTRO and CONTEPO may be particularly difficult because of the number of generic drugs, which are typically available at lower prices, that are available to treat CABP and cUTI. In addition, third-party payors are likely to impose strict requirements for reimbursement of a higher priced drug, such as XENLETA, SIVEXTRO and CONTEPO. If reimbursement is not

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available or is available only to limited levels, we may not be able to successfully commercialize XENLETA, SIVEXTRO, CONTEPO or other product candidates for which we obtain marketing approval.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and particularly in the hospital, coverage may be more limited than the purposes for which the drug is approved by the applicable regulatory authority. Moreover, eligibility for coverage and reimbursement does not imply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs, and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. In the United States, third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. In the European Union, reference pricing systems and other measures may lead to cost containment and reduced prices. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and to limit commercialization of XENLETA and any other products that we may develop or in-license.

We face an inherent risk of product liability exposure related to the testing of XENLETA, CONTEPO and any other product candidate that we develop in human clinical trials and an even greater risk related to the commercial sale of XENLETA and any other products that we may develop or in-license. If we cannot successfully defend ourselves against claims that XENLETA or our other product candidates caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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reduced resources of our management to pursue our business strategy;

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decreased demand for XENLETA or any other product candidates that we may develop;

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injury to our reputation and significant negative media attention;

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withdrawal of clinical trial participants;

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significant costs to defend the related litigation;

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substantial monetary awards to trial participants or patients;

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loss of revenue; and

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the inability to commercialize any products that we may develop.

We maintain clinical trial liability insurance that covers bodily injury to patients participating in our clinical trials up to a $10.0 million annual aggregate limit and subject to a per event deductible. This amount of insurance may not be adequate to cover all liabilities that we may incur. We may need to increase our product liability insurance coverage due to the FDA approval of XENLETA. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

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If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the United States, we could be subject to additional reimbursement requirements, penalties, sanctions and fines which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

We participate in the Medicaid Drug Rebate Program and a number of other federal and state government pricing programs in the United States in order to obtain coverage for XENLETA by certain government healthcare programs. These programs generally require us to pay rebates or provide discounts to certain private purchasers or government payers in connection with our products when dispensed to beneficiaries of these programs. In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs change frequently. We may also have reimbursement obligations or be subject to penalties if we fail to provide timely and accurate information to the government, pay the correct rebates or offer the correct discounted pricing. Changes to the price reporting or rebate requirements of these programs would affect our obligations to pay rebates or offer discounts. Responding to current and future changes may increase our costs and the complexity of compliance, will be time-consuming, and could have a material adverse effect on our results of operations.

If clinical trials of XENLETA, CONTEPO or any of our other product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, regulatory authorities in the European Union, or other regulatory authorities or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of XENLETA, CONTEPO or any other product candidate.

Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and early clinical trials, including Phase 1 clinical trials, in addition to extensive later-stage Phase 3 clinical trials, to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. In connection with the ZEUS Study in which CONTEPO met the primary endpoint of statistical non-inferiority versus piperacillin/tazobactam, Zavante conducted a post-hoc primary efficacy analysis of CONTEPO using results of blinded pulsed-field gel electrophoresis molecular typing of urinary tract pathogens. Regulatory authorities typically give greater weight to results from pre-specified analyses and less weight to results from post-hoc, retrospective analyses. While we believe this post-hoc analysis is illustrative information, the FDA may ultimately have a different interpretation of any of our data that may be based on such post-hoc analysis, or the FDA may conduct its own analyses and modify analysis populations which could lead to different numerical results or conclusions.

If we are required to conduct additional clinical trials or other testing or studies of XENLETA, CONTEPO or any other product candidate that we develop beyond those that we contemplate; if we are unable to successfully complete our clinical trials or other testing or studies; if the results of these trials, tests or studies are not positive or are only modestly positive; if there are safety concerns; or if they are otherwise not acceptable to the FDA, we may:

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be delayed in obtaining marketing approval for our product candidates;

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not obtain marketing approval at all;

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obtain approval for indications or patient populations that are not as broad as intended or desired;

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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including boxed warnings;

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be subject to additional post-marketing testing requirements or restrictions;

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have the product removed from the market after obtaining marketing approval;

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be unable to obtain reimbursement for use of the product; or

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need to raise capital before we otherwise would or on terms less favorable to us.

The occurrence of any of the developments listed above could materially harm our business, financial condition, results of operations and prospects.

If we experience any of a number of possible unforeseen events in connection with our clinical trials, the potential marketing approval or commercialization of XENLETA, CONTEPO or other product candidates could be delayed or prevented.

We may experience numerous unforeseen events during, or as a result of, our clinical trials of XENLETA and CONTEPO or other product candidates that could delay or prevent our ability to receive marketing approval or commercialize XENLETA, CONTEPO or our other product candidates, including:

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clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

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the number of patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;

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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

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regulators, institutional review boards or independent ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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we may experience delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

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we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health or safety risks;

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the cost of clinical trials of our product candidates may be greater than we anticipate;

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the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate;

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ongoing or future restrictions resulting from the COVID-19 pandemic and its collateral consequences may result in internal and external operational delays and limitations; and

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our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators, institutional review boards or independent ethics committees to suspend or terminate the trials.

Our product development costs will increase if we experience delays in enrollment in our clinical development program or our non-clinical development program or in obtaining marketing approvals. We do not know whether any additional non-clinical tests or clinical trials will be required, or if they will begin as planned, or if they will need to be restructured or will be completed on schedule, or at all. Significant non-clinical development program delays, including chemistry, manufacturing and control activities, or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

If we experience delays or difficulties in the enrollment of patients in our clinical trials, our receipt of necessary marketing approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates, including with respect to XENLETA, CONTEPO or any other product candidate that we develop, if we are unable to locate and enroll a sufficient number of eligible patients to participate in these clinical trials, including our Phase 1 clinical trial of IV XENLETA in pediatric patients. In addition, the COVID-19 pandemic has resulted in enrollment suspension globally for many clinical trials. Some of our competitors have ongoing clinical trials for product candidates that could be competitive with XENLETA and CONTEPO, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment is affected by other factors including:

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severity of the disease under investigation;

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eligibility criteria for the clinical trial in question;

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perceived risks and benefits of the product candidate under study;

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approval of other therapies to treat the disease under investigation;

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efforts to facilitate timely enrollment in clinical trials;

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patient referral practices of physicians;

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the time of year in which the trial is initiated or conducted;

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the geographic distribution of global trial sites;

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the ability to monitor patients adequately during and after treatment;

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proximity and availability of clinical trial sites for prospective patients;

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delays in the receipt of required regulatory approvals, or the failure to receive required regulatory approvals, in the jurisdictions in which clinical trials are expected to be conducted;

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restrictions resulting from the COVID-19 pandemic and its collateral consequences; and

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delays in the receipt of approvals, or the failure to receive approvals, from the relevant institutional review board or ethics committee at clinical trial sites.

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Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of the company to decline and limit our ability to obtain additional financing. Our inability to enroll a sufficient number of patients in any of our clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

If serious adverse or undesirable side effects are identified in XENLETA or CONTEPO or any other product candidate that we develop or following their approval and commercialization, we may need to modify, abandon or limit our development or marketing of that product or product candidate.

It is impossible to predict when or if the FDA, EMA or other regulators will view any of our product candidates as effective and safe in humans or if we will receive marking approval for any of our product candidates and it is impossible to ensure that safety or efficacy issues will not arise following the marketing approval. If our products or product candidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to modify or abandon their marketing or development or limit marketing or development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Similarly, if we are not able to comply with post-approval regulatory requirements, including safety requirements, with respect to XENLETA or any other approved product that we may develop, we could have the marketing approvals for such products withdrawn by regulatory authorities. Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause side effects or other safety issues that prevented further development of the compound.

In the ZEUS Study, the incidence of premature discontinuation from study drug was low and similar between treatment groups (6.0% in the CONTEPO treatment group compared to 3.9% in the PIP-TAZ treatment group), and the incidence of not completing the study through the last follow-up visit, which occurred on the 24th through 28th day after completion of seven days of treatment with the study drug, or after up to 14 days of treatment for patients with concurrent bacteremia, was 5.2% in the CONTEPO group compared to 0.9% in the PIP-TAZ group. A total of 42.1% CONTEPO patients and 32.0% PIP-TAZ patients experienced at least one treatment-emergent adverse event. Most treatment-emergent adverse events were mild or moderate in severity, and severe treatment-emergent adverse events were uncommon (2.1% of CONTEPO patients and 1.7% of PIP-TAZ patients). The most common treatment-emergent adverse events in both treatment groups were transient, asymptomatic laboratory abnormalities and gastrointestinal events. Treatment-emergent serious adverse events were uncommon in both treatment groups (2.1% of CONTEPO patients and 2.6% of PIP-TAZ patients). There were no deaths in the study and one treatment-emergent serious adverse event in each treatment group was deemed related to study drug (hypokalemia in a CONTEPO patient and renal impairment in a PIP-TAZ patient), leading to study drug discontinuation in the PIP-TAZ patient. Study drug discontinuations due to the treatment-emergent adverse events were infrequent and similar between treatment groups (3.0% of CONTEPO patients and 2.6% of PIP-TAZ patients).

The most common laboratory abnormality treatment-emergent adverse events in the ZEUS Study were increases in the levels of alanine aminotransferase, or ALT, (8.6% of CONTEPO patients and 2.6% of PIP-TAZ patients) and aspartate transaminase, or AST, (7.3% of CONTEPO patients and 2.6% of PIP-TAZ patients). None of the ALT or AST elevations were symptomatic or treatment-limiting, and none of the patients met the criteria for Hy’s Law. Outside the United States, elevated liver aminotransferases are listed among undesirable effects in the labeling for IV fosfomycin.

In the ZEUS Study, hypokalemia occurred in 71 of 232 (30.6%) CONTEPO patients and 29 of 230 (12.6%) PIP-TAZ patients. Most decreases in potassium levels were mild to moderate in severity. Shifts in potassium levels from normal at baseline to hypokalemia, as determined by worst post-baseline hypokalemia values, were more frequent in the CONTEPO group than the PIP-TAZ group for mild (17.7% compared to 11.3%), moderate (11.2% compared to 0.9%), and severe (1.7% compared to 0.4%) categories of hypokalemia. Hypokalemia was deemed a treatment-emergent adverse event in 6.4% of patients receiving CONTEPO and 1.3% of patients receiving PIP-TAZ, and all cases were transient and asymptomatic.

While no significant cardiac adverse events were observed in the ZEUS Study, post-baseline QT intervals calculated using Fridericia’s formula, or QTcF, of greater than 450 to less than or equal to 480 msec (baseline QTcF of

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less than or equal to 450 msec) occurred at a higher frequency in CONTEPO patients (7.3%) compared to PIP-TAZ patients (2.5%). In the CONTEPO arm, these results appeared to be associated with the hypokalemia associated with the salt load of the IV formulation. Only one patient in the PIP-TAZ arm had a baseline QTcF of less than or equal to 500 msec and a post-baseline QTcF of greater than 500 msec.

If we elect or are forced to suspend or terminate any clinical trial of XENLETA, CONTEPO or any other product candidates that we are developing, the commercial prospects of XENLETA, CONTEPO or such other product candidates will be harmed and our ability to generate product revenues from XENLETA, CONTEPO or any of these other product candidates will be delayed or eliminated. In addition, a higher rate of adverse events in XENLETA or CONTEPO as compared to the standard of care, even if slight, could negatively impact commercial adoption of XENLETA or CONTEPO by physicians. Any of these occurrences could materially harm our business, financial condition, results of operations and prospects.

Risks Related to Our Dependence on Third Parties

Use of third parties to manufacture our product candidates or products may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable quality or cost, which could delay, prevent or impair our development or commercialization efforts.

We do not own or operate manufacturing facilities for the production of XENLETA or CONTEPO that could be used in product candidate development, including clinical trial supply, or for commercial supply, or for the supply of any other compound that we are developing or evaluating in our research program. We have limited personnel with experience in drug manufacturing and lack the resources and the capabilities and facilities to manufacture any of our product candidates or products on a clinical or commercial scale. We currently rely on third parties for supply of XENLETA and CONTEPO, and our strategy is to outsource all manufacturing, packaging, testing, serialization and distribution of our product candidates and products to third parties. We will be procuring supply of SIVEXTRO from Merck & Co., Inc.

We have entered into agreements, and expect to enter into additional agreements, with third-party manufacturers for the long-term commercial supply of XENLETA and CONTEPO. We obtained the pleuromutilin starting material for the clinical trial supply of XENLETA from a single third-party manufacturer, Sandoz GmbH, or Sandoz, a division of Novartis AG, or Novartis. Novartis stopped manufacturing pleuromutilin for us in June 2015 and is not a commercial supplier of pleuromutilin for us. We have identified and entered into a commercial supply agreement with an alternative supplier that provides pleuromutilin starting material for the commercial supply of XENLETA.

Another third-party manufacturer synthesizes XENLETA starting from pleuromutilin and a readily accessible chiral building block and provides our supply of the active pharmaceutical ingredient, or API. We may engage a secondary supplier to synthesize XENLETA. However, our current operating plans do not include a secondary supplier unless we obtain additional funding. We engage separate manufacturers to provide tablets, sterile vials, and sterile diluent that we are using in our clinical trials of XENLETA. We have entered into commercial supply agreements with these same manufacturers to support the commercialization of XENLETA in the United States and, if approved outside of the United States, to support future demand outside of the United States. We also entered into a long-term commercial supply agreement with Arran Chemical Company Limited, or Arran, for the supply of the chiral acid starting material required in the synthesis of XENLETA API and a commercial packaging and supply agreement with Sharp Corporation for the secondary packaging of XENLETA for distribution in the United States.

In addition, we have entered into a manufacturing and supply agreement with Ercros, S.A., pursuant to which Ercros, S.A. supplies to us, on an exclusive basis, the API mixture for CONTEPO in support of our NDA filing and, if CONTEPO is approved, will supply the commercial API mixture for CONTEPO in the United States. We have also entered into a manufacturing and exclusive supply agreement with Laboratorios ERN, S.A., pursuant to which Laboratorios ERN, S.A. has agreed to supply us with certain technical documentation and data as required for our NDA filing for CONTEPO and certain regulatory support in connection with the commercial sale and use of CONTEPO in the United States, if approved. We entered into a commercial packaging agreement with AndersonBrecon, Inc. for the commercial packaging and serialization of CONTEPO. Alternatively, we may elect to have secondary packaging and

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serialization of CONTEPO completed under our existing commercial packaging and supply agreement with Sharp Corporation. We also entered into a manufacturing and supply agreement with Fisiopharma S.r.l., or Fisiopharma, for the supply, on a minimum commitment basis, of a percentage of our commercial requirements of CONTEPO in bulk drug vials for the United States as well as the supply of bulk drug vials of CONTEPO in connection with the submission of an NDA.

We may be unable to maintain our current arrangements for commercial supply, or conclude agreements for commercial supply with additional third-party manufacturers, or we may be unable to do so on acceptable terms. Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

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reliance on the third party for regulatory compliance and quality assurance;

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an event at one of our manufacturers or suppliers causing an unforeseen disruption of the manufacture or supply of our product candidates;

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the possible breach of the manufacturing agreement by the third party;

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the possible misappropriation of our proprietary information, including our trade secrets and know-how; and

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the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

Third-party manufacturers may not be able to comply with current good manufacturing practice, or cGMP, regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and products. Such failure could also result in the delay of our obtaining regulatory approval of our product candidates. Also, the spread of COVID-19 may affect the ability of our third-party manufacturers to supply XENLETA, CONTEPO or any future product candidates.

In April 2019, the FDA issued a Complete Response Letter in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP, stating that it was unable to approve the application in its current form. Specifically, the Complete Response Letter requested us to address issues related to facility inspections and manufacturing deficiencies at our API contract manufacturer prior to the FDA approving the NDA. In December 2019, we resubmitted the NDA for CONTEPO. On June 19, 2020 we received a second Complete Response Letter from the FDA. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. We do not have a forecasted date for the resubmission of the CONTEPO NDA. We will request a Type A Meeting with the FDA. Our contract manufacturers plan to interact with FDA to discuss its plans for conducting inspections at their sites. If these manufacturing issues are not resolved to the FDA’s satisfaction, or if we or any of our third-party manufacturers, or suppliers are the subject of any other open or unresolved regulatory inspections, inspection reports, or FDA Form 483s identifying noncompliance with applicable regulations, we would be delayed in obtaining or fail to obtain regulatory approval of our product candidates, including CONTEPO.

Our product candidates and any products that we have developed or may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

If the third parties that we engage to supply any materials or manufacture product for our non-clinical testing and clinical trials should cease to continue to do so for any reason, we likely would experience delays in advancing these trials while we identify and qualify replacement suppliers, and we may be unable to obtain replacement supplies on

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terms that are favorable to us. For example, there are only a limited number of known manufacturers that produce the pleuromutilin starting material used in the synthesis of XENLETA. In early 2015, Novartis completed the sale of its animal health division, including its veterinary products, to a third party. As a result, we were required to identify an alternative supplier for pleuromutilin starting material for XENLETA. If we are not able to obtain adequate supplies of our product candidates or products, or the drug substances used to manufacture them, it will be more difficult for us to develop or commercialize our product candidates and compete effectively.

Our current and anticipated future dependence upon others for the manufacture of our product candidates and products may adversely affect our revenues and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis. In addition, slower than forecasted commercialization of our products in approved territories may adversely affect our profit margins and uninterrupted supply of our product as a result of our potential failure to comply with contractual minimum order commitments with our third party suppliers.

We have entered into a Sales Promotion and Distribution Agreement with Merck & Co. related to the promotion, distribution and sale of SIVEXTRO. If our collaboration with Merck is not successful, we may incur significant expenses related to the distribution of SIVEXTRO without realizing any value from the agreement. [NTD: We have included this draft risk factor in the “third party” risks section but depending on your view of the actual risks to this arrangements, consider whether it is more appropriate to include this risk factor in another section.]

Furthermore, a subsidiary of Merck will sell, and we have agreed to purchase, SIVEXTRO at specified prices in such quantities as we may specify. Although we are entitled, subject to appliable law, to determine the final selling prices of SIVEXTRO in our sole discretion, subject to an overall annual limit on price increases, we may not be able to sell SIVEXTRO at prices high enough to recoup our investment in a sales force and other commercialization activities. In addition, we will rely on a subsidiary of Merck to supply SIVEXTRO to us. Relying on a third-party manufacturer subjects us to a number of additional risks. See “Risk Factors—Risks Related to Our Dependence on Third Parties—Use of third parties to manufacture our product candidates or products may increase the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable quality or cost, which could delay, prevent or impair our development or commercialization efforts.”

We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.

We do not independently conduct clinical trials for our product candidates. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to perform this function. We expect to continue to rely on such third parties in conducting our clinical trials of

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XENLETA and CONTEPO, and expect to rely on these third parties to conduct clinical trials of any other product candidate that we develop. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities.

Our reliance on these third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, or GCP, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a U.S. government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Similar GCP and transparency requirements apply in the European Union. Failure to comply with such requirements, including with respect to clinical trials conducted outside the European Union, can also lead regulatory authorities to refuse to take into account clinical trial data submitted as part of an MAA.

Furthermore, third parties that we rely on for our clinical development activities may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates. Our product development costs will increase if we experience delays in testing or obtaining marketing approvals.

We also rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.

We have entered into and may enter into additional collaborations with third parties for the development or commercialization of XENLETA, CONTEPO and our other product candidates. If those collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates.

We are commercializing XENLETA and, expect to commercialize CONTEPO, if approved in the United States with targeted sales and marketing efforts. Outside the United States, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize XENLETA. For example, we have entered into a license agreement with Sinovant pursuant to which we granted Sinovant certain rights to manufacture and commercialize XENLETA in the People’s Republic of China, Hong Kong, Macau and Taiwan and we have also entered into a license agreement with Sunovion pursuant to which we granted Sunovion certain rights to commercialize XENLETA in Canada. We also may seek third-party collaborators for development and commercialization of other product candidates or for XENLETA for indications other than CABP.

Our likely future collaborators for any sales, marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. Under our license agreements with Sinovant and Sunovion, we have, and under any such arrangements we enter into with any third parties in the future we will likely have, limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.

Our current collaborations involving our product candidates pose, and any future collaborations likely will pose, numerous risks to us, including the following:

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collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected;

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collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, product and product candidate priorities, available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

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collaborators may need to conduct clinical trials, and these clinical trials may not be successful;

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

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a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

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collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

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collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

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disputes may arise between the collaborator and us as to the ownership of intellectual property arising during the collaboration;

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we may grant exclusive rights to our collaborators, which would prevent us from collaborating with others;

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collaborators may be unable to enforce our intellectual property rights in territories where we have licensed, or may license, them such rights, which may expose us to material adverse tax and other consequences;

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disputes may arise between the collaborators and us that result in the delay or termination of the development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and

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collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

For example, under our license agreement with Sinovant, if any court, tribunal or governmental agency in the People’s Republic of China, Hong Kong, Macau or Taiwan determines that the exclusive license granted to Sinovant pursuant to the license agreement is not sufficiently exclusive such that Sinovant does not have sufficient rights to enforce the licensed patent rights in such territories, we and our subsidiary, Nabriva Therapeutics GmbH, have agreed to take such commercially reasonable steps as Sinovant reasonably requests to grant Sinovant such rights. If a court in such jurisdictions were to determine that our license to Sinovant was not sufficiently exclusive and that Sinovant did not have the rights to enforce the licensed patent rights in the licensed territories, Sinovant may require us to take such actions that it deems reasonable but that we do not and which may have a material adverse effect on our business, including requiring us to make changes to our organizational structure that may result in adverse tax and other consequences, or to conduct other activities that may cause us to incur significant expenses.

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Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

If we are not able to establish additional collaborations, we may have to alter our development and commercialization plans.

The commercialization of XENLETA, potential commercialization of CONTEPO, if approved, and the development and potential commercialization of other product candidates will require substantial additional cash to fund expenses. For some of our product candidates, we may decide to further collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. For example, we intend to seek to commercialize XENLETA through a variety of types of additional collaboration arrangements outside the United States. These collaborations may help fund the potential commercialization of our product candidates.

We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for additional collaborations outside greater China and Canada will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. Mergers and acquisitions in the pharmaceutical and biotechnology industries may also reduce the number of potential collaborators with whom we could partner. We may also be restricted under future license agreements from entering into agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.

If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into additional collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market and generate product revenue.

We enter into various contracts in the normal course of our business in which we agree to indemnify the other party to the contract. In the event we have to perform under these indemnification provisions, it could have a material adverse effect on our business, financial condition and results of operations.

In the normal course of business, we periodically enter into academic, commercial, service, collaboration, licensing, consulting and other agreements that contain indemnification provisions. With respect to our academic and other research agreements, we typically agree to indemnify the institution and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which we have secured licenses, and from claims arising from our or our sub licensees’ exercise of rights under the agreement. With respect to our commercial agreements, we have agreed to indemnify our vendors from any third-party product liability claims that could result from the production, use or consumption of the product, as well as for alleged infringements of any patent or other intellectual property right by a third party. With respect to consultants, we typically agree to indemnify them from claims arising from the good faith performance of their services.

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Should our obligation under an indemnification provision exceed applicable insurance coverage or if we were denied insurance coverage or not covered by insurance, our business, financial condition and results of operations could be adversely affected. Similarly, if we are relying on a collaborator or other third party to indemnify us and the collaborator or other third party is denied insurance coverage or otherwise does not have assets available to indemnify us, our business, financial condition and results of operations could be adversely affected.

Risks Related to Our Intellectual Property

If we are unable to obtain and maintain patent protection for our technology, products and product candidates, or if the scope of the patent protection is not sufficiently broad, our competitors could develop and commercialize technology, products and product candidates similar or identical to ours, and our ability to successfully commercialize our technology, products and product candidates may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology, products and product candidates. We seek to protect our proprietary position by filing patent applications in the United States, Europe and in certain additional foreign jurisdictions related to our novel technologies, products and product candidates 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. Moreover, if we license technology, products or product candidates from third parties, these license agreements may not permit us to control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering this intellectual property. These agreements could also give our licensors the right to enforce the licensed patents without our involvement, or to decide not to enforce the patents at all. Therefore, in these circumstances, these patents and applications may not be prosecuted, maintained and enforced in a manner consistent with the best interests of our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology, products or product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies, products and product candidates. 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. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. We also may not pursue or obtain patent protection in all major markets or may not obtain protection that enables us to prevent the entry of third parties onto the market. Assuming the other requirements for patentability are met, currently, the first to file a patent application is generally entitled to the patent. However, prior to March 16, 2013, in the United States, the first to invent was entitled to the patent. 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. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our U.S. patents or pending U.S. patent applications, or that we were the first to file for patent protection of such inventions.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post grant review, interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology, products or product candidates and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products and product candidates without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could

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dissuade companies from collaborating with us to license, develop or commercialize current or future technology, products or product candidates.

Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or any licensed patents by developing similar or alternative technologies, products or product candidates in a non-infringing manner. In addition, other companies may attempt to circumvent any regulatory data protection or market exclusivity that we obtain under applicable legislation, which may require us to allocate significant resources to preventing such circumvention. Legal and regulatory developments in the European Union and elsewhere may also result in clinical trial data submitted as part of an MAA becoming publicly available. Such developments could enable other companies to circumvent our intellectual property rights and use our clinical trial data to obtain marketing authorizations in the European Union and in other jurisdictions. Such developments may also require us to allocate significant resources to prevent other companies from circumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our intellectual property and other rights may ultimately be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain our patents.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology, products and product candidates, or limit the duration of the patent protection of our technology, products and product candidates. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.

Competitors may infringe our patents, trademarks, copyrights or other intellectual property. To counter such infringement or unauthorized use, we may be required to file claims, which can be expensive, time consuming and a distraction to management. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging our patents, trademarks, copyrights or other intellectual property are invalid or unenforceable or that we infringe their intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the intellectual property and other proprietary rights of third parties. There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products, product candidates and technology, including interference, derivation, inter partes review or post-grant review proceedings before the USPTO. The risks of being involved in such litigation and proceedings may increase as our product candidates approach commercialization, and as we gain greater visibility as a public company with commercial products. Third parties may assert infringement claims against us based on existing or future intellectual property rights. We may not be aware of all such intellectual property rights potentially relating to our products and product candidates. Any freedom-to-operate search or analysis previously conducted may not have uncovered all relevant patents and patent applications, and there may be pending or future patent applications that, if issued, would block us from commercializing XENLETA or CONTEPO. Thus, we do not

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know with certainty whether XENLETA, CONTEPO or any other product candidate, or our commercialization thereof, does not and will not infringe any third party’s intellectual property.

If we are found to infringe a third party’s intellectual property rights, or to avoid or settle litigation, we could be required to obtain a license to continue developing and marketing our technology, products and product candidates. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us and could require us to make substantial payments. We could be forced, including by court order, to cease commercializing the infringing technology, products or product candidates. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent or other intellectual property right. A finding of infringement could prevent us from commercializing our technology, products and product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.

We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Many of our employees 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 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 these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.

In addition, while we typically require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our pleuromutilin business was founded as a spin-off from Sandoz. Although all patents and patent applications are fully owned by us and were either filed by Sandoz with all rights fully transferred to us, or filed in our sole name, because we acquired certain of our patent rights from Sandoz, we must rely on their prior practices, with regard to the assignment of such intellectual property. Similarly, for any patents and patent applications we acquired from Zavante in connection with the Acquisition, we must rely on Zavante’s prior practices with regard to the assignment of intellectual property.

Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.

Intellectual property litigation could cause us to spend substantial resources and could distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could 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 substantial adverse effect on the price of our ordinary shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development, sales, marketing or distribution activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

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If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for some of our technology, products and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect our trade secrets, know-how, technology and other proprietary information, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. However, we cannot guarantee that we have executed these agreements with each party that may have or has had access to our trade secrets and other confidential information or that the agreements we have executed will provide adequate protection. Any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be obtained or independently developed by a competitor, our competitive position would be harmed.

We have not yet registered our trademarks in all of our potential markets, and failure to secure those registrations could adversely affect our business.

Our trademark applications may not be allowed for registration, and our registered trademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in the USPTO and in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing them against third parties than we otherwise would.

Risks Related to Regulatory Approval and Marketing of Our Product Candidates and Other Legal Compliance Matters

Even if we complete the necessary non-clinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, in particular in the United States or the European Union, we will not be able to commercialize our product candidates in those markets, and our ability to generate revenue will be materially impaired.

XENLETA, CONTEPO, and any other product candidates that we develop, and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and, in the case of XENLETA, by comparable authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. On August 19, 2019, we received approval from the FDA to market the oral and intravenous formulations of XENLETA to treat CABP in the United States. We have not received approval to market XENLETA in any jurisdiction other than the United States or for any other indication, and we have not received approval to market CONTEPO or any of our other product candidates from regulatory authorities in any jurisdiction, and we do not intend to seek approval to market CONTEPO outside the United States. Further, on July 28, 2020, the European Commission issued a legally binding decision for approval of the marketing authorization application for XENLETA for the treatment of community-acquired pneumonia in adults following a review by the European Medicines Agency. Sunovion Pharmaceuticals Canada Inc. additionally received approval from Health Canada to market oral and intravenous formulations of XENLETA for the treatment of community-acquired pneumonia in adults, with the Notice of Compliance from Health Canada dated July 10, 2020. We

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have entered into a license and commercialization agreement in March 2019 with Sunovion Pharmaceuticals Canada Inc. for XENLETA in Canada. We have not received approval to market XENLETA in any other jurisdiction or for any other indication, and we have not received approval to market CONTEPO or any of our other product candidates from regulatory authorities in any jurisdiction, and we do not intend to seek approval to market CONTEPO outside the United States. In April 2019, the FDA issued a Complete Response Letter in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP, stating that it was unable to approve the application in its current form. Specifically, the Complete Response Letter requested us to address issues related to facility inspections and manufacturing deficiencies at our API contract manufacturer prior to the FDA approving the NDA. In December 2019, we resubmitted the NDA for CONTEPO. On June 19, 2020 we received a second Complete Response Letter from the FDA. Although our European contract manufacturing partners were prepared for regulatory authority inspections, the CRL cites observations at our manufacturing partners that could not be resolved due to FDA’s inability to conduct onsite inspections because of travel restrictions. We do not have a forecasted date for the resubmission of the CONTEPO NDA.

Even after obtaining marketing approval for XENLETA, we have limited experience in filing and supporting the applications necessary to obtain marketing approvals for product candidates and we have and expect to continue to rely on third parties to assist us in this process. Securing marketing approval requires the submission of extensive non-clinical and clinical data and supporting information to various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Regulatory authorities may determine that XENLETA, CONTEPO or any of our other product candidates are not effective or only moderately effective, or have undesirable or unintended side effects, toxicities, safety profiles or other characteristics that preclude us from obtaining marketing approval or that prevent or limit commercial use.

The process of obtaining marketing approvals is expensive, may take many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application.

For example, on June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, commonly referred to as Brexit. Following protracted negotiations, the United Kingdom left the European Union on January 31, 2020. Under the withdrawal agreement, there is a transitional period until December 31, 2020 (extendable up to two years). Discussions between the United Kingdom and the European Union have so far mainly focused on finalizing withdrawal issues and transition agreements but have been extremely difficult to date. To date, only an outline of a trade agreement has been reached. Much remains open but the Prime Minister has indicated that the United Kingdom will not seek to extend the transitional period beyond the end of 2020. If no trade agreement has been reached before the end of the transitional period, there may be significant market and economic disruption.

Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or European Union for our product candidates, which could significantly and materially harm our business.

The FDA and comparable regulatory authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from non-clinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

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Accordingly, if we or our collaborators experience delays in obtaining approval or if we or they fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.

Our failure to obtain marketing approval in jurisdictions other than the United States and Europe would prevent our product candidates from being marketed in these other jurisdictions, and any approval we are granted for our product candidates in the United States and Europe would not assure approval of product candidates in other jurisdictions.

In order to market and sell XENLETA and our other product candidates in jurisdictions other than the United States and Europe, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval process varies among countries and can involve additional testing. The time required to obtain approval may differ from that required to obtain FDA approval or approvals from regulatory authorities in the European Union. The regulatory approval process outside the United States and Europe generally includes all of the risks associated with obtaining FDA approval or approvals from regulatory authorities in the European Union. In addition, some countries outside the United States and Europe require approval of the sales price of a drug before it can be marketed. In many countries, separate procedures must be followed to obtain reimbursement and a product may not be approved for sale in the country until it is also approved for reimbursement. We may not obtain marketing, pricing or reimbursement approvals outside the United States and Europe on a timely basis, if at all. Approval by the FDA or regulatory authorities in the European Union does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States and Europe does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA or regulatory authorities in the European Union. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. Marketing approvals in countries outside the United States and Europe do not ensure pricing approvals in those countries or in any other countries, and marketing approvals and pricing approvals do not ensure that reimbursement will be obtained.

Even if we obtain marketing approvals for our product candidates, the terms of approvals and ongoing regulation of our products may limit how we manufacture and market our products and compliance with such requirements may involve substantial resources, which could materially impair our ability to generate revenue.

Even if marketing approval of a product candidate is granted, such as in the case of XENLETA, an approved product and its manufacturer and marketer are subject to ongoing review and extensive regulation, including the potential requirements to implement a risk evaluation and mitigation strategy or to conduct costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. We must also comply with requirements concerning advertising and promotion for any of our product candidates for which we obtain marketing approval. 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 labeling. Thus, we will not be able to promote any products we develop for indications or uses for which they are not approved. In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive FDA requirements including ensuring that quality control and manufacturing procedures conform to cGMP, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We and our contract manufacturers could be subject to periodic unannounced inspections by the FDA to monitor and ensure compliance with cGMP.

Accordingly, with respect to XENLETA and any other product candidates for which we receive marketing approval, we and our contract manufacturers will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production, product surveillance and quality control. If we are not able to comply with post-approval regulatory requirements, we could have the marketing approvals for our products, including XENLETA, withdrawn by regulatory authorities and our ability to market any future products could be limited, which could adversely affect our ability to achieve or sustain profitability. Thus, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition.

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Any product candidate for which we obtain marketing approval will be subject to strict enforcement of post-marketing requirements and we could be subject to substantial penalties, including withdrawal of our product from the market, if we fail to comply with all regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.

XENLETA and any other product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of samples to physicians and recordkeeping. In addition, even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval.

The FDA and other federal and state agencies, including the U.S. Department of Justice, or DOJ, closely regulate compliance with all requirements governing prescription drug products, including requirements pertaining to marketing and promotion of drugs in accordance with the provisions of the approved labeling and manufacturing of products in accordance with cGMP requirements. The FDA and DOJ impose stringent restrictions on manufacturers’ communications regarding off-label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of such requirements may lead to investigations alleging violations of the Food, Drug and Cosmetic Act and other statutes, including the False Claims Act and other federal and state health care fraud and abuse laws as well as state consumer protection laws. Accordingly, we may not promote XENLETA in the United States for use in any indications other than the treatment of CABP, and all promotional claims must be consistent with the FDA-approved labeling of XENLETA.

Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including:

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litigation involving patients taking our products;

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restrictions on such products, manufacturers or manufacturing processes;

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restrictions on the labeling or marketing of a product;

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restrictions on product distribution or use;

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requirements to conduct post-marketing studies or clinical trials;

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warning or untitled letters;

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withdrawal of the products from the market;

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refusal to approve pending applications or supplements to approved applications that we submit;

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recall of products;

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fines, restitution or disgorgement of profits or revenues;

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suspension or withdrawal of marketing approvals;

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damage to relationships with any potential collaborators;

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unfavorable press coverage and damage to our reputation;

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refusal to permit the import or export of our products;

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product seizure;

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exclusion from participation in federal healthcare reimbursement programs or debarment or the imposition of Corporate Integrity Agreements; or

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injunctions or the imposition of civil or criminal penalties.

Non-compliance by us or any future collaborator with regulatory requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with regulatory requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, also can result in significant financial penalties. Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

Inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies have delayed the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which has adversely affected our business. The FDA announced that in order to bring new therapies to patients sick with COVID-19 as quickly as possible, it has redeployed medical and regulatory staff from other areas to work on COVID-19 therapies. On June 19, 2020 we received a second Complete Response Letter in connection with our NDA for CONTEPO for the treatment of cUTIs, including AP due to issues at our third party manufacturers that could not be inspected by the FDA owing to operational restrictions placed on the FDA by COVID-19. Additionally, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.

In some countries, particularly the member states of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. Also, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of

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cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidate to other available therapies to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on prices or reimbursement levels within the country of publication and other countries. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

Fast track designation by the FDA may not actually lead to a faster development or regulatory review or approval process and does not assure FDA approval of our product candidate.

If a drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address an unmet medical need for this condition, the drug sponsor may apply for FDA fast track designation. The FDA has designated the IV formulation of CONTEPO as a qualified infectious disease product, or QIDP, and granted a fast track designation for this formulation of CONTEPO. However, neither the QIDP nor the fast track designation ensures that CONTEPO will receive marketing approval or that approval will be granted within any particular timeframe. We may, however, not experience a faster development process, review or approval compared to conventional FDA procedures. In addition, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. Fast track designation alone does not guarantee qualification for the FDA’s priority review procedures.

Priority review designation by the FDA may not lead to a faster regulatory review or approval process and, in any event, does not assure FDA approval of our product candidate.

If the FDA determines that a product candidate offers major advances in treatment or provides a treatment where no adequate therapy exists, the FDA may designate the product candidate for priority review. A priority review designation means that the FDA’s goal to review an application is six months, rather than the standard review period of ten months. CONTEPO was granted priority review by the FDA, and we may also request priority review for other product candidates. The FDA has broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily mean a faster regulatory review process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or thereafter.

Designation of CONTEPO as a Qualified Infectious Disease Product does not assure FDA approval of this product candidate.

A QIDP is an antibacterial or antifungal drug intended to treat serious or life-threatening infections, including those caused by an antibacterial or antifungal resistant pathogen, including novel or emerging infectious pathogens or certain “qualifying pathogens.” Upon the approval of an NDA for a drug product designated by the FDA as a QIDP, the product is granted an additional period of five years of regulatory exclusivity. Even though we have received a QIDP designation for CONTEPO, there is no assurance that CONTEPO will be approved by the FDA.

If the FDA does not conclude that our product candidates satisfy the requirements under Section 505(b)(2) of the Federal Food Drug and Cosmetics Act, or if the requirements for such product candidates under Section 505(b)(2) are not as we expect, the approval pathway for those product candidates may take longer, cost more and entail greater complications and risks than anticipated, and may not be successful.

We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States in October 2018, and we resubmitted the NDA in December 2019, utilizing Section 505(b)(2) of the Food, Drug and Cosmetic Act, or the FDCA, which was enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Act. Section 505(b)(2) permits the submission of an NDA where at

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least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference.

For NDAs submitted under Section 505(b)(2) of the FDCA, the patent certification and related provisions of the Hatch-Waxman Act apply. In accordance with the Hatch-Waxman Act, such NDAs may be required to include certifications, known as Paragraph IV certifications, that certify any patents listed in the Orange Book publication in respect to any product referenced in the 505(b)(2) application are invalid, unenforceable and/or will not be infringed by the manufacture, use or sale of the product that is the subject of the 505(b)(2) application. Under the Hatch-Waxman Act, the holder of the NDA which the 505(b)(2) application references may file a patent infringement lawsuit after receiving notice of the Paragraph IV certification. Filing of a patent infringement lawsuit triggers a one-time automatic 30-month stay of the FDA’s ability to approve the 505(b)(2) application. We have not conducted a comprehensive freedom-to-operate review with regard to CONTEPO.

Accordingly, we may invest a significant amount of time and expense in the development of CONTEPO or any other product candidate we may develop and experience significant delays and patent litigation before such products may be commercialized, if at all. A Section 505(b)(2) application also may not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the referenced product has expired. The FDA may also require us to perform one or more additional clinical studies or measurements to support the change from the approved product. The FDA may then approve the new formulation for all or only some of the indications sought by us. The FDA may also reject our future Section 505(b)(2) submissions and may require us to file such submissions under Section 501(b)(1) of the FDCA, which could be considerably more expensive and time consuming.

In addition, notwithstanding the approval of a number of products by the FDA under Section 505(b)(2) over the last few years, certain competitors and others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, the FDA may be required to change its 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2). It is not uncommon for a manufacturer of an approved product to file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending competing products. If successful, such petitions can significantly delay, or even prevent, the approval of the new product. However, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition. Thus, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to faster product development or earlier approval.

If the FDA does not conclude that CONTEPO, or any of our other product candidates for which we may utilize the 505(b)(2) pathway, satisfies the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of any of our product candidates, including CONTEPO, under Section 505(b)(2) are not as we expect, the approval pathway for CONTEPO and any of our other product candidates for which we may utilize the 505(b)(2) pathway will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful.

Under the CURES Act and the Trump Administration’s regulatory reform initiatives, the FDA’s policies, regulations and guidance may be revised or revoked and that could prevent, limit or delay regulatory approval of our product candidates, which would impact our ability to generate revenue.

In December 2016, the 21st Century Cures Act, or the Cures Act was signed into law. The Cures Act, among other things, is intended to modernize the regulation of drugs and spur innovation, but its ultimate implementation is unclear. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. For example, certain policies of

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the Trump administration may impact our business and industry. Namely, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. An under-staffed FDA could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all. Moreover, on January 30, 2017, President Trump issued an Executive Order, applicable to all executive agencies, including the FDA, which requires that for each notice of proposed rulemaking or final regulation to be issued in fiscal year 2017, the agency shall identify at least two existing regulations to be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. For fiscal years 2018 and beyond, the Executive Order requires agencies to identify regulations to offset any incremental cost of a new regulation and approximate the total costs or savings associated with each new regulation or repealed regulation. In interim guidance issued by the Office of Information and Regulatory Affairs within the Office of Management and Budget on February 2, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents. In addition, on February 24, 2017, President Trump issued an executive order directing each affected agency to designate an agency official as a “Regulatory Reform Officer” and establish a “Regulatory Reform Task Force” to implement the two-for-one provisions and other previously issued executive orders relating to the review of federal regulations, however it is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Our relationships with healthcare providers, physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which in the event of a violation could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any of our products, including XENLETA, and product candidates, including CONTEPO, for which we obtain marketing approval. Our future arrangements with healthcare providers, physicians and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute XENLETA and any other products for which we obtain marketing approval. Restrictions under applicable federal, state, and foreign healthcare laws and regulations, include the following:

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the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

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the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at a minimum of $11,181 and a maximum of $22,363 per false claim;

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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

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the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to report payments and other transfers of value to physicians and teaching hospitals, with data collection beginning in August 2013; and

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, and foreign anti-corruption laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require product manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus complicating compliance efforts.

If our operations are found to be in violation of any of the laws described above or any governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our financial results. We have developed and implemented a corporate compliance program designed to ensure that we will market and sell any approved products in compliance with all applicable laws and regulations, but we cannot guarantee that this program will protect us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Current and future legislation may increase the difficulty and cost for us and any future collaborators to obtain marketing approval of and commercialize our products and product candidates and affect the prices we, or they, may obtain.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, prevent or delay marketing approval of CONTEPO or any of our other product candidates, restrict or regulate post-approval activities and affect our ability, or the ability of any collaborators, to profitably sell any products, including XENLETA, or product candidates, including CONTEPO, for which we, or they, obtain marketing approval. We expect that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we, or any future collaborators, may receive for any approved products.

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In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA. Among the provisions of the ACA of potential importance to our business and our product candidates are the following:

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an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription products and biologic agents;

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an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

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expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;

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a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices;

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extension of manufacturers’ Medicaid rebate liability;

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expansion of eligibility criteria for Medicaid programs;

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expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

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new requirements to report certain financial arrangements with physicians and teaching hospitals;

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a new requirement to annually report product samples that manufacturers and distributors provide to physicians; and

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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include the Budget Control Act of 2011, which among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in April 2013 and, due to subsequent legislative amendments to the statutes, will stay in effect through 2029 unless additional Congressional action is taken, and the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Further, there have been several recent U.S. congressional inquiries and proposed state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

We expect that these healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market. Reductions in reimbursement levels may negatively impact the prices we receive or the frequency with which our products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. Since enactment of the ACA, there have been numerous legal challenges and Congressional actions to repeal and replace provisions of the law.

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Congress has repeatedly tried to repeal, replace and amend the ACA in recent years. With enactment of the legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, which was signed by the President on December 22, 2017, Congress repealed the “individual mandate” for the ACA. The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019. Additionally, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the ACA-mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the health insurer tax. Further, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” The Congress may consider other legislation to replace elements of the ACA during the next Congressional session.

The Trump Administration has also taken executive actions to undermine or delay implementation of the ACA. Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. One Executive Order directs federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. The second Executive Order terminates the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys Generals filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. In addition, CMS has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. Further, on June 14, 2018, U.S. Court of Appeals for the Federal Circuit ruled that the federal government was not required to pay more than $12 billion in ACA risk corridor payments to third-party payors who argued were owed to them. This decision is under review by the U.S. Supreme Court during its current term. The full effects of this gap in reimbursement on third-party payors, the viability of the ACA marketplace, providers, and potentially our business, are not yet known.

In addition, the Centers for Medicare & Medicaid Services, or CMS, has proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. On November 30, 2018, CMS announced a proposed rule that would amend the Medicare Advantage and Medicare Part D prescription drug benefit regulations to reduce out of pocket costs for plan enrollees and allow Medicare plans to negotiate lower rates for certain drugs. Among other things, the proposed rule changes would allow Medicare Advantage plans to use pre authorization, or PA, and step therapy, or ST, for six protected classes of drugs, with certain exceptions, permit plans to implement PA and ST in Medicare Part B drugs; and change the definition of “negotiated prices” in the regulations. It is unclear whether these proposed changes will be accepted, and if so, what effect such changes will have on our business. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. The Trump administration and CMS have both stated that the ruling will have no immediate effect, and on December 30, 2018 the same judge issued an order staying the judgment pending appeal. The Trump Administration recently represented to the Court of Appeals considering this judgment that it does not oppose the lower court’s ruling. On July 10, 2019, the Court of Appeals for the Fifth Circuit heard oral argument in this case. On December 18, 2019, that court affirmed the lower court’s ruling that the individual mandate portion of the ACA is unconstitutional and it remanded the case to the district court for reconsideration of the severability question and additional analysis of the provisions of the ACA. On January 21, 2020, the U.S. Supreme Court declined to review this decision on an expedited basis. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results.

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Further, there have been several recent U.S. congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products. At the federal level, the Trump administration’s budget proposal for fiscal year 2019 contains further drug price control measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. While any proposed measures will require authorization through additional legislation to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

In addition, on May 11, 2018, the Administration issued a plan to lower drug prices. Under this blueprint for action, the Administration indicated that the Department of Health and Human Services, or HHS, will take steps to end the gaming of regulatory and patent processes by drug makers to unfairly protect monopolies; advance biosimilars and generics to boost price competition; evaluate the inclusion of prices in drug makers’ advertisements to enhance price competition; speed access to and lower the cost of new drugs by clarifying policies for sharing information between insurers and drug makers; avoid excessive pricing by relying more on value-based pricing by expanding outcome-based payments in Medicare and Medicaid; work to give Part D plan sponsors more negotiation power with drug makers; examine which Medicare Part B drugs could be negotiated for a lower price by Part D plans, and improving the design of the Part B Competitive Acquisition Program; update Medicare’s drug-pricing dashboard to increase transparency; prohibit Part D contracts that include “gag rules” that prevent pharmacists from informing patients when they could pay less out-of-pocket by not using insurance; and require that Part D plan members be provided with an annual statement of plan payments, out-of-pocket spending, and drug price increases. In addition, on December 23, 2019, the Trump Administration published a proposed rulemaking that, if finalized, would allow states or certain other non-federal government entities to submit importation program proposals to FDA for review and approval. Applicants would be required to demonstrate their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers. At the same time, FDA issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-market approved products).

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

Moreover, legislative and regulatory proposals have also been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical drugs. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our drug candidates, if any, may be. In addition, increased scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us and any future collaborators to more stringent drug labeling and post-marketing testing and other requirements.

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We are subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect our business, results of operations and financial condition.

Our operations are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act, or FCPA, the Irish Criminal Justice (Corruption Offenses) Act, and other anti-corruption laws that apply in countries where we do business and may do business in the future. The FCPA and these other laws generally prohibit us, our officers, and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We may in the future operate in jurisdictions that pose a high risk of potential FCPA violations, and we may participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in that existing laws might be administered or interpreted.

Compliance with the FCPA and other anti-corruption laws is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United States, and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, collectively referred to as the trade control laws.

There is no assurance that we will be effective in ensuring our compliance with all applicable anti-corruption laws, including the FCPA or other legal requirements, including trade control laws. If we are not in compliance with the FCPA and other anti-corruption laws or trade control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of the FCPA, other anti-corruption laws or trade control laws by U.S. or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition.

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.

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations currently, and may in the future, involve the use of hazardous and flammable materials, including chemicals and medical and biological materials, and produce hazardous waste products. Even if we contract with third parties for the disposal of these materials and wastes, we cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials or disposal of hazardous wastes, we could be held liable for any resulting damages, and any liability could exceed our resources.

Although we maintain workers’ compensation insurance to cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We also maintain a general liability program for some of the risks, but our insurance program includes limited environmental damage coverage, which has an annual aggregate coverage limit of $2.0 million. Although we maintain an umbrella policy with an annual aggregate coverage limit of $10.0 million, which may provide some environmental coverage, we do not maintain a separate policy covering environmental damages.

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In addition, we may incur substantial costs to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Our employees may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable non-U.S. regulatory authorities, provide accurate information to the FDA or comparable non-U.S. regulatory authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-U.S. regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements.

Employee misconduct could also involve the improper use of information obtained during clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cyber security incidents, could harm our ability to operate our business effectively.

We are increasingly dependent upon technology systems and data to operate our business. In particular, the COVID-19 pandemic has caused us to modify our business practices, including the requirement that our office-based employees work from home. As a result, we are increasingly dependent upon our technology systems to operate our business and our ability to effectively manage our business depends on the security, reliability and adequacy of our technology systems and data.

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such systems are also vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, unauthorized access to or deletion of files, social engineering and other means to affect the service reliability and threaten the confidentially, integrity and availability of information. Cyber-attacks also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient.

System failures, accidents or security breaches could cause interruptions in our operations, and could result in a material disruption of our drug development programs and commercialization activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of clinical trial data could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our product research, development and commercialization efforts could be delayed.

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We are subject to various laws protecting the confidentiality of certain patient health information, and our failure to comply could result in penalties and reputational damage.

Certain countries in which we operate have, or are developing, laws protecting the confidentiality of certain patient health information. European Union member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations.

For example, the European Union General Data Protection Regulation, or the GDPR, which came into force on May 25, 2018, introduced new data protection requirements in the European Union and substantial fines for breaches of the data protection rules. The GDPR imposes strict obligations and restrictions on controllers and processors of personal data including, for example, expanded disclosures about how personal data is to be used, increased requirements pertaining to health data and pseudonymised (i.e., key-coded) data, mandatory data breach notification requirements and expanded rights for individuals over their personal data. This could affect our ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting, or could cause our costs to increase, and harm our business and financial condition.

While the GDPR, as a directly effective regulation, was designed to harmonize data protection law across the European Union, it does permit member states to legislate in many areas (particularly with regard to the processing of genetic, biometric or health data), meaning that inconsistencies between different member states will still arise. European Union member states have their own regimes on medical confidentiality and national and European Union-level guidance on implementation and compliance practices is often updated or otherwise revised, which adds to the complexity of processing personal data in the European Union.

Risks Related to Our Acquisition of Zavante

We may fail to realize the anticipated benefits of our Acquisition of Zavante, those benefits may take longer to realize than expected, and we may encounter significant integration difficulties.

On July 24, 2018, we completed the Acquisition, of Zavante pursuant to the Merger Agreement. Our ability to realize the anticipated benefits of the Acquisition will depend, to a large extent, on our ability to integrate Zavante and CONTEPO into our business and business strategy and realize anticipated growth opportunities and synergies. The integration process has been, and we expect will continue to be complex, costly and time-consuming. As a result, we have been, and in the future will be, required to devote significant management attention and resources to integrating Zavante into our business and CONTEPO into our business strategy. The integration process may be disruptive to our business and the expected benefits may not be achieved within the anticipated time frame, or at all. The failure to meet the challenges involved and to realize the anticipated benefits of the Acquisition could cause an interruption of, or a loss of momentum in, our development and commercialization efforts, including with respect to XENLETA and CONTEPO, and could adversely affect our business, financial condition and results of operations.

Our ability to realize the anticipated benefits of the Acquisition is expected to entail numerous additional material potential difficulties, including, among others:

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any delay or failure in obtaining marketing approvals for CONTEPO, or any delay or failure to commercialize CONTEPO in the United States thereafter;

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increased scrutiny from third parties, including regulators, legislative bodies and enforcement agencies, including with respect to product pricing and commercialization matters;

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changes in laws or regulations that adversely impact the anticipated benefits of the Acquisition;

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challenges related to the perception by patients, the medical community and third-party payors of CONTEPO for the treatment of cUTIs;

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disruptions to our manufacturing arrangements with third-party manufacturers, including our manufacturing and supply arrangements with respect to CONTEPO and disruptions to our third-party distribution channel;

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difficulties in managing the expanded operations of a larger and more complex company following the Acquisition;

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the diversion of management attention to integration matters;

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difficulties in achieving the anticipated business opportunities and growth prospects from the Acquisition;

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the size of the treatable patient population for CONTEPO may be smaller than we believe it is;

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difficulties in attracting and retaining key personnel; and

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potential unknown liabilities, adverse consequences, unforeseen increased expenses or other unanticipated problems associated with the Acquisition.

Many of these factors are outside of our control, and any one of them could result in increased costs, decreased expected revenues and further diversion of management time and energy, which could materially adversely impact our business, financial condition and results of operations.

Upfront consideration for the Acquisition was comprised of 8,152,092 of our ordinary shares, including the 815,186 ordinary shares that were initially held back but which were issued in July 2019 upon release of the Holdback Shares pursuant to the terms of the Merger Agreement. Pursuant to the Merger Agreement, former Zavante stockholders are also entitled to receive from us, subject to the terms and conditions of the Merger Agreement, up to $97.5 million in contingent consideration, of which $25.0 million would become payable upon the first approval of a new drug application from the FDA, for CONTEPO for any indication, or the Approval Milestone Payment, and an aggregate of up to $72.5 million would become payable upon the achievement of specified net sales milestones, or the Net Sales Milestone Payments, with the first commercial milestone becoming payable when CONTEPO exceeds $125.0 million in net sales in a calendar year. At our Extraordinary General Meeting of Shareholders held in October 2018, our shareholders approved the issuance of ordinary shares in settlement of potential milestone payment obligations that may become payable in the future to former Zavante stockholders, including the Approval Milestone Payment which will be settled in our ordinary shares. We also now have the right to settle the Net Sales Milestone Payments in ordinary shares, except as otherwise provided in the Merger Agreement. The issuance of our ordinary shares in connection with the closing of the Acquisition was dilutive to our existing shareholders, and the future issuance of our ordinary shares to satisfy our milestone payment obligations would be further dilutive to our then existing shareholders.

Also, following the Acquisition, we now possess certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by us upon closing of the Acquisition. Prior to the Acquisition, former Zavante stockholders and SG Pharmaceuticals, Inc. entered into a stock purchase agreement, dated as of May 5, 2015, or the Stock Purchase Agreement, pursuant to which SG Pharmaceuticals, Inc. acquired all of the outstanding capital stock of Zavante from the Zavante selling stockholders and SG Pharmaceuticals, Inc., subsequently merged with and into Zavante, with Zavante as the surviving entity. Pursuant to the Stock Purchase Agreement, Zavante (as successor to SG Pharmaceuticals, Inc.) is obligated to make milestone payments payable in cash to the selling stockholders of $3.0 million upon marketing approval by the FDA with respect to any oral, intravenous or other form of fosfomycin, or the Zavante Products, and milestone payments that may be settled in ordinary shares of up to $26.0 million in the aggregate upon the occurrence of various specified levels of net sales with respect to the Zavante Products. In addition, Zavante is obligated to make annual royalty payments to the selling stockholders of a mid-single-digit percentage of net sales of Zavante Products, subject to adjustment based on net sales thresholds and with such percentage reduced to low single-digits if generic fosfomycin products account for half of the applicable market on a product-by-product and country-by-country basis. The Stock Purchase Agreement also provides that Zavante will pay to the selling stockholders a mid-single-digit percentage of transaction revenue in connection with the consummation of the grant, sale, license or transfer

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of market exclusivity rights for a qualified infectious disease product (within the meaning of the Cures Act) related to a Zavante Product.

In addition, we expect to incur expenses related to the continued development, regulatory approval process and commercialization with respect to CONTEPO. Zavante has entered into a manufacturing and supply agreement with Fisiopharma, pursuant to which Zavante has an obligation to purchase a minimum percentage of its commercial requirements of CONTEPO in the United States. Zavante has also entered into a manufacturing and exclusive supply agreement with Laboratorios ERN, S.A., pursuant to which Laboratorios ERN, S.A. has agreed to supply Zavante with certain technical documentation and data as required for submission of an NDA, or an abbreviated new drug application for CONTEPO and certain regulatory support in connection with the commercial sale and use of CONTEPO in the United States, and which provides for payments to Laboratorios ERN, S.A. of a one-time cash payment upon the first commercial sale of CONTEPO and subsequent quarterly payments thereafter based on the number of vials of CONTEPO sold in the United States during each quarter. Zavante has also entered into a manufacturing and supply agreement with Ercros, S.A., pursuant to which Ercros, S.A. supplies to Zavante, on an exclusive basis, a blend of fosfomycin disodium and succinic acid, or API Mixture, for CONTEPO and, if CONTEPO is approved, will supply the commercial API Mixture for CONTEPO in the United States.

Because we have limited financial resources, by investing in the Acquisition, we may forgo or delay pursuit of other opportunities that may have proven to have greater commercial potential. Further, it is possible that undisclosed, contingent, or other liabilities or problems may arise in the future of which we were previously unaware. These undisclosed liabilities could have an adverse effect on our business, financial condition and results of operations.

All of these factors could decrease or delay the expected accretive effect of the Acquisition and negatively impact our stock price. As a result, it cannot be assured that the Acquisition will result in the full realization of the benefits anticipated from the Acquisition or in the anticipated time frames or at all.

Risks Related to Employee Matters

Our future success depends on our ability to attract, retain and motivate key executives and qualified personnel.

We are highly dependent on the principal members of our management team. Although we have formal employment agreements with each of our executive officers, these agreements do not prevent our executives from terminating their employment with us at any time. We do not maintain “key person” insurance on any of our executive officers. The unplanned loss of the services of any of these persons might impede the achievement of our research, development and commercialization objectives.

Recruiting and retaining qualified personnel, including in the United States and Ireland where we have key business processes, will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. Our functional teams are small and therefore attrition can lead to gaps in institutional knowledge and risks to running the business. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by companies other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we cannot recruit and retain qualified personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates.

We have recently reduced the size of our organization, and we may encounter difficulties in managing our business as a result of this reduction, or the attrition that may occur following this reduction, which could disrupt our operations. In addition, we may not achieve anticipated benefits and savings from the reduction.

In April 2020, we announced a plan to restructure our hospital-based commercial sales force and transition to a community-based sales effort. The restructuring is intended to reduce costs and to align the capabilities of our sales efforts with our strategic re-focus on making sales of XENLETA to community health care professionals, as well as our business development strategy to in-license additional community products, such as SIVEXTRO and additional

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community products. The restructuring resulted in the termination of long-term employees, the loss of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities across the organization, all of which could adversely affect our operations. Given the complexity and nature of our business, we must continue to implement and improve our managerial, operational and financial systems, manage our facilities and continue to recruit and retain qualified personnel. This will be made more challenging given the restructuring described above and additional measures we may take to reduce costs. As a result, our management may need to divert a disproportionate amount of its attention away from our day-to-day strategic and operational activities and devote a substantial amount of time to managing these organizational changes. Further, the restructuring and possible additional cost containment measures may yield unintended consequences, such as attrition beyond our intended reduction in headcount and reduced employee morale. In addition, the restructuring may result in employees who were not affected by the reduction in headcount seeking alternate employment, which would result in us seeking contract support at unplanned additional expense. In addition, we may not achieve anticipated benefits from the restructuring. Due to our limited resources, we may not be able to effectively manage our operations or recruit and retain qualified personnel, which may result in weaknesses in our infrastructure and operations, risks that we may not be able to comply with legal and regulatory requirements, loss of business opportunities, loss of employees and reduced productivity among remaining employees. We may also determine to take additional measures to reduce costs, which could result in further disruptions to our operations and present additional challenges to the effective management of our company. If our management is unable to effectively manage this transition and restructuring and additional cost containment measures, our expenses may be more than expected, and we may not be able to implement our business strategy.

Risks Related to Ownership of Our Ordinary Shares

An active trading market for our ordinary shares may not be sustained.

Our ordinary shares began trading on the Nasdaq Global Select Market on June 26, 2017. Given the limited trading history of our ordinary shares, there is a risk that an active trading market for our ordinary shares will not be sustained, which could put downward pressure on the market price of our ordinary shares and thereby affect the ability of our security holders to sell their shares.

The price of our ordinary shares may be volatile and fluctuate substantially.

The trading price of our ordinary shares has been and is likely to continue to be volatile. The stock market in general and the market for smaller biopharmaceutical companies in particular have experienced significant volatility that has often been unrelated to the operating performance of particular companies. The market price for our ordinary shares may be influenced by many factors, including:

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our ability to successfully commercialize the oral and intravenous formulations of XENLETA for the treatment of CABP and the intravenous formulation of CONTEPO, if approved;

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our ability to promote and distribute SIVEXTRO;

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our ability to obtain FDA approval of CONTEPO;

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our ability to successfully implement our proposed business strategy;

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the success of competitive products or technologies;

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results of clinical trials of our product candidates or those of our competitors;

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regulatory delays and greater government regulation of potential products due to adverse events;

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regulatory or legal developments in the United States, the European Union and other countries or regions;

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developments or disputes concerning patent applications, issued patents or other proprietary rights;

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the recruitment or departure of key personnel;

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the level of expenses related to any of our product candidates or clinical development programs;

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the results of our efforts to discover, develop, acquire or in-license additional product candidates or products, including additional community products;

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one or more of our manufacturers or suppliers could have an event which causes an unforeseen disruption of the manufacture or supply of our product candidates;

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our ability to comply with the restrictive covenants under our Loan Agreement and avoid an event of default that may lead to an acceleration of the amounts due under the Loan Agreement;

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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

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variations in our financial results or those of companies that are perceived to be similar to us;

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perception and market performance of companies that are perceived to be similar to us:

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changes in the structure of healthcare payment systems;

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market conditions in the pharmaceutical and biotechnology sectors;

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activism by any single large shareholder or combination of shareholders;

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the societal and economic impact of public health epidemics, such as the ongoing COVID-19 pandemic;

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general economic, industry and market conditions; and

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the other factors described in this “Risk Factors” section.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. We also may face securities class-action litigation if we cannot obtain regulatory approvals for or if we otherwise fail to successfully commercialize XENLETA or, if approved, CONTEPO or any of our other product candidates or if our securities experience volatility for any reason. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources. For example, we and our Chief Executive Officer, Chief Medical Officer and Chief Financial Officer have been named as defendants in a purported class action lawsuit following our announcement in April 2019 that the FDA issued a Complete Response Letter in connection with our NDA for CONTEPO for injection for the treatment of cUTIs, including AP, stating that it was unable to approve the application in its current form. See “—Risks Related to Our Financial Position and Need for Additional Capital— We and our Chief Executive Officer, Chief Medical Officer and Chief Financial Officer have been named as defendants in a lawsuit that could result in substantial costs and divert management’s attention.”.

The number of shares of ordinary shares underlying our outstanding warrants is significant in relation to our currently outstanding ordinary shares, which could have a negative effect on the market price of our ordinary shares and make it more difficult for us to raise funds through future equity offerings.

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As part of our May 2020 registered direct offering, we issued warrants to purchase an aggregate of up to 41,445,373 ordinary shares at an exercise price of $0.792 per share. As part of our December 2019 registered direct offering, we issued warrants to purchase an aggregate of up to 13,793,106 shares of ordinary shares at an exercise price of $1.90 per share. Substantially all of these warrants remain outstanding and, upon exercise in full of these warrants, the shares issuable upon exercise would represent a significant portion of our outstanding ordinary shares. Each of the December 2019 warrants is initially exercisable six months following the date of issuance, which was December 24, 2019, and will expire on the three-year anniversary of the date on which such warrants became initially exercisable. Each of the May 2020 warrants is initially exercisable and will expire on the two-year anniversary of the date of issuance. We have registered the issuance of shares upon exercise of these warrants under a registration statement under the Securities Act of 1933, as amended, and, accordingly, such shares can be freely sold into the public market upon issuance, subject to volume limitations applicable to affiliates. Sales of these shares could cause the market price of our ordinary shares to decline significantly. Furthermore, if our share price rises, the holders of these warrants may be more likely to exercise their warrants and sell a large number of shares, which could negatively impact the market price of our ordinary shares and reduce or eliminate any appreciation in our share price that might otherwise occur.

We may also find it more difficult to raise additional equity capital while these warrants are outstanding. At any time during which these warrants are likely to be exercised, we may be unable to obtain additional equity capital on more favorable terms from other sources. In addition, the exercise of these warrants would result in a significant increase in the number of our outstanding ordinary shares, which could have the effect of significantly diluting the interest of our current shareholders, and following such exercise the former holders of such warrants could have significant influence over our company as a result of the ordinary shares they acquire upon such exercise.

If we fail to meet the requirements for continued listing on The Nasdaq Global Select Market, our ordinary shares could be delisted from trading, which would decrease the liquidity of our ordinary shares and our ability to raise additional capital.

Our ordinary shares are currently listed for quotation on The Nasdaq Global Select Market. We are required to meet specified requirements in order to maintain our listing on The Nasdaq Global Select Market, including, among other things, a minimum bid price of $1.00 per share.

On April 29, 2020, we received written notice from The Nasdaq Stock Market LLC, or Nasdaq, indicating that, based on the closing bid for the last 30 consecutive business days, we are not in compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Global Select Market, as set forth in Listing Rule 5450(a)(1), or the Bid Price Rule. The notice did not result in the immediate delisting of our ordinary shares from The Nasdaq Global Select Market. In accordance with Listing Rule 5810(c)(3)(A), we have a period of 180 calendar days to regain compliance with the Bid Price Rule. However, due to recent market conditions, Nasdaq has determined to toll the compliance period for the Bid Price Rule through June 30, 2020. As a result, the compliance period for the Bid Price Rule will be reinstated on July 1, 2020 and the Company will have until December 28, 2020, or the Compliance Date, to regain compliance with the Bid Price Rule. To regain compliance, the closing bid price of our ordinary shares must be at least $1.00 per share for a minimum of ten consecutive business days on or before the Compliance Date. If we do not regain compliance with the Bid Price Rule by the Compliance Date, we may be eligible for an additional 180 calendar day compliance period. In addition to continuing to monitor the closing bid price of our ordinary shares, we expect to consider available options to regain compliance with the Bid Price Rule, which could include seeking to effect a reverse stock split. However, there can be no assurance that we will be able to regain compliance with the Bid Price Rule.

If we do not regain compliance with the Bid Price Rule by the Compliance Date or if in the future we fail to satisfy The Nasdaq Global Select Market’s other continued listing requirements, we may transfer to The Nasdaq Capital Market, which generally has lower financial requirements for initial listing, to avoid delisting, or, if we fail to meet its listing requirements, the OTC Bulletin Board. A transfer of our listing to The Nasdaq Capital Market or having our ordinary shares trade on the OTC Bulletin Board could adversely affect the liquidity of our ordinary shares. Any such event could make it more difficult to dispose of, or obtain accurate quotations for the price of, our ordinary shares, and there also would likely be a reduction in our coverage by securities analysts and the news media, which could cause the price of our ordinary shares to decline further. We may also face other material adverse consequences in such event, such as negative publicity, a decreased ability to obtain additional financing, diminished investor and/or employee

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confidence, and the loss of business development opportunities, some or all of which may contribute to a further decline in our share price.

At our Annual Shareholders Meeting on July 29, 2020, our shareholders approved, subject to and conditional upon the board of directors determining, in its sole discretion, that a reverse stock split is necessary for the Company to comply with the minimum $1.00 per share requirement pursuant to Nasdaq Listing Rule 5450(a)(1), or the Bid Price Rule, a reverse stock split (i.e., a consolidation of share capital under Irish law) whereby every 10 ordinary shares of $0.01 (nominal value) each in the authorized and unissued and authorized and issued share capital of the Company be consolidated into 1 ordinary share of $0.10 (nominal value) each, and the subsequent reduction in the nominal value of the ordinary shares in the authorized and unissued and authorized and issued share capital of the Company from $0.10 each to $0.01 each.

There are many factors that may adversely affect our minimum bid price, including those described throughout this section titled “Risk Factors”. Many of these factors are outside our control. As a result, we may not be able to comply with the Bid Price Rule. Any potential delisting of our ordinary shares from The Nasdaq Global Select Market would likely result in decreased liquidity and increased volatility for our ordinary shares and would adversely affect our ability to raise additional capital or enter into strategic transactions. Any potential delisting of our ordinary shares from The Nasdaq Global Select Market would also make it more difficult for our shareholders to sell their ordinary shares in the public market.

Our ordinary shares do not trade on any exchange outside of the United States.

Our ordinary shares are listed only in the United States on The Nasdaq Global Select Market, and we have no plans to list our ordinary shares in any other jurisdiction. As a result, a holder of ordinary shares outside of the United States may not be able to effect transactions in our ordinary shares as readily as the holder may if our ordinary shares were listed on an exchange in that holder’s home jurisdiction.

Substantial future sales of our ordinary shares in the public market, or the perception that these sales could occur, could cause the price of our ordinary shares to decline significantly, even if our business is doing well.

Sales of a substantial number of our ordinary shares, or the perception in the market that these sales could occur, could reduce the market price of our ordinary shares. We had 142,965,483 ordinary shares outstanding as of June 30, 2020. To the extent any of these shares are sold into the market, particularly in substantial quantities, the market price of our ordinary shares could decline.

Future issuances of ordinary shares pursuant to our equity incentive plans could also result in a reduction in the market price of our ordinary shares. We have filed registration statements on Form S-8 registering all of the ordinary shares that we may issue under our equity compensation plans. These shares can be freely sold in the public market upon issuance and once vested, subject to volume, notice and manner of sale limitations applicable to affiliates. The majority of ordinary shares that may be issued under our equity compensation plans remain subject to vesting in tranches over a four-year period. As of June 30, 2020, an aggregate of 4,229,437 options to purchase our ordinary shares had vested and become exercisable although these options all have an exercise price that is higher than the recent market trading prices of our ordinary shares.

In addition, on June 25, 2019 we entered into the Jefferies ATM Agreement with Jefferies, as agent, pursuant to which we may offer and sell ordinary shares for aggregate gross sale proceeds of up to $50.0 million from time to time through Jefferies under an “at-the-market” offering program. As of the date of this filing, we have issued and sold an aggregate of 13,117,034 ordinary shares under the Jefferies ATM Agreement, for gross proceeds of $18.0 million, and net proceeds of $17.2 million, after deducting commissions and offering costs. We previously entered into the Cantor ATM Agreement with Cantor Fitzgerald & Co. that we terminated effective as of June 24, 2019. As of the effective date of the termination of the Cantor ATM Agreement, we had issued and sold an aggregate of 10,316,190 of our ordinary shares pursuant to the Cantor ATM Agreement for aggregate gross proceeds of $37.8 million and net proceeds to us of $36.3 million, after deducting commissions and offering expenses payable by us.

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Moreover, as part of our May 2020 registered direct offering, we issued warrants to purchase an aggregate of up to 41,445,373 shares of ordinary shares at an exercise price of $0.792 per share. In addition, as part of our December 2019 registered direct offering, we issued warrants to purchase an aggregate of up to 13,793,106 shares of ordinary shares at an exercise price of $1.90 per share. Substantially all of these warrants remain outstanding and, upon exercise in full of these warrants, the shares issuable upon exercise would represent a significant portion of our outstanding ordinary shares. Each of the December 2019 warrants is initially exercisable six months following the date of issuance, which was December 24, 2019, and will expire on the three-year anniversary of the date on which such warrants became initially exercisable. Each of the May 2020 warrants is initially exercisable and will expire on the two-year anniversary of the date of issuance. We have registered the issuance of shares upon exercise of these warrants under a registration statements under the Securities Act of 1933, as amended, and, accordingly, such shares can be freely sold into the public market upon issuance, subject to volume limitations applicable to affiliates. Sales of these shares, or the perception that sales of these shares could occur, could cause the market price of our ordinary shares to decline significantly. Furthermore, if our share price rises, the holders of these warrants may be more likely to exercise their warrants and sell a large number of shares, which could negatively impact the market price of our ordinary shares and reduce or eliminate any appreciation in our share price that might have otherwise occurred.

If a large number of our ordinary shares are sold in the public market after they become eligible for sale, the sales could reduce the trading price of our ordinary shares and impede our ability to raise future capital.

Upfront consideration for the Acquisition was comprised of 8,152,092 of our ordinary shares, including 815,186 ordinary shares that were initially held back but which were issued in July 2019 upon release of the Holdback Shares pursuant to the terms of the Merger Agreement. Such shares are able to be freely sold in the public market, subject to any requirements and restrictions, including any applicable volume limitations, imposed by Rule 144 under the Securities Act. In addition, the Merger Agreement provides that we may issue up to an additional $97.5 million in our ordinary shares to former Zavante stockholders upon the achievement of specified regulatory and commercial milestones in the future, and obligates us to provide registration rights with respect to the registration for resale of such additional ordinary shares that may become issuable upon the achievement of such milestones.

The sale or resale of these shares in the public market, or the market’s expectation of such sales, may result in an immediate and substantial decline in our stock price. Such a decline will adversely affect our investors and also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

We are an “emerging growth company” and a “smaller reporting company”, and the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies may make our ordinary shares less attractive to investors.

We are an “emerging growth company”, as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until December 31, 2020 or such earlier time that we are no longer an emerging growth company. For so long as we remain an emerging growth company, we are permitted and may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

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an exemption from compliance with the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, on the design and effectiveness of our internal controls over financial reporting;

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an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

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reduced disclosure about our executive compensation arrangements; and

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exemptions from the requirements to obtain a non-binding advisory vote on executive compensation or a shareholder approval of any golden parachute arrangements.

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We may choose to take advantage of some, but not all, of the available exemptions. We may take advantage of these provisions until December 31, 2020 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earlier to occur of: the last day of the fiscal year in which we have more than $1.07 billion (as may be inflation-adjusted by the SEC from time-to-time) in annual revenues; the date we qualify as a “large accelerated filer,” with more than $700 million in market value of our share capital held by non-affiliates; or the issuance by us of more than $1 billion of non-convertible debt over a three-year period.

We may choose to take advantage of some, but not all, of the available benefits under the JOBS Act. We cannot predict whether investors will find our ordinary shares less attractive if we rely on such 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 the market price of our ordinary shares may be more volatile.

We are also a "smaller reporting company" as defined in Rule 12b-2 promulgated under the Exchange Act. We may remain a smaller reporting company until we have a non-affiliate public float in excess of $250 million and annual revenues in excess of $100 million, or a non-affiliate public float in excess of $700 million, each as determined on an annual basis. Even after we no longer qualify as an emerging growth company, we may still qualify as a smaller reporting company, which would allow us to take advantage of many of the same exemptions from disclosure requirements. In addition, the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies that are not emerging growth companies.

We have broad discretion in the use of our funds and may not use them effectively.

We have broad discretion in the application of our available funds and could spend the funds in ways that do not improve our results of operations or enhance the value of our ordinary shares. Our failure to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our ordinary shares to decline and delay the development of our product candidates. Pending their use, we may invest funds in a manner that does not produce income or that loses value.

We incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company we incur, and particularly after we are no longer an emerging growth 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, the listing requirements of The Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations have made it more expensive for us to obtain director and officer liability insurance, and if such insurance becomes prohibitively expensive, this could make it more difficult for us to attract and retain qualified members of our board.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, security holders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our ordinary shares.

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of

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the Sarbanes-Oxley Act, or Section 404, or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. As a growing company, implementing and maintaining effective controls may require more resources, and we may encounter internal control integration difficulties. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting. However, as an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm until we are no longer an emerging growth company. To achieve compliance with Section 404 within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

United States investors may have difficulty enforcing judgments against us, our directors and executive officers.

We are incorporated under the laws of Ireland, and our registered offices and a substantial portion of our assets are located outside of the United States. As a result, it may not be possible to effect service of process on such persons or us in the United States or to enforce judgments obtained in courts in the United States against such persons or us based on civil liability provisions of the securities laws of the United States.

There is no treaty between Ireland and the United States providing for the reciprocal enforcement of judgments obtained in the other jurisdiction and Irish common law rules govern the process by which a U.S. judgment may be enforced in Ireland. The following requirements must be met as a precondition before a U.S. judgment will be eligible for enforcement in Ireland:

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the judgment must be for a definite sum;

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the judgment must be final and conclusive, and the decree must be final and enforceable in the court which pronounces it;

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the judgment must be provided by a court of competent jurisdiction, and the procedural rules of the court giving the foreign judgment must have been observed;

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the U.S. court must have had jurisdiction in relation to the particular defendant according to Irish conflict of law rules; and

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jurisdiction must be obtained by the Irish courts over judgment debtors in enforcement proceedings by service in Ireland or outside Ireland in accordance with the applicable court rules in Ireland.

Even if the above requirements have been met, an Irish court may exercise its right to refuse to enforce the U.S. judgment if the Irish court is satisfied that the judgment (1) was obtained by fraud; (2) is in contravention of Irish public policy; (3) is in breach of natural justice; or (4) is irreconcilable with an earlier judgment. By way of example, a judgment of a U.S. court of liabilities predicated upon U.S. federal securities laws may not be enforced by Irish courts on the grounds of public policy if that U.S. judgment includes an award of punitive damages. Further, an Irish court may stay proceedings if concurrent proceedings are being brought elsewhere.

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We do not expect to pay dividends in the foreseeable future.

We have not paid any dividends on our ordinary shares since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that earnings, if any, will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. If we propose to pay dividends in the future, we must do so in accordance with Irish law, which provides that distributions including dividend payments, share repurchases and redemptions be funded from “distributable reserves.” In addition, the terms of the Loan Agreement with Hercules currently, and the terms of any future debt agreements may in the future, preclude us from paying dividends. Subject to the foregoing, payment of future dividends to security holders will be at the discretion of our board, after taking into account various factors including our business prospects, cash requirements, financial performance, debt covenant limitations and new product development. As a result, capital appreciation, if any, of our ordinary shares will be the sole source of gain for holders of our ordinary shares for the foreseeable future.

We are exposed to risks related to currency exchange rates.

A portion of our expenses are denominated in currencies other than the U.S. dollar. Because our consolidated financial statements are presented in U.S. dollars, changes in currency exchange rates have had and could have a significant effect on our operating results. Exchange rate fluctuations between foreign currencies and the U.S. dollar create risk in several ways, including the following:

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weakening of the U.S. dollar may increase the U.S. dollar cost of overseas research and development expenses;

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strengthening of the U.S. dollar may decrease the value of our revenues denominated in other currencies; and

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the exchange rates on non-U.S. dollar transactions and cash deposits can distort our financial results.

As a holding company, our operating results, financial condition and ability to pay dividends or other distributions are entirely dependent on funding, dividends and other distributions received from our subsidiaries, which may be subject to restrictions.

Our ability to pay dividends or other distributions and to pay our obligations in the future will depend on the level of funding, dividends and other distributions, if any, received from our subsidiaries and any new subsidiaries we establish in the future. The ability of our subsidiaries to make loans or distributions (directly or indirectly) to us may be restricted as a result of several factors, including restrictions in financing agreements and the requirements of applicable law and regulatory and fiscal or other restrictions. In particular, our subsidiaries and any new subsidiaries may be subject to laws that restrict dividend payments, authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries to us, or limit or prohibit transactions with affiliates. Restrictions and regulatory action of this kind could impede access to funds that we may need to make dividend payments or to fund our own obligations.

Furthermore, we may guarantee some of the payment obligations of certain of our subsidiaries from time to time. These guarantees may require us to provide substantial funds or assets to our subsidiaries or their creditors or counterparties at a time when we are in need of liquidity to fund our own obligations.

The ownership percentage of our shareholders may be diluted in the future which could dilute the voting power or reduce the value our outstanding ordinary shares.

As with any publicly traded company, the ownership percentage of our shareholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we intend to continue to grant to our directors, officers and employees. From time to time, we may issue additional options or other share awards to our directors, officers and employees under our benefits plans.

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In addition, our articles of association authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred shares having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our ordinary shares respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our ordinary shares. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of the ordinary shares. Additionally, we may issue and sell our ordinary shares under our Jefferies ATM Agreement from time to time, and we may issue additional ordinary shares as contingent consideration upon the achievement of certain regulatory and commercialization milestones, subject to the terms and conditions of the Merger Agreement. See “—Risks Related to Ownership of our Ordinary Shares—Substantial future sales of our ordinary shares in the public market, or the perception that these sales could occur, could cause the price of our ordinary shares to decline significantly, even if our business is doing well. ”

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation. We are incorporated as a public limited company under Irish law.

The rights of our shareholders are governed by our memorandum and articles of association and Irish law. The rights associated with our ordinary shares are different to the rights generally associated with shares held in a U.S. corporation. Material differences between the rights of shareholders of a U.S. corporation and the rights of our shareholders include differences with respect to, among other things, distributions, dividends, repurchases and redemptions, bonus issues, the election of directors, the removal of directors, the fiduciary and statutory duties of directors, conflicts of interests of directors, the indemnification of directors and officers, limitations on director liability, the convening of annual meetings of shareholders and special shareholder meetings, notice provisions for meetings, the quorum for shareholder meetings, the adjournment of shareholder meetings, the exercise of voting rights, shareholder suits, rights of dissenting shareholders, anti-takeover measures and provisions relating to the ability to amend the articles of association.

As an Irish public limited company, certain capital structure decisions require shareholder approval, which may limit our flexibility to manage our capital structure.

Under Irish law, our board of directors may issue new ordinary or preferred shares up to a maximum amount equal to the authorized but unissued share capital, without shareholder approval, once authorized to do so by our articles of association or by an ordinary resolution of our shareholders. Additionally, subject to specified exceptions, Irish law grants statutory preemption rights to existing shareholders where shares are being issued for cash consideration but allows shareholders to disapply such statutory preemption rights either in our articles of association or by way of special resolution. Such disapplication can either be generally applicable or be in respect of a particular allotment of shares. Accordingly, our articles of association contain, as permitted by Irish company law, provisions authorizing our board of directors to issue new shares, and to disapply statutory preemption rights. The authorization of our board of directors to issue shares and the disapplication of statutory preemption rights must both be renewed by the shareholders at least every five years, and we cannot provide any assurance that these authorizations will always be approved, which could limit our ability to issue equity and thereby adversely affect the holders of our ordinary shares.

Irish law differs from the laws in effect in the U.S. with respect to defending unwanted takeover proposals and may give our board less ability to control negotiations with hostile offerors.

We are subject to the Irish Takeover Panel Act, 1997, Takeover Rules, 2013. Under those Irish Takeover Rules, the board is not permitted to take any action that might frustrate an offer for our ordinary shares once the board has received an approach that may lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions. Potentially frustrating actions such as (i) the issue of ordinary shares, options or convertible securities, (ii) material acquisitions or disposals, (iii) entering into contracts other than in the ordinary course of business or (iv) any action, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of an offer or at any earlier time during which the board has reason to believe an offer is or may be imminent. These provisions may give the board less ability to control negotiations with hostile offerors and protect the interests of holders of ordinary shares than would be the case for a corporation incorporated in a jurisdiction of the United States.

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The operation of the Irish Takeover Rules may affect the ability of certain parties to acquire our ordinary shares.

Under the Irish Takeover Rules, if an acquisition of ordinary shares were to increase the aggregate holding of the acquirer and its concert parties to ordinary shares that represent 30% or more of the voting rights of a company, the acquirer and, in certain circumstances, its concert parties would be required (except with the consent of the Irish Takeover Panel) to make an offer for the outstanding ordinary shares at a price not less than the highest price paid for the ordinary shares by the acquirer or its concert parties during the previous 12 months. This requirement would also be triggered by an acquisition of ordinary shares by a person holding (together with its concert parties) ordinary shares that represent between 30% and 50% of the voting rights in the company if the effect of such acquisition were to increase that person’s percentage of the voting rights by 0.05% within a 12-month period. The Irish Takeover Rules could therefore discourage an investor from acquiring 30% or more of our outstanding ordinary shares, unless such investor was prepared to make a bid to acquire all outstanding ordinary shares.

Certain separate concert parties will also be presumed to be acting in concert. Our board of directors and their relevant family members, related trusts and “controlled companies” are presumed to be acting in concert with any corporate shareholder who holds 20% or more of the company. The application of these presumptions may result in restrictions upon the ability of any of the concert parties and members of our board of directors to acquire more of our securities, including under the terms of any executive incentive arrangements. We may consult with the Irish Takeover Panel with respect to the application of this presumption and the restrictions on the ability to acquire further securities if necessary, although we are unable to provide any assurance as to whether the Irish Takeover Panel would overrule this presumption.

We will be exposed to the risk of future changes in law, which could materially adversely affect us.

We are subject to Irish law. As a result, we are subject to the risk of future adverse changes in Irish law (including Irish corporate and tax law). In addition, we and our subsidiaries are also subject to the risk of future adverse changes in Austrian and U.S. law, as well as changes of law in other countries in which we and our subsidiaries operate.

Future adverse changes in law could result in our not being able to maintain a worldwide effective corporate tax rate that is competitive in our industry.

While we believe that being incorporated in Ireland should not affect our ability to maintain a worldwide effective corporate tax rate that is competitive in our industry, we cannot give any assurance as to what our effective tax rate will be because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we will operate. The tax laws of Ireland, Austria, the United States, and other jurisdictions could change in the future, and such changes could cause a material change in our worldwide effective corporate tax rate. In particular, legislative action could be taken by Ireland, Austria, the United States or other jurisdictions which could override tax treaties upon which we expect to rely and adversely affect our effective tax rate. As a result, our actual effective tax rate may be materially different from our expectation.

The IRS may not agree with the conclusion that we should be treated as a foreign corporation for U.S. federal tax purposes.

Although we are incorporated in Ireland, the IRS may assert that we should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal tax purposes pursuant to Section 7874 of the Code. For U.S. federal tax purposes, a corporation generally is considered a tax resident in the jurisdiction of its organization or incorporation. Because we are an Irish incorporated entity, we would be classified as a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules. Section 7874 of the Code provides an exception under which a foreign incorporated entity may, in certain circumstances, be treated as a U.S. corporation for U.S. federal tax purposes. New statutory and/or regulatory provisions under Section 7874 of the Code or otherwise could be enacted that adversely affect our status as a foreign corporation for U.S. federal tax purposes, and any such provisions could have prospective or retroactive application to us and our shareholders.

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Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in the ownership of its equity by certain significant shareholders over a rolling three year period), the corporation’s ability to use its pre-change net operating loss carryforwards and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. We may have experienced such ownership changes in the past, and we may experience ownership changes in the future as a result of shifts in our share ownership, some of which would be outside our control. If our ability to use our net operating losses and other tax attributes is limited by ownership changes, we may be unable to utilize a material portion of our net operating losses and other tax attributes to offset our future taxable income. In addition, there is also a risk that due to changes in laws and regulations, such as suspensions on the use of net operating losses, or other unforeseen reasons, our existing net operating losses could expire or otherwise become unavailable to offset future income tax liabilities.

U.S. persons who own 10 percent or more of our shares may be subject to U.S. federal income taxation on certain of our foreign subsidiaries’ income even if such income is not distributed to such U.S. persons.

A foreign corporation is treated as a “controlled foreign corporation”, or CFC, for U.S. federal income tax purposes if, on any day during a taxable year, “United States shareholders” (as defined below) own (directly, indirectly or constructively within the meaning of Section 958 of the Code) more than 50% of the total combined voting power of all classes of our voting shares or more than 50% of the total value of all of our shares. A “United States shareholder” of a foreign corporation is a U.S. person who owns (directly, indirectly or constructively within the meaning of Section 958 of the Code) at least 10% of the total combined voting power of voting shares of such non-U.S. corporation or at least 10% of the total value of shares of all classes of stock of such non-U.S. corporation.

As a result of the Tax Act, all of our non-U.S. subsidiaries will be treated as CFCs. The legislative history under the Tax Act indicates that this change may not have been intended to cause these non-U.S. subsidiaries to be treated as CFCs with respect to a United States shareholder that is not related to our U.S. subsidiary. However, particularly since an express provision to that general effect was at one time part of recently introduced tax legislation but was not included in the version signed into law by the President, it is not clear whether the IRS or a court would interpret the change made by the Tax Act in a manner consistent with such apparent intent.

Any United States shareholder who owns our shares (directly or indirectly within the meaning of Section 958(a) of the Code) on the last day in such taxable year must include in its gross income for U.S. federal income tax purposes its pro rata share (based on direct or indirect ownership of value) of the non-U.S. subsidiaries’ “subpart F income,” regardless of whether that income was actually distributed to such U.S. person (with certain adjustments). “Subpart F income” of a CFC generally includes among other items passive income, such as dividends, interest, annuities, net gains from sales of property that do not generate active income, net commodities gains, net foreign currency gains, passive rents and royalties.

United States shareholders must also include in their gross income for U.S. federal income tax purposes their pro rata share of a CFC’s “global intangible low tax income”, or GILTI.” In general terms, GILTI is the net income of the CFCs (other than income already included in United States shareholders’ taxable income) that exceeds 10% of the CFCs’ bases in depreciable tangible assets. GILTI is treated in a manner similar to subpart F income.

In addition, if a U.S. person disposes of shares in a non-U.S. corporation and the U.S. person was a United States shareholder at any time when the corporation was a CFC during the five-year period ending on the date of disposition, any gain from the disposition will generally be treated as a dividend to the extent of the U.S. person’s share of the corporation’s undistributed earnings and profits that were accumulated during the period or periods that the U.S. person owned the shares while the corporation was a CFC (with certain adjustments). Also, a U.S. person may be required to comply with specified reporting requirements, regardless of the number of shares owned.

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A transfer of our ordinary shares, other than a transfer effected by means of the transfer of book-entry interests in the Depository Trust Company, may be subject to Irish stamp duty.

Transfers of our ordinary shares effected by means of the transfer of book entry interests in the Depository Trust Company, or DTC, will not be subject to Irish stamp duty. However, if you hold our ordinary shares directly rather than beneficially through DTC, any transfer of your ordinary shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of our ordinary shares.

Our ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax, or CAT, could apply to a gift or inheritance of our ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because our ordinary shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €335,000 in respect of taxable gifts or inheritances received from their parents.

Our business and operations could be negatively affected if we become subject to shareholder activism, which could cause us to incur significant expense, hinder execution of our business strategy and impact our stock price.

Shareholder activism, which takes many forms and arises in a variety of situations, has been increasingly prevalent. If we become the subject of certain forms of shareholder activism, such as proxy contests, the attention of our management and our board of directors may be diverted from execution of our business strategy. Such shareholder activism could give rise to perceived uncertainties as to our future strategy, adversely affect our relationships with business partners and make it more difficult to attract and retain qualified personnel. Also, we may incur substantial costs, including significant legal fees and other expenses, related to activist shareholder matters. Our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism.

We may be classified as a passive foreign investment company for one or more of our taxable years, which may result in adverse U.S. federal income tax consequence to U.S. holders.

A corporation organized outside the United States generally will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes (1) in any taxable year in which (A) at least 75% of its gross income is passive income or (B) on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income, and (2) as to a given holder who was a holder in such taxable year and regardless of such corporation’s income or asset composition, in any subsequent taxable year, unless certain elections are made by that holder that allow the holder to discontinue that classification as to that holder, generally at a substantial tax cost to that holder. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions and from sales of property that produced, or was held for the production of, passive income (or no income).

Based on our gross income and average value of our gross assets for each relevant taxable year, and given the nature of our business, we do not believe that we were a “passive foreign investment company,” or PFIC, for U.S. federal income tax purposes for any such taxable year from our initial public offering through the year ended December 31, 2019. Our status in any taxable year (determined without regard to our status in any prior taxable year) will depend on our assets and activities in that year, and because this is a factual determination made annually after the end of the year, there can be no assurance that we will not be considered a PFIC for the current taxable year or any other taxable year. In particular, in many cases the gross value of our assets may be inferred from the market price of our ordinary shares, which may fluctuate considerably given that market prices of biotechnology companies can be especially volatile. In other cases, factors external to our specific circumstances may make the presumptive relationship between the gross value of our assets and our market capitalization unreliable, in which case the gross value of our individual

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assets, based upon valuation methods suitable for use in U.S. federal tax matters (the choice of which may vary from taxable year to taxable year), will govern the determination of our status.

If we were to be treated as a PFIC for the taxable year ending December 31, 2020, or any other taxable year during which a U.S. holder held or holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to the U.S. holder. We currently intend to make available the information necessary to permit a U.S. holder to make a valid qualified electing fund, or QEF, election, which may mitigate some of the adverse U.S. federal income tax consequences that could apply to a U.S. holder of ordinary shares if it is determined that we are a PFIC for a given taxable year. However, we may choose not to provide such information at a future date.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

We did not sell any of our equity securities or any options, warrants, or rights to purchase our equity securities during the three months ended June 30, 2020 that were not registered under the Securities Act of 1933, as amended, or the Securities Act.

Purchase of Equity Securities

We did not purchase any of our registered equity securities during the period covered by this Quarterly Report on Form 10-Q.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS


		Incorporated by Reference
Exhibit Number	Description of Exhibit	Form	File Number	Date of Filing	Exhibit Number	Filed Herewith

4.1	Form of Warrant	8-K	001-37558	6/1/2020	4.1
10.1	2020 Share Incentive Plan, as amended	8-K	001-37558	7/30/2020	99.1
*10.2	Sales Promotion and Distribution Agreement, dated as of July 15, 2020, by and among Nabriva Therapeutics Ireland Designated Activity Company, MSD International GmbH and Merck Sharp & Dohme Corp.					X

31.1	Certification of principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

31.2	Certification of principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X

32.1	Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

32.2	Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2019 and June 30, 2020, (ii) Consolidated Statements of Operations for the three months and six months ended June 30, 2019 and 2020, (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2020, (iv) Consolidated Statement of Changes in Stockholders’ Equity for the three months and six months ended June 30, 2019 and 2020 and (v) Notes to Unaudited Consolidated Financial Statements.					X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).					X

* Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NABRIVA THERAPEUTICS plc
Date: August 6, 2020
	By:	/s/ Theodore Schroeder
		Theodore Schroeder
		Chief Executive Officer
		(Principal Executive Officer)


Date: August 6, 2020	By:	/s/ Gary Sender
		Gary Sender
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

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Exhibit 10.2

Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Company, if publicly disclosed. Double asterisks denote omissions.

SALES PROMOTION AND DISTRIBUTION AGREEMENT

BY AND AMONG

MSD INTERNATIONAL GMBH

MERCK SHARP & DOHME CORP.

and

NABRIVA THERAPEUTICS IRELAND DESIGNATED ACTIVITY COMPANY

DATED AS OF JULY 15, 2020

SALES PROMOTION AND DISTRIBUTION AGREEMENT

This Sales Promotion and Distribution Agreement (this “Agreement”), dated as of July 15, 2020 (the “Effective Date”), is entered into by and among NABRIVA THERAPEUTICS IRELAND DESIGNATED ACTIVITY COMPANY, an Irish designated activity company (“Distributor”), with its registered office at Alexandra House, Office 225/227, The Sweepstakes, Ballsbridge, Dublin 4, D04 C7H2, Ireland, MSD INTERNATIONAL GMBH, a [•] (“MSD”), with offices at [•], and, solely for purposes of Sections 7.1 and 7.2, MERCK SHARP & DOHME CORP., a New Jersey corporation (“Supplier”), with offices at 2000 Galloping Hill Road, Kenilworth, NJ 07033, USA. Distributor, MSD, and Supplier are each referred herein as a “Party” and collectively as the “Parties.”

WITNESSETH:

WHEREAS, MSD is the owner of the intellectual property rights in and to the Products and MSD and one or more of its Affiliates owns the Marketing Authorizations in and to the Products in the Territory;

WHEREAS, Distributor and its Affiliates has the capability to promote, distribute and sell the Products in the Territory (as hereinafter defined);

WHEREAS, MSD desires to appoint Distributor as its sole and exclusive, non-assignable and non-sublicensable distributor and promoter of the Products in the Territory, and Distributor desires to accept such appointment;

WHEREAS, MSD, through its Affiliate Supplier, wishes to supply, and Distributor wishes to purchase, the Products in accordance with the terms of this Agreement; and

WHEREAS, MSD and/or any of its Affiliates shall hold and continue to hold, in the Territory, the Marketing Authorizations and rights to certain Know-How relating to the Products, and nothing contained in this Agreement shall restrict MSD from continuing to do so.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

1.Definitions.

The following terms as used in this Agreement shall have the meanings set forth in this Article 1:

1.1“Activity Targets” shall mean the activity targets for each Product or group of Products as set out in Schedule 1.1.

1.2“Adverse Event” as used herein means any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical or vaccine product, which occurrence does not have to have a causal relationship with this treatment. An adverse event can therefore be any unfavorable and unintended sign (including an abnormal laboratory finding,

for example), symptom, or disease temporally associated with the use of a medicinal product, whether or not considered related to the medicinal product.

1.3“Affiliate” means any Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with a Party, for so long as such Person controls, is controlled by or is under common control with a Party, and regardless of whether such Affiliate is or becomes an Affiliate on or after the Effective Date. For purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a Person means (i) direct or indirect ownership of 50% or more of the voting securities or other voting interest of any Person (including attribution from related parties), or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract, as a general partner, as a manager, or otherwise.

1.4“Agency” shall mean any applicable federal, state, local, national or supranational government regulatory authority responsible for granting any health, import, pricing or other approvals, registrations or permits necessary before the Products may be lawfully imported, promoted and sold in the Territory.

1.5“Agency Requirement” shall have the meaning set forth in Section 2.4.1(b).

1.6“Agreement” shall have the meaning set forth in the introduction paragraph.

1.7“Alleged Infringement” shall have the meaning set forth in Section 13.11.

1.8“Alliance Manager” shall have the meaning set forth in Section 2.9.

1.9“Annual Sales and Marketing Plan” shall have the meaning ascribed to it in Section 5.6.3(a).

1.10“Artwork Costs” shall have the meaning set forth in Section 10.6.1(f).

1.11“Artwork Transition Plan” shall have the mean set forth in Section 10.6.

1.12“Binding Forecast Commencement Date” shall have the meaning set forth in Section 9.1.1.

1.13“Business Combination” shall have the meaning set forth in Section 1.18.2.

1.14“Business Day” shall mean any day other than a Saturday, Sunday or a day when banking institutions in New Jersey are permitted or obligated by Law to close.

1.15“Calendar Quarter” shall mean each period of three consecutive calendar months ending March 31, June 30, September 30, and December 31; provided, however, that (1)

the first Calendar Quarter of this Agreement shall commence on the Effective Date and end on the last day of the Calendar Quarter in which the Effective Date occurs and (2) the last Calendar Quarter of this Agreement shall commence on the commencement of such Calendar Quarter and end on the date of expiration or termination of this Agreement.

1.16“Calendar Year” shall mean each period during the Term commencing on January 1 and ending on December 31 of such calendar year; provided, however, that (1) the first Calendar Year of this Agreement shall commence on the Effective Date and end on December 31 of the same calendar year and (2) the last Calendar Year of this Agreement shall commence on January 1 of the calendar year in which this Agreement terminates or expires and end on the date of expiration or termination of this Agreement.

1.17“cGDP” shall mean all laws, regulations, and industry practices relating to the handling, warehousing, and shipping of Products, including, the current Good Distribution Practices as specified in the most current versions of the United States Code of Federal Regulations (the CFR) or their replacement, and any other applicable laws, guidelines and/or regulations, including MSD’s reasonable requirements made in good faith relating to the warehousing and distribution for the Products (to the extent such MSD requirements are disclosed in writing to Distributor).

1.18“Change of Control” with respect to a Party shall be deemed to have occurred if any of the following occurs after the Effective Date:

1.18.1any Third Party “person” or “group” (as such terms are defined below) (i) is or becomes the “beneficial owner” (as defined below), directly or indirectly, of the then-outstanding shares of common stock of the ultimate parent entity of such Party representing 50% or more of the total then-outstanding common stock (or foreign equivalent thereof) (the “Outstanding Common Stock”), (ii) is or becomes the “beneficial owner”, directly or indirectly, of shares of securities, capital stock or other interests (including partnership interests) of the ultimate parent entity of such Party then-outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (“Outstanding Voting Stock”) of the ultimate parent entity of such Party representing 50% or more of the total voting power of all Outstanding Voting Stock of the ultimate parent entity of such Party or (iii) has or acquires the power, directly or indirectly, to elect a majority of the members of such Party’s ultimate parent entity’s board of directors (or similar governing body); or

1.18.2such ultimate parent entity of such Party enters into a merger, consolidation or similar transaction with a Person (whether or not such ultimate parent entity of such Party is the surviving entity) (a “Business Combination”), in each case, unless, following such Business Combination, (i) the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and Outstanding Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of, respectively, (a) the then-outstanding shares of common stock (or foreign equivalent thereof) and

(b) the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, of the corporation or other entity resulting from such Business Combination (and the ultimate parent entity thereof) and (ii) 50% or more of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from such Business Combination (and ultimate parent entity thereof) were members of the board of directors (or similar governing body) of such ultimate parent entity of such Party at the time of the execution of the initial agreement, or of the action of the board of directors (or similar governing body) of such ultimate parent entity, providing for such Business Combination; or

1.18.3such Party (and its Affiliates) sells or transfers to any Third Party, directly or indirectly, in one or more related transactions, the properties and assets representing all or substantially all of such Party’s total assets (together with all or substantially all of the properties and assets of its Affiliates).

1.18.4For the purpose of this definition of Change of Control, (x) “person” and “group” have the meanings given such terms under Sections 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the aforesaid Act; (y) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act; and (iii) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”

1.19“Code” shall have the meaning set forth in Section 17.1.1.

1.20“Commercially Reasonable Efforts” shall mean, with respect to the efforts to be expended by a Party with respect to any objective, the reasonable, diligent efforts to accomplish such objective as a reasonable pharmaceutical company engaged in the marketing and sale of biopharmaceuticals in the U.S. would normally use to accomplish a similar objective under similar circumstances

1.21“Competitive Product” shall mean, with respect to a Product, those products and active pharmaceutical ingredients that are competitive with such Product in the Territory as set forth on Schedule 1.21.

1.22“Compliance Documents” shall have the meaning set forth in Schedule 8.1.1.

1.23“Compliance Principles” shall mean the compliance principles Distributor shall meet in handling the Products as set out in Schedule 8.1.1, which shall be updated from time to time by mutual agreement of the Parties in writing.

1.24“Confidential Information” shall mean all information and data relating to a Party (including information regarding the other Party’s and its Affiliates’ business, employees, development plans, programs, documentation, techniques, trade secrets, systems, and know-how) obtained pursuant to, or in connection with, this Agreement. For clarity, MSD Know-

How shall be the Confidential Information of MSD, subject to the exceptions set forth in the remainder of this definition. “Confidential Information” does not include any information or data (i) rightfully previously known by a Party hereto, or acquired from a Third Party without a continuing restriction on use; (ii) which is or becomes publicly known without breach of this Agreement; or (iii) which is independently developed without violating any obligations under this Agreement and without reference to the Confidential Information of the other Party. Any combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of the receiving Party unless the combination itself and principle of operation are published or available to the general public or in the rightful possession of the receiving Party.

1.25“CSO” shall have the meaning set forth in Section 2.5.2(a).

1.26“Deleted Package Unit” shall have the meaning set forth in Section 2.4.1.

1.27“Disagreement” shall have the meaning set forth in Section 10.2.4.

1.28“Distribution Activities” shall mean receiving, storage, order processing, invoicing, selling (other than selling Products to Distributor under the supply provisions of this Agreement), administration of trade discount, delivery to customers/branches, reverse logistics, return/exchange, Recalls, inventory management, quarantine and release, back order management, trade collection and credit management, credit risk absorption, damage goods storage, customer complaints management (other than product quality complaints subject to Section 10.4 and Adverse Events subject to the Quality Agreement), standard reports provision, Tender management, storage of Products awaiting destruction, sample storage and distribution, promotional materials storage and distribution. “Distribute” shall mean to engage and perform Distribution Activities and “Distribution” shall have a correlative meaning.

1.29“Distribution Centers” shall mean the warehouses located in the Territory as designated by Distributor and agreed to by MSD for the storage of the Products in the Territory.

1.30“Distribution Commencement Date” shall have the meaning set forth in Section 2.1.3.

1.31“Distributor” shall have the meaning set forth in the Preamble.

1.32“Distributor Indemnities” shall have the meaning set forth in Section 19.1

1.33“Effective Date” shall have the meaning set forth in the introduction paragraph.

1.34“Exclusions Lists” shall have the meaning set forth in Section 17.3.

1.35“Extension Term” shall have the meaning set forth in Section 3.2.

1.36“FDA” shall mean the U.S. Food and Drug Administration, or any successor Agency.

1.37“Force Majeure Event” shall have the meaning set forth in Section 21.3.

1.38 “GST” shall have the meaning set forth in Section 9.3.2.

1.39“Immediate” or “Immediately” shall mean within 24 hours.

1.40“Initial Rolling Forecast” shall have the meaning set forth in Section 9.1.1.

1.41“Initial Term” shall mean the period from the Effective Date until December 31, 2023

1.42“Know-How” shall mean information and data in any form that MSD determines to be necessary for the import, transportation, promotion, storage, handling, repackaging and redressing of the Products, as disclosed by MSD or its Affiliates to Distributor from time to time, which may be modified by MSD or its Affiliates in their sole discretion.

1.43“Latent Defect” shall mean any Product that at the time of delivery did meet the representations, warranties or covenants set forth in Section 18.2 that is not readily determinable upon a reasonable inspection of the Product (based on physical inspection, identity test and review of the certificate of analysis).

1.44“Laws” shall mean the applicable laws, ordinances, rules, regulations, requirements and lawful orders of any federal, state, local, national or supranational public authority (including any Agency), including child labor laws, whether existing at present or later enacted, bearing on the performance of this Agreement.

1.45“Lead Time” shall have the meaning set forth in Schedule 9.1.4.

1.46“Marketing Authorization” means, with respect to a Product, the Agency approval required by applicable Laws to sell such Product in the Territory.

1.47“MSD” shall have the meaning set forth in the Preamble.

1.48“MSD Indemnities” shall have the meaning set forth in Section 19.2

1.49“MSD Patents” shall have the meaning set forth in Section 13.10.

1.50“NDC” shall have the meaning assigned in Section 2.1.3.

1.51“Net Sales” shall have the meaning set forth in Section 20.3.

1.52“Officials” shall have the meaning set forth in Section 17.1.2.

1.53“Order” shall have the meaning set forth in Section 9.1.4.

1.54“Order Period” shall have the meaning set forth in Section 9.1.1.

1.55“Outstanding Common Stock” shall have the meaning set forth in Section 1.18.1.

1.56“Outstanding Voting Stock” shall have the meaning set forth in Section 1.18.1.

1.57“Party” or “Parties” shall have the meaning set forth in the Preamble.

1.58“Payment” shall have the meaning set forth in Section 17.1.2.

1.59“Person” means any individual, partnership, joint venture, limited liability company, corporation, firm, trust, association, unincorporated organization, governmental authority or agency, or any other entity not specifically listed herein.

1.60“Personal Data” shall mean data, whether true or not, about an individual who can be identified (i) from that data; or (ii) from that data and other information to which the organization has or is likely to have access, which may include personal data relating to Distributor’s or MSD’s respective directors, officers, employees or customers that may be directly or indirectly obtained by each Party in relation to this Agreement.

1.61“Personnel” shall have the meaning set forth in Section 8.1.7.

1.62“Pharmacovigilance Agreement” shall have the meaning set forth in Section 12.7.

1.63“Product” shall mean the human pharmaceutical product in final finished, packaged, and labeled form and ready for administration to humans containing tedizolid phosphate as the active ingredient and marketed and sold by MSD in the Territory prior to the Effective Date under the Trademark SIVEXTRO^®for injection, for intravenous use and tablet for oral use under the New Drug Application Numbers 205435 and 205436, including Samples as the context may require. The Product shall be in the formats and sizes set forth on Schedule 1.63, each with a strength of 200mg.

(a) HDPE bottles of 30 tablets with child-resistant closure (“Tablet Bottle Product”);

(b) Unit dose blister packs of 6 tablets (“Tablet Blister Product”);

(d) Sample unit dose blister pack of 1 tablet (“Sample Product”).

1.64“Promotion” shall mean those activities undertaken in accordance with applicable Laws as well as MSD requirements and policies communicated by MSD in writing from time to time to Distributor, to implement marketing plans and strategies aimed at encouraging and extending the appropriate use and knowledge of a particular pharmaceutical product. When used as a verb, “Promote” shall mean to engage in such activities.

1.65“Promotion Commencement Date” shall have the meaning set forth in Section 2.1.2 below.

1.66“Promotional Material” means the final promotional and media materials for the Products in each applicable country or other applicable political subdivision in the Territory which MSD and its Affiliates have approved for use as of the Effective Date to Promote the Products in each such country or other applicable political subdivision in the Territory.

1.67“Quality Agreement” shall have the meaning set forth in Section 10.1.

1.68“Recall” shall have the meaning set forth in Section 5.4.1.

1.69“Records” shall have the meaning set forth in Section 15.1.

1.70“Remaining Shelf Life” at such relevant point in time, shall mean the remaining shelf life of a Product measured against the Shelf Life of such a Product.

1.71“Returned Products” shall have the meaning set forth in Section 10.2.13.

1.72“Rolling Forecast” has the meaning set forth in Section 9.1.1.

1.73“Safety Stock” shall mean the relevant stock of the applicable Product under Distributor ownership at the end of each month.

1.74“Sample” shall mean a unit of a Product that is not intended to be sold and intended to be used to Promote the appropriate use of the Products pursuant to applicable Law in the Territory. Samples shall only be available for tablets as unit dose blister packs of 1 tablet.

1.75“Sample Reports” shall have the meaning set forth in Section 5.6.5.

1.76“SDN List” shall have the meaning set forth in Section 17.2.3.

1.77 “Shelf Life” shall mean the shelf life of a Product which has been approved in accordance with applicable regulatory requirements.

1.78“SKU” shall mean a stock keeping unit of the relevant Product and “SKUs” shall be construed accordingly.

1.79“Supply Prices” shall have the meaning set forth in Section 7.1.

1.80“Tender(s)” shall mean any tender for the supply of Products that is offered by a government body, national and/or local health authority within the Territory.

1.81“Term” shall mean the entire duration of this Agreement, including the Initial Term and, if applicable, all Extension Terms.

1.82“Territory” shall mean United States of America and its territories, districts, possessions and commonwealths, including but not limited to the Commonwealth of Puerto Rico.

1.83“Territory Promotion Plan” means the plan pursuant to which Distributor will Promote the Products after the Promotion Commencement Date as set forth on Schedule 1.83.

1.84“Third Party” shall mean any person or entity other than Distributor, MSD, Supplier and their respective Affiliates.

1.85“Third Party Claim” shall mean any claim, demand, proceeding, action or cause of action by a Third Party against MSD (or other MSD Indemnitees, as applicable) or Distributor (or other Distributor Indemnitees, as applicable).

1.86“Third Party Damages” means all losses, costs, claims, damages, judgments, liabilities and expenses payable to a Third Party by MSD (or other MSD Indemnitees, as applicable) or Distributor (or other Distributor Indemnitees, as applicable) under a Third Party Claim (including reasonable attorneys’ fees and other reasonable out-of-pocket costs of litigation in connection therewith).

1.87“Timeline Review” shall have the meaning set forth in Section 9.1.3.

1.88“Trademarks” shall mean the trademarks for the applicable Product as set forth on Schedule 1.88.

1.89“Trade Restrictions” shall have the meaning set forth in Section 17.2.1.

1.90“Transition Period” means the period of time between the Promotion Commencement Date and the Distribution Commencement Date as set forth in the Transition Services Agreement.

1.91“Transition Services Agreement” or “TSA” means that certain Transition Services Agreement between Distributor and Supplier which sets forth certain transition services Supplier and its Affiliates will provide to Distributor in connection with the transition of the Products from products Promoted and Distributed by MSD to products Promoted and Distributed by Distributor.

1.92“TSC” or “Territory Steering Committee” shall have the meaning set forth in Section 2.8.

1.93“Unsold Inventory” shall have the meaning set forth in Section 20.11.3.

1.94“VAT” shall have the meaning set forth in Section 9.3.2.

1.95“Wind-Down Period” shall have the meaning set forth in Section 20.11.3.

2.Appointment of Distributor; Governance.

2.1Appointment of Distributor.

2.1.1Subject to the terms and conditions of this Agreement and subject to fulfillment of the conditions set forth in Section 2.1.2 and Section 2.1.3

below, as appropriate, MSD hereby appoints Distributor as MSD’s sole and exclusive, even as to MSD, non-assignable and non-sublicensable except as expressly permitted hereby, distributor of the Products in the Territory and grants Distributor the right to Distribute and Promote the Products in the Territory during the Term of this Agreement, and Distributor hereby accepts such appointment. Distribution and Promotion of the Products under this Agreement is expressly limited to apply within the Territory and, unless otherwise agreed in writing by MSD, exportation by Distributor and/or its sub-distributors or agents of any Products from the Territory in any way, form or manner is strictly prohibited. Such right further expressly excludes the right to delegate, subcontract or sublicense its rights under this Agreement to any Third Party without MSD’s prior written consent, except that Distributor may retain the services of a contract sales organization as contemplated by Section 2.5 hereof. Subject to the terms and conditions of this Agreement, Distributor shall have the sole right and responsibility for the performance of the Distribution Activities, including the sole right and responsibility to fill orders with respect to the Products for the Territory consistent with applicable Laws and the availability of Products. MSD shall promptly forward to Distributor any sales order(s) for the Products in the Access Territory that are received by MSD.

2.1.2Distributor may commence Promotion, but not Distribution or sale, of the Products upon the date specified by MSD in a written notice. The date on which Distributor actually commences Promotion of the Products is herein referred to as the “Promotion Commencement Date”. Distributor agrees to use Commercially Reasonable Efforts to fulfill the conditions set forth below as promptly as practicable, and to promptly report its progress to MSD, with the goal of enabling the Promotion Commencement Date to occur on or about [**]. MSD shall use Commercially Reasonable Efforts to evaluate Distributor’s progress in achieving the conditions set forth in this Section and will not unreasonably delay sending such notice of the Promotion Commencement Date. MSD and Distributor agree that MSD shall not be obligated to send the notice of the Promotion Commencement Date unless and until the following conditions have been satisfied: (i) Distributor has employed sufficient sales representatives, or has contracted with a CSO in accordance with Section 2.5 to provide sufficient sales representatives, to enable Distributor to deploy within [**] as of the eventual Promotion Commencement Date a minimum of [**] qualified, trained and experienced sales representatives in the Territory ; (ii) ongoing restrictions due to COVID-19 relating to travel and physician office access in the Territory have continued to decrease in a sufficient portion of the Territory so as not to hinder the successful detailing of the Products in MSD’s reasonable judgment; (iii) Distributor continues to meet all of its representations and warranties in this Agreement and is not subject to any investigation, prosecution or other adverse process by any Agency and is not subject to any corporate integrity agreement with the U.S. Department of Justice or Department of Health and Human Services or any comparable agreement with any state Agency; (iv) Distributor has no unresolved, material compliance violations with respect to any Agency, other governmental authority having jurisdiction over Distributor and its operations, including without limitation the U.S. Securities and

Exchange Commission, or Laws; (v) MSD has approved Distributor’s Compliance Documents relating to Promotion in accordance with Schedule 8.1.1; and (vi) the TSA, Pharmacovigilance Agreement and Quality Agreement have been executed by each of the parties thereto. If Distributor is unable to commence such Promotion within [**] after the Promotion Commencement Date set forth in such notice, it shall propose an alternate Promotion Commencement Date to MSD and thereafter MSD and Distributor shall negotiate in good faith to determine a mutually acceptable alternate Promotion Commencement Date which shall not be later than [**] after the initial Promotion Commencement Date specified in the notice from MSD given under the first sentence of this Section.

2.1.3Distributor may commence Distribution of the Products upon the date specified by MSD in a written notice. The date on which Distributor actually commences Distribution of the Products is herein referred to as the “Distribution Commencement Date”. Distributor agrees to use Commercially Reasonable Efforts to fulfill the conditions set forth below as promptly as practicable, and to promptly report its progress to MSD, with the goal of enabling the Distribution Commencement Date to occur on or about January 1, 2021. MSD shall use Commercially Reasonable Efforts to evaluate Distributor’s progress in achieving the conditions set forth in this Section and will not unreasonably delay sending such notice of the Distribution Commencement Date. MSD and Distributor agree that MSD shall not be obligated to send the notice of the Distribution Commencement Date unless and until the following conditions have been satisfied: (i) Distributor has performed its Promotion obligations herein and under the TSA in a reasonable and timely manner consistent with the Territory Promotion Plan and is not in material breach of this Agreement or the TSA; (ii), Distributor has deployed at least [**] qualified, trained and experienced sales representatives in the Territory with customary face-to-face access to customers of the Product in accordance with the Territory Promotion Plan, which sales representatives shall be either employed by Distributor or engaged through its CSO in accordance with Section 2.5 and in accordance with the Territory Promotion Plan; (iii) Distributor will deploy a minimum of [**] qualified, trained and experienced sales representatives in the Territory in accordance with the timeline set forth in the Territory Promotion Plan, which sales representatives shall be either employed by Distributor or engaged through its CSO in accordance with Section 2.5; (iv) ongoing restrictions due to COVID-19 relating to travel and physician office access in the Territory have continued to decrease in a sufficient portion of the Territory so as not to unforeseeably hinder the successful detailing of the Products in MSD’s reasonable judgment; (v) then-current market conditions in the Territory are likely, in MSD’s reasonable judgment, to permit Distributor to achieve Distributor’s sales forecasts for the Products; (vi) Distributor has a minimum of [**] cash reserves to enable Distributor to sustain reasonable levels of Promotion activities and perform the Distribution Activities or at the request of MSD or Distributor, Distributor demonstrates to MSD’s reasonable satisfaction plans to obtain additional cash reserves through corporate funding activities to enable Distributor to sustain reasonable levels of Promotion activities and perform the Distribution Activities; (vii) Distributor continues to meet all of its representations and warranties in this

Agreement and is not subject to any investigation, prosecution or other adverse process by any Agency and is not subject to any corporate integrity agreement with the U.S. Department of Justice or Department of Health and Human Services or any comparable agreement with any state Agency; (viii) Distributor has no unresolved, material compliance violations with respect to any Agency, other governmental authority having jurisdiction over Distributor and its operations, including without limitation the U.S. Securities and Exchange Commission, or Law; (ix) MSD has approved Distributor’s Compliance Documents relating to Distribution in accordance with Schedule 8.1.1; (x) Distributor has obtained its own National Drug Code (“NDC”) numbers for each of the Product SKUs; and (xi) Distributor purchased sufficient inventory of the Products to commence Distribution as determined and specified by Distributor in good faith based on its sales projections. If Distributor is unable to commence such Distribution within [**] after the Distribution Commencement Date set forth in such notice, it shall propose an alternate Distribution Commencement Date to MSD and thereafter MSD and Distributor shall negotiate in good faith to determine a mutually acceptable alternate Distribution Commencement Date which shall not be later than [**] after the initial Distribution Commencement Date specified in the notice from MSD given under the first sentence of this Section.

2.1.4For the avoidance of doubt, until satisfaction of the conditions set forth in Section 2.1.2 or Section 2.1.3, as appropriate, Distributor shall not Promote or Distribute any of the Products.

2.1.5Notwithstanding the aforementioned, until the Distribution Commencement Date the exclusivity granted to Distributor shall not prevent MSD or its Affiliates from selling off existing Product inventory as of the Effective Date, nor shall such exclusivity prevent MSD from stocking up MSD’s future distributor with Products three months prior to the expiration or termination of this Agreement, so long as such new distributor shall not sell, distribute or Promote the Product in the Territory before the expiration or termination of this Agreement without the prior written consent of Distributor. Anything to the contrary herein notwithstanding, Distributor acknowledges that Products sold by MSD and its Affiliates prior to the Distribution Commencement Date will likely remain in possession of wholesalers, pharmacies, hospitals and other Persons which distribute pharmaceutical products, including the Products, in the marketplace and nothing in this Agreement or the TSA shall prevent or restrict (i) the sale, dispensing or other distribution of Products on or after the Distribution Commencement Date purchased by any such Persons, directly or indirectly, from MSD and its Affiliates prior to the Distribution Commencement Date (ii) the payment or provision of rebates, discounts or other price concessions by MSD or its Affiliates on the Products referred to in the preceding clause (i).

2.1.6The foregoing rights shall not include any products of MSD or its Affiliates other than the Product. No license or right is granted by implication or otherwise from MSD with respect to the Product except as expressly granted herein. All rights not expressly granted from MSD to Distributor are expressly

reserved by MSD. MSD shall continue to be the owner of all Marketing Authorizations for the Products in the Territory.

2.2Negotiation of TSA. The Parties shall negotiate in good faith and enter into the TSA within 45 days after the Effective Date. If the TSA has not been executed within 60 days after the Effective Date other than as a result of MSD’s failure to negotiate the TSA in good faith, MSD shall have the right to terminate this agreement immediately upon written notice to Distributor.

2.3Label Expansion. MSD shall be entitled, in its sole discretion, but shall not be required to, explore or seek an expansion of the patient population for which the Products are approved, such as by seeking to expand the age range of patients for which the Products are approved as set forth in the relevant label provided, however, that in no event shall MSD be required to conduct clinical trials of any kind in connection with such expansion. In the event that MSD intends to seek any such label expansion, MSD shall so notify Distributor in writing of such intention. If such label expansion is approved by the appropriate Agency, MSD shall modify the Promotional Materials accordingly and provide such revised Promotional Materials to Distributor.

2.4Deleted Package Units.

2.4.1MSD and Distributor expressly agree that MSD reserves the right to delete any format, package size or style or SKU of the Product (each, a “Deleted Package Unit”) with Immediate effect by written notice to Distributor in the event of:

(a)[**]; or

(b)[**]

2.4.2Where MSD undertakes the deletion of any Deleted Package Units, all inventory of such Deleted Package Units remaining in Distributor’s possession at the time of deletion shall be disposed of in accordance with the provisions of this Agreement and at MSD’s cost. MSD shall reimburse Distributor for the Supply Price of such Deleted Package Units if already paid for by Distributor. Save for such reimbursement, Distributor shall not have any right to claim any other compensation from MSD.

2.5Subcontracting; Use of Contract Sales Organization and Third Party Logistics Company.

2.5.1Except as expressly set forth in this Agreement, Distributor shall not subcontract or otherwise make any provision or arrangement with any Third Party except its Affiliates for the Promotion, sale or Distribution of the Products in the Territory without the prior written consent of MSD. In the event Distributor is permitted to subcontract with the prior written consent of MSD, Distributor shall cause its permitted subcontractor(s) to comply with the terms of this Agreement mutatis mutandis, including Article 15, and shall, subject to confidentiality agreements to which Distributor is subject as of the date hereof, allow MSD or its

Affiliates access to its records and facilities as contemplated in Article 15. Notwithstanding any consent given by MSD under this Section 2.5, such consent may be revoked by MSD at any time should MSD provide reasonable supporting document(s) that the business conduct or dealings of any such subcontractor in question is detrimental to MSD’s business interests, in which event, upon [**] prior written notice given to Distributor, Distributor shall cease any dealings with such subcontractor with respect to the Products, and Distributor shall cause any agreement entered into by Distributor with such sub-contractors to acknowledge MSD’s right to withdraw its permission for such subcontractor(s) to distribute the Product and shall permit Distributor to terminate such agreement on such terms in the event of such a revocation. Further, notwithstanding any consent given by MSD under this Section 2.5, Distributor shall remain liable for all its obligations to MSD under this Agreement, including any obligations that it may have sub-contracted with MSD’s consent, and shall be liable for any breaches, acts or omissions of any such subcontractor.

2.5.2Notwithstanding the foregoing, but subject to all of the conditions and requirements of Section 2.5.1 above,

(a)Distributor may, in lieu of employing sales representatives as otherwise required by Sections 5.3 and 8.1.3, retain the services of Amplity, Inc. or another contract sales organization that is an experienced provider of such services (“CSO”), subject to MSD’s approval of such other CSO, such approval not to be unreasonably withheld.

(b)Distributor may contract with (i) [**];; (ii) any Affiliate of either of the foregoing; or (iii) another similarly experienced provider of the services set forth in this Section 2.5.2(b), in each case (ii) and (iii) subject to MSD’s approval, not to be unreasonably withheld or delayed, for warehousing, inventory management, order processing, fulfillment, shipping and invoicing services with respect to the Products; provided, however, that Distributor shall at all times until sale to the relevant pharmacy, hospital, medical office or other healthcare practice customer, hold title to the Products, be responsible for all Promotion and Distribution Activities hereunder, other than those Distribution Activities subcontracted to such contracted entity, and book the Net Sales of the Products.

2.6No Competitive Products. Neither Distributor nor any of its Affiliates shall, without the written consent of MSD, during the Term, including any Extension Term thereof, directly or indirectly, Promote, sell and/or Distribute (i) any Competitive Product in the Territory; or (ii) any human pharmaceutical product bearing a trademark or trade name identical with, similar to, or potentially confusing or conflicting with the Trademarks.

2.7MSD Option to [**], Distributor agrees to [**].

2.8Territory Steering Committee. The Parties hereby establish a Territory steering committee (the “TSC” or “Territory Steering Committee”) to facilitate communications between the Parties and discuss, oversee, review and manage the Promotion, sale and Distribution of Products.

2.8.1Composition of the Territory Steering Committee. The Territory Steering Committee shall be comprised of [**] employees of MSD or its Affiliates as representatives of MSD and [**] employees of Distributor or its Affiliates as representatives of Distributor. Each Party may change one or more of its representatives to the TSC from time to time in its sole discretion, effective upon notice to the other Party of such change. Within [**] after the Effective Date, the Parties shall each appoint its initial [**] representatives to the TSC. Each Party’s representatives shall have appropriate technical credentials, experience and knowledge for their specific role within the TSC, and ongoing familiarity with the Products and Territory and shall be duly authorized under their respective company’s internal governance procedures to carry out the activities given to them under this Agreement. Additional representatives or consultants may from time to time, by mutual consent of the Parties, be invited to attend TSC meetings (such as supply chain, medical affairs, regulatory, pharmacovigilance, legal, compliance, business development and sales and marketing as dictated by the respective meeting agenda), subject to such representative’s or consultant’s written agreement to comply with the confidentiality requirements of this Agreement. Chairperson responsibilities will rotate between MSD and Distributor. The role of the chairperson shall be to convene and preside in person or telephonically at meetings of the TSC, to prepare and circulate agendas and to ensure the preparation of minutes, but the chairperson shall have no additional powers or rights beyond those held by the other TSC representatives.

2.8.2Specific Responsibilities of the TSC. In addition to its overall responsibility for monitoring and providing a forum to discuss and coordinate the Parties’ activities under this Agreement, the TSC, subject to the terms of this Agreement, in particular shall:

(a)Review and approve Annual Sales and Marketing Plans and their routine review during the Calendar Year;

(b)Review sales forecasts, major market events and any proposed mitigation plan(s).

(c)Coordinate the following divisions that will take part at the TSC if necessary: (i) Supply Chain Management; (ii) Legal and Compliance; (iii) Finance; (iv) Business Development; (v) Commercial Operations; (vi) Medical Affairs; (vii) Market Access/External Affairs & Policy; (viii) Pharmacovigilance and Regulatory Affairs; and (ix) Alliance Management; (ix) Office of Promotion and Advertising Review; and

(d)Have such other responsibilities as may be agreed to by the Parties in writing.

2.8.3TSC Meetings. The Parties shall endeavor to have their first meeting of the TSC within [**] after the Effective Date. Thereafter, the TSC shall meet in accordance with a schedule established by mutual written agreement of the Parties, but no less frequently than [**], unless the Parties mutually agree in writing

to a different frequency. The TSC meetings shall be conducted in person, by telephone or via secure video conference, as determined by the TSC, and in the local language of the Territory; provided that representatives who cannot attend an in-person meeting in person may participate by means of teleconference, videoconference or other similar communications equipment. Either Party may also call a special meeting of the TSC by providing at least [**] prior written notice to the other Party in the event such requesting Party reasonably believes that a significant matter must be addressed prior to the next scheduled meeting, and such requesting Party shall provide the TSC no later than [**] prior to the special meeting with materials reasonably adequate to enable an informed decision on the relevant matter; provided that for time sensitive matters, a Party may call a special meeting of the TSC and provide relevant materials with less than [**] notice if the Parties agree that an issue warrants an expedited meeting. No later than [**] prior to any meeting of the TSC (other than a special meeting as described above), the designated chairperson of the TSC shall prepare and circulate an agenda for such meeting to all members of the TSC and any pre-read material/business case submission to be approved by the TSC must be issued [**] prior to the meeting; provided, however, that either Party shall be free to propose additional topics to be included on such agenda, either prior to or, if representatives of each Party are present at a meeting, during the course of such meeting. Each Party shall bear its own expenses related to the attendance of such meetings by its representatives. The designated chairperson of the TSC will be responsible for preparing reasonably detailed written minutes of all TSC meetings that reflect, without limitation, material decisions made at such meetings. The designated TSC chairperson shall send draft meeting minutes to each member of the TSC for review and approval within [**] after each TSC meeting. Such minutes will be deemed approved unless one or more members of the TSC objects to the accuracy of such minutes within [**] after receipt. TSC meetings shall be conducted in English. Minutes of all meetings of the TSC and resolutions adopted in lieu of a meeting, shall be kept by MSD and Distributor in their respective files.

2.8.4TSC Decision-Making. The TSC shall act by unanimous consent. The representatives from each Party will have, collectively, one vote on behalf of that Party that shall be cast by a representative attending such meeting. In the event that the TSC cannot or does not, after good faith efforts, reach agreement on any issue, the Parties shall escalate such issue to the [**] or its successor, in the case of MSD, and to the [**] of Distributor, in the case of Distributor for a decision. Such executives shall meet in person, by telephone or by video conference to try within [**] after the TSC escalates the issue to try to resolve the issue in good faith. If such Persons cannot agree on a resolution within [**] after the TSC escalates the issue such issue shall be decided by MSD; provided that, in making such determination, MSD shall not make a determination which undermines the fundamental purposes of this Agreement or would unreasonably and materially impose additional obligations or costs on Distributor.

2.9Alliance Managers. Promptly after the Effective Date, each Party shall appoint an individual to act as alliance manager for such Party, which individual may be a member

representative of such Party on the TSC (each, an “Alliance Manager”). The Alliance Managers shall be the primary point of contact for the Parties regarding the activities contemplated by this Agreement. The name and contact information for each Party’s Alliance Manager, as well as any replacement(s) chosen by such Party, in its sole discretion, from time-to-time, shall be promptly provided to the other Party.

3.Term.

3.1Initial Term. This Agreement shall be effective as of the Effective Date and, unless sooner terminated as provided herein, shall continue in effect for the Initial Term.

3.2Extension Term. The Term shall be automatically extended for successive additional periods of 36 months each (the “Extension Term”) unless either Party shall provide written notice to the other that such Party elects not to renew the Agreement for the Extension Term at least 12 months prior to the end of the then-current Term, in which event this Agreement shall expire at the end of the then-current Term.

4.Provision of Information. Within [**] after the Effective Date, to the extent such information is in MSD’s possession, MSD shall provide to Distributor the following information:

4.1List of existing customers in the Territory which directly purchase a Product from MSD and its Affiliates as of the Effective Date to the extent MSD and its Affiliates may do so without breaching any applicable confidentiality obligations;

4.2[**]; and

4.3[**] provided, however, that [**]. For avoidance of doubt, [**].

5.Responsibilities of Distributor.

5.1Cost and Expenses. All costs, expenses and taxes with respect to the Promotion, sale and Distribution of the Products by Distributor, as well as all costs, expenses and taxes required to meet Distributor’s staffing requirements and obligations as set out in this Agreement, shall be the sole responsibility of Distributor. Each Party shall be liable for any and all taxes on any and all income earned by it under or in connection with this Agreement and the transactions contemplated hereby.

5.2Licenses and Permits. Distributor warrants that it is in possession of all licenses and permits (excluding the Marketing Authorizations for the Products in the Territory, which shall be the responsibility of MSD pursuant to Article 12 below) required under the applicable Laws to perform its obligations and exploit its rights under this Agreement. Distributor shall be responsible for maintaining the validity of all such licenses and permits, and shall perform all of its obligations pursuant to this Agreement in the manner authorized by such licenses and permits. If any of such licenses or permits ceases to be valid during the Term of this Agreement, Distributor shall Immediately inform MSD accordingly. Upon MSD’s request, Distributor shall provide MSD with evidence of all such licenses and permits. Each Party represents that it will comply with all Laws of the Territory concerning the storage, handling, Promotion and

Distribution of the Products by such Party and its subcontractors and agents as contemplated by this Agreement.

5.3Employees.

5.3.1Distributor agrees to fulfill its obligations under this Agreement with due care, skill and diligence, and in accordance with applicable and common industry standards currently recognized by Distributor’s profession or industry. Distributor shall be responsible for the quality, technical accuracy and completeness of all reports, information, and any other items required to be provided by Distributor under this Agreement.

5.3.2Distributor further agrees to employ an adequate number of qualified personnel to be responsible for the professional quality, training, and supervision of all Distributor’s personnel to fulfill its obligations hereunder. Distributor shall also maintain a well-staffed and technically trained sales force.

5.3.3Distributor will recruit the sales force in accordance to the agreed criteria.

5.3.4The Territory Promotion Plan shall include detailed plans, including a schedule, for the expected strategic build of Distributor’s commercial organization that Distributor anticipates will be necessary to fulfill Distributor’s obligations hereunder. For clarity, any full time employee specifications contained in the Territory Promotion Plan shall be for indicative purposes and does not constitute a binding commitment by Distributor.

5.3.5MSD does not assume any liability or obligation for the laborers, contractors or employees of Distributor. All such duties and obligations are exclusively the responsibility of Distributor. Except if due to the act, omission, negligence or breach of its representations, warranties or obligations by MSD or its Affiliates under this Agreement and to the extent permitted by applicable law, MSD shall not in any circumstances be liable for the death of, or injury to, any person or for any damage to the property of Distributor, its Affiliates or any other persons in the course of Distributor’s performance of its obligations under this Agreement, directly or through its Affiliates or subcontractors.

5.4Product Recall.

5.4.1Distributor shall take all actions reasonably requested by MSD or as directed by government authorities or Agencies or compelled by court order to effect or facilitate the recall of Products in the Territory (“Recall”). In the event MSD is required or voluntarily decides to Recall any Products, Distributor shall reasonably cooperate with MSD in the carrying out of such Recall. Provided that the Recall is not due to the negligence or misconduct of Distributor, or a breach of the Agreement by Distributor, MSD shall reimburse Distributor for all reasonable out-of-pocket costs incurred by Distributor in connection with implementing such Recall (e.g., travel, storage, transportation, administrative and handling fees,

destruction and publicity costs), as well as Distributor’s Supply Price of all Products recalled, and any other costs or charges agreed by MSD in advance. If the Recall is due to the negligence or misconduct of Distributor, or a breach of the Agreement by Distributor, Distributor shall be responsible for all reasonable expenses in connection with implementing such Recall (e.g., travel, storage, transportation, administrative and handling fees, destruction and publicity costs).

5.4.2Distributor shall destroy all Products returned to Distributor as a result of a Recall. Distributor shall (i) arrange for the destruction of the Products in compliance with the applicable Laws in the Territory and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed. The costs of such destruction shall be borne by MSD unless such recall is a result of Distributor’s negligence, intentional misconduct or a breach of this Agreement.

5.5Key Performance Metrics. On an agreed upon timeframe but no sooner than [**], Distributor shall be responsible for providing key performance metrics to MSD including but not limited to provision of regulatory documents from Distributor to MSD.

5.6Reports and Meetings.

5.6.1Distributor shall prepare and submit to MSD monthly and calendar quarterly sales reports for each Product SKU within [**] after the end of each such month and Calendar Quarter to allow MSD to determine [**] its government reporting and payment obligations under Section 8.2.3. Sales reports should include [**].

5.6.2In addition to the foregoing, in order for MSD and its Affiliates to fulfill their government price reporting obligations under Section 8.2.3, Distributor shall prepare and submit to MSD quarterly sales and discounts transactional detail in a format to be agreed by the Parties for each Product SKU within [**] after the end of each Calendar Quarter. These reports shall include all data as MSD shall reasonably request to enable it to fulfill its obligations referred to in Section 8.2.3, including the calculation of Non-Federal Average Manufacturer Prices and Federal Ceiling Prices as required by the Veteran’s Healthcare Act of 1992 and other applicable statutes and regulations.

5.6.3For the Territory, Distributor shall provide the following reports and plans:

(a)Distributor shall submit to MSD an annual sales and marketing plan for each forthcoming Calendar Year by [**] or any other date agreed by the Territory Steering Committee (“Annual Sales and Marketing Plans”). The template shall be mutually agreed by the Parties. The Annual Sales and Marketing Plans should at the least include:

(i)

the [**] sales forecast by SKU;

(ii)

marketing plans;

(iii)

target physician type and channel type coverage;

(iv)

other opportunities (including market access and public sector); and

(v)

sales force incentive plan;

(vi)

any changes in distribution and logistics (and potentially reportable to FDA) unless the change is:

Change of approved monitor alarm settings/parameters limited to measurement interval, detail and total recording time;

Additional or replacement of an existing temperature monitoring device with no other changes to the specified conditions, performance or functionality; or

Change in conditioning of qualified TPS components with no other changes affecting material quality, performance or functionality.

(b)Distributor shall report to MSD at the end of each Calendar Quarter performance of its obligations under this Agreement against the Compliance Principles.

5.6.4For the Territory, Distributor shall:

(a)conduct at least [**] operational meetings for each Calendar Year during the Term (the frequency of meetings may be reduced by mutual agreement of the Parties and such meetings shall be attended by the relevant representatives of MSD), during which both Parties shall provide an update on the following (as applicable) which may be part of the TSC meetings:

(i)

[**];

(ii)

[**];

(iii)

[**];

(iv)

[**];

(v)

[**];

(vi)

[**];

(vii)

[**]; and

(viii)

[**].

5.6.5Distributor shall prepare and submit to MSD routine sample distribution and loss reports in accordance with the requirements of the FDA and certain state authorities, where applicable (“Sample Reports”). The Sample Reports shall be prepared and submitted to MSD no later than [**] after such report is submitted to the relevant Agency.

5.6.6Distributor shall prepare and submit to the appropriate federal and state authorities all reports required by Laws, and otherwise comply with all Laws, applicable to the Distribution of the Products and Distributor’s role as a distributor of the Products, including reports relating to significant losses.

6.Direct Sales.

6.1No Promotion by MSD. With the exception of MSD maintaining the Product website prior to the Distribution Commencement Date, MSD shall not Promote the Products in the Territory at any point during the Term after the Promotion Commencement Date. MSD and its Affiliates shall refer to Distributor any direct orders or inquiries received by MSD or its Affiliates from prospective purchasers of the Products in the Territory after the date on which Distributor actually begins Distributing the Products. Distributor shall use all reasonable efforts to fill any such order referred to it. Distributor shall advise MSD promptly in writing if, for any reason, it is not able to fill any such order, so that MSD or its Affiliates may fill such order directly if they so choose, although MSD and its Affiliates shall not be obligated to do so.

6.2Humanitarian Sales.

6.2.1Notwithstanding any provision to the contrary in this Agreement, MSD reserves the right, but has no obligation, to sell, directly or through its Affiliates, the Products solely for humanitarian purposes to any of the following entities: (i) any international welfare organization; (ii) any organization or agency of the United States government; and (iii) any governmental agency of any state, district, commonwealth or other political subdivision in the Territory (provided that the foregoing shall not include the right for MSD to supply any Tenders for Products in the Territory).

6.2.2Unless otherwise agreed in writing, Distributor shall not be entitled to any compensation for sales made by MSD under Section 6.2.1.

7.Supply Price.

7.1Supply Prices. MSD agrees to cause Supplier, an Affiliate of MSD, to sell, and Distributor agrees to purchase from Supplier, the Products, at such prices (in the relevant currencies) as set forth on Schedule 7.1 (“Supply Prices”), which Supply Price is inclusive MSD’s margin.

7.2Supply Price of Samples. If so requested by Distributor, and subject to the availability of sufficient quantities of Products to produce and package such Samples, MSD will cause Supplier, an Affiliate of MSD, to sell to Distributor, and Distributor will purchase from Supplier, Samples. Supply Prices of Samples shall be [**] listed on Schedule 7.1. The sale and supply of any Samples shall be subject to the availability of the relevant Samples in the Territory, the agreed list of SKUs of such Samples and all applicable Laws.

7.3Distributor Pricing Decisions. Subject to the applicable Laws, with respect to all Products labeled with Distributor’s NDC numbers, (i) the final selling prices of Products charged by Distributor to its customers shall be determined by Distributor at its sole discretion, [**], (ii) Distributor shall be solely responsible for sales contracting, including payer contracts and rebates, and (iii) Distributor shall solely manage all market access activities which include bidding, hospital listing and reimbursement in the Territory.

8.Product and Promotion.

8.1Promotion.

8.1.1Distributor shall, at its own expense, Promote (after the Promotion Commencement Date), Distribute (after the Distribution Commencement Date) and use Commercially Reasonable Efforts to maximize the sales of the Products throughout the Territory by meeting the Compliance Principles in Schedule 8.1.1 and complying with the terms of this Agreement.

8.1.2Upon reliance on Distributor’s experience and expertise in marketing, Distributing and Promoting human pharmaceutical products, in accordance with Section 2.1 MSD has appointed Distributor to Promote and Distribute the Products in the Territory in accordance with the terms of this Agreement.

8.1.3During the Term of this Agreement, Distributor shall at its own expense procure the relevant personnel to conduct in the manner set forth in this Agreement, such Promotion activities as are necessary and adequate, for properly raising the level of awareness and knowledge of the Products in the Territory, with a view to achieving those Promotion objectives set out in the Annual Sales and Marketing Plans. Promotion is solely restricted to the Products and activities as set forth herein, and such Promotion does not include authorization for promoting any other product of MSD or any Product outside the said permitted scope.

8.1.4Distributor shall conduct the Promotion according to the terms of this Agreement and, between the Promotion Commencement Date and the Distribution Commencement Date, the Territory Promotion Plan and, on and after the Distribution Commencement Date, the Annual Sales and Marketing Plans of the relevant Calendar Year. The manner and method by which Distributor shall use in the objectives as set out in the Annual Sales and Marketing Plan shall be left to its own discretion and responsibility, free from the control of MSD, but shall at all

times be compliant with the terms of this Agreement, the Compliance Principles and applicable Laws.

8.1.5Prior to the Distribution Commencement Date MSD or its Affiliate shall [**]. Upon or promptly after the Distribution Commencement Date, if so requested by Distributor, MSD or its Affiliates shall grant Distributor a license to use the URL “sivextrocoupon.com” in connection with Distributor’s own coupon program; provided, however, that MSD and its Affiliates will not be required to provide Distributor with or permit Distributor to use the content, wire frames or other content of “sivextrocoupon.com” as that website existed when operated by MSD and its Affiliates. The license granted herein shall expire at the end of the Term and Distributor shall take any and all actions reasonably requested by MSD at the end of the Term to transfer “sivextrocoupon.com” back to MSD and its Affiliates. Notwithstanding any other provision in this Agreement to the contrary, MSD or its Affiliate shall be permitted, directly or through a Third Party vendor, to continue to redeem coupons for the Product presented by consumers on or prior to the expiration date printed on the coupon. Distributor may, but shall not be required to, establish and manage at its own cost a coupon program for the Products provided: (a) such coupon program is applicable only to Products labelled with Distributor’s NDC numbers; and (b) Distributor, represents, warrants, and covenants, that it shall comply with all Laws in structuring, administering, implementing and Promoting any coupon program for Products. MSD may assist in know-how of its current coupon practices including introducing Distributor to a Third Party vendor.

8.1.6Until the Distribution Commencement Date MSD or one or more of its Affiliates may, if it shall choose to do so, continue to [**].

8.1.7MSD and Distributor agree that all personnel that carry out the Promotion (the “Personnel”) shall solely and legally be Distributor’s, or Distributor’s duly approved sub-contractors’, employees, consultants or professional advisers who shall, in addition to performing satisfactorily all their respective duties in relation to the Promotion, be subject to all of Distributor’s work rules and regulations that are in force from time to time.

8.1.8Distributor represents, warrants and covenants that the Personnel shall faithfully and diligently perform those duties which are necessary for the proper performance of the Promotion in accordance with the terms of this Agreement and shall in doing so, strictly follow all applicable Laws and legal and ethical requirements in the Territory and of MSD (such requirements of MSD to be provided in writing). Distributor shall provide MSD on a [**] basis or at other mutually agreed intervals, a report in a format agreed by the Parties, detailing the Personnel’s duties and performance in relation to the Promotion.

8.1.9Distributor undertakes to provide adequate training to the Personnel so that the latter shall acquire and keep up-to-date a working knowledge of the basic documentation and technical information concerning the Products as

provided by MSD. Distributor warrants that the Personnel shall limit their claims of efficacy and safety of the Products in a manner which is consistent with MSD’s literature or Promotional Materials relating to the Products or from other materials approved by MSD, to which Distributor shall neither add nor delete claims unless approved by MSD in writing.

8.1.10MSD shall provide Distributor with the relevant Promotional Materials for the Products. MSD shall have the right to revise the relevant Promotional Materials [**] at its sole discretion. Distributor will cooperate fully with MSD to implement any Product safety or other label updates to Promotional Materials on a timely basis in accordance with then applicable Laws. Distributor shall not modify or create any Promotional material for the Products without MSD’s prior written consent, which consent shall be at MSD’s sole discretion, and if so permitted by MSD any and all such modifications or creations shall always be subject to MSD’s prior review and written approval. [**]. MSD agrees that it shall not unreasonably withhold a review of the modified Promotion materials prior to their use provided that such Promotional Materials are approved in accordance with MSD’s and its Affiliates’ standard policies and practices for reviewing and approving promotional materials for their human pharmaceutical products. Distributor (and its Affiliates) shall be entitled to include its corporate name and logo and related contact information on any Promotional Materials to the extent permissible by applicable Laws, subject to MSD’s review and approval of the revised materials. For the avoidance of doubt, MSD will retain exclusive authority and responsibility for the filing of Promotional Materials with the FDA on Form 2253 (or such other form as required by FDA) or as otherwise required by applicable Laws.

8.1.11In order to comply with the Physician Payments Transparency Requirements enacted as section 6002 of the Patient Protection and Affordable Care Act of 2010 (codified at 42 U.S.C. 1320a-7h) and the regulations of the Centers for Medicare and Medicaid Services promulgated thereunder, and any similar state sunshine Laws and requirements, Distributor shall prepare and submit any and all required reports to relevant Agencies regarding payments or other transfers of value that Distributor provides to U.S. physicians, teaching hospitals, and other covered recipients (as defined under applicable transparency requirements), in accordance with its policies and procedures for making such submissions.

8.2NDC Numbers; Government Price Reporting; Processing and Payment of Commercial and Government Discounts or Other Contractual Obligations.

8.2.1Distributor shall, at its own expense, promptly after Effective Date file for and obtain its own NDC for the Products, and each SKU thereof.

8.2.2For Products sold with Distributor’s NDC numbers, Distributor shall be responsible for preparing and submitting any and all governmental price reports to each relevant Agency in accordance with Distributor’s reporting methodologies, which shall comply in all material respects with applicable Laws.

The Parties agree that, upon request by Distributor, MSD shall provide Distributor with the base date average manufacturer price, as defined in 42 CFR §447.504, and market entry data currently reported to the Centers for Medicare & Medicaid Services for the applicable Product. Nothing herein shall obligate MSD to provide its underlying sales or pricing data or its methodologies used to calculate such base date average manufacturing price, as defined in 42 CFR §447.504, unless such information is required to respond to an inquiry, request or audit of any Agency in the Territory. Distributor shall be responsible for the processing and payment of all commercial and governmental discounts, fees or other contractual obligations for Products sold with Distributor’s NDC numbers.

8.2.3For Products sold with MSD’s NDC numbers, MSD shall be responsible for preparing and submitting any and all governmental price reports to each relevant Agency and for the payment of all fees, Medicaid Drug Rebates, other similar amounts to each such Agency for Products sold with its NDC numbers. Distributor shall provide the monthly sales reports and information required by Section 5.6.1 and such provide such other information reasonably requested by MSD sufficiently in advance of MSD being required to file any and all such reports with each Agency.

8.3Use of Commercially Reasonable Efforts. Distributor must use Commercially Reasonable Efforts to Promote and Distribute the Products in accordance with the terms of this Agreement.

8.4Distribution of Samples. If Distributor desires to distribute Samples, Distributor shall prepare and submit to MSD for its review and approval a sampling policy complying with applicable Laws. Such approval must be obtained prior to Distributor taking delivery of any Samples. Distributor shall, and shall cause each approved subcontractor, including any contract sales organization, and its personnel to, Distribute any and all Samples in accordance with applicable Law and Distributor’s sampling policy. In no event shall Distributor offer for sale or sell Samples or permit any approved subcontractor to do so. Distributor shall be solely responsible for, and shall prepare and file in a timely manner, any and all reports regarding samples required by any Law.

9.Purchase and Delivery.

9.1Purchase Plan and Ordering.

9.1.1Within [**] from Effective Date, Distributor shall submit to MSD as its best estimates of its forecast purchase requirements of the Products and Samples for the first [**] months (“Initial Rolling Forecast”), together with projected delivery dates relative to the Distribution Commencement Date. For avoidance of doubt, such Initial Forecast shall set forth the delivery dates expressed as the date of the number of months following the expected Distribution Commencement Date (e.g., “the [**] of the [**] month after the Distribution Commencement Date”). The Initial Rolling Forecast will not be binding and may be revised up to the date which is [**] months before the anticipated Distribution

Commencement Date (the “Binding Forecast Commencement Date”) at which time the Initial Rolling Forecast will become Rolling Forecast a portion of which is binding as set forth in Section 9.1.2; provided, however, that the Initial Rolling Forecast in effect on the Binding Forecast Commencement Date may not be for less than [**]% nor more than [**]% of the amount of any [**] than the Initial Rolling Forecast in effect on the day preceding the Binding Forecast Commencement Date.

9.1.2Beginning on the Binding Forecast Commencement Date, not later than the [**] of each calendar month Distributor shall submit to MSD its best estimates of its forecast purchase requirements and delivery dates of the Products and Samples for the following [**] calendar months beginning with the calendar month (hereinafter referred to as month “M”) in which the forecast is issued (each, a “Rolling Forecast”), broken down into requirements for each calendar month. The Rolling Forecasts given by Distributor for month M and the subsequent [**] calendar months (“Order Period”) shall be a firm commitment and binding and Distributor may not vary the Rolling Forecast for such Order Period. For the immediate [**] succeeding months in a Rolling Forecast following the Order Period, Distributor may vary such Rolling Forecast by a variance of up to [**]% from the Rolling Forecast for such months submitted in the preceding month, and (iii) month [**] through month [**] of each Rolling Forecast shall be non-binding and subject to change by Distributor; provided, however, that until [**] months after the Distribution Commencement Date the Order Period for the binding Rolling Forecasts shall be month M and the subsequent [**] calendar months. Nevertheless, such non-binding forecasts shall represent Distributor’s good faith best estimates of the quantity of Products that it will require during the applicable period.

9.1.3The TSC may from time to time review the timelines for the submission of the forecast purchase requirements (“Timeline Review”) for efficient supply chain planning. All new timelines resulting from the Timeline Review shall be agreed by both Parties in writing and Distributor shall adhere to the new timelines upon agreement.

9.1.4Distributor shall submit to MSD a purchase order (“Order”) for each delivery of a Product ordered hereunder, which Order shall state the delivery date requested by Distributor for such Product. Such Order shall be submitted no later than the [**] of the calendar month in which such Order is placed and which is at least [**] prior to the requested delivery date. By way of example, (i) an Order for delivery of Products on [**] must be submitted no later than the [**] of the preceding [**] as the [**] of [**] is less than [**] before the requested delivery date and (ii) an Order for delivery of Products on [**] must be submitted no later than the [**] of the preceding [**] as such date is more than [**] before the requested delivery date. Each Order shall be consistent with the applicable Rolling Forecast for such month in the relevant Order Period and shall be for at least the minimum order quantity for each Product so ordered set forth on Schedule 9.1.4. While Orders may exceed the minimum order quantity for such Product, all Orders must be for a whole number of [**]. Unless MSD notifies Distributor of its

rejection within [**] after its receipt of the Order, the Order shall be considered as accepted by MSD.

9.1.5Subject to MSD’s acceptance of any Order in accordance with Section 9.1.4, MSD shall deliver the Products and Samples to Distributor on the desired date of delivery with an accepted variance of plus or minus [**], unless MSD is prevented by causes beyond MSD’s reasonable control in accordance with Section 21.2.2. Any delivery shall be subject to a permitted [**] percent variance between the quantities of the Products ordered in the Order and the Products delivered.

9.1.6Once an Order has been accepted by MSD, the Order cannot be cancelled or delivery of the Products under the Order deferred by Distributor unless:

(a)MSD provides its prior written consent; or

(b)Distributor agrees to fully indemnify MSD against any loss, damage, cost or liability suffered by it as a result of cancellation of any Order or deferral of delivery of Products up to the maximum aggregate Supply Price of all cancelled Products covered by the cancelled Order.

9.1.7In the event that any of the Products or Samples available to MSD shall be in short supply and MSD is unable to deliver Product or Samples to meet an Order placed by Distributor, MSD shall allocate to Distributor a pro-rated share of the quantity of Products then available to the manufacturer of Products in proportion to the purchases of Products made by Distributor in the previous [**] and shall allocate Samples in a comparable manner.

9.1.8Unless otherwise agreed in writing by the Parties, Distributor shall at all times during the Term maintain a minimum of [**] Safety Stock of each presentation of Product based on an average of [**] forward looking forecast volumes. For the sake of clarity, in the event where there is an unexpected market demand for the Products in the Territory, it is acknowledged and accepted by MSD that Distributor may need to deplete stock below the minimum stockholdings set out in this Section. Distributor shall document the same in the monthly inventory report. In the event that MSD reasonably instructs Distributor to maintain more than [**] Safety Stock of any or all Products in the Territory which are subject to source change or network activities in MSD (as determined by MSD), then Distributor shall comply with all such reasonable directions issued by MSD. The payment terms for holding such additional stock beyond [**] shall be agreed mutually between the Parties.

9.2Delivery.

9.2.1Subject to Section 9.1.5, MSD (or its Affiliate) shall deliver or arrange for the delivery of the Products [**] (Incoterms 2020). Distributor agrees to, or to cause its Affiliate or its or their designated logistics provider to, pick-up

and remove from MSD’s (or its Affiliate’s) premises each delivery of Products within [**] after MSD (or its Affiliate) notifies Distributor such Products are available for delivery.

9.2.2Title to and risk of loss to the Products shall pass from MSD (or its Affiliate) to Distributor upon delivery, except that if Distributor fails to pick-up and remove the Product from MSD’s (or its Affiliate’s) premises within the time permitted under Section 9.2.1 the risk of loss to the Products not collected by Distributor or its Affiliates or representatives shall pass to Distributor at the end of such period. After the delivery, all risks related to inventory and account receivables shall be borne by Distributor.

9.2.3Upon transfer of title to the Products from MSD (or its Affiliate) to Distributor, the sale and purchase of the said Products shall be concluded as between MSD and Distributor, and Distributor shall thereafter be handling and selling the Products in its own name and on its own behalf.

9.2.4Unless otherwise agreed in writing by the Parties, MSD shall deliver the Products to Distributor with a minimum of [**] Remaining Shelf Life at time of the delivery. Where the Remaining Shelf Life cannot be met, MSD shall consult with Distributor as soon as practicable, before the delivery, and Distributor shall have the discretion as to whether it will accept any such delivery.

9.3Invoicing and Payment.

9.3.1MSD or its Affiliate shall issue an invoice for each accepted Order prior to delivery and Distributor shall make payment for such invoice [**]. MSD or its Affiliate shall use Commercially Reasonable Efforts to deliver Product within [**], but in no event later than [**], after its receipt of good funds for such payment. [**].

9.3.2Any amounts payable under this Agreement are exclusive of applicable sales, use, goods and services tax (“GST”), value added tax (“VAT”), excise, and other taxes, duties or charges of a similar nature imposed by any federal, state, provincial or local government or other taxing authority. If any sales, use, GST, VAT, excise, and other taxes, duties or charges of a similar nature are applicable, these will be added at the applicable rate in force at the due time for payment or such other time as is stipulated under the relevant legislation and will be explicitly indicated on the invoices.

9.3.3Without prejudice to MSD’s other rights in this Agreement, if Distributor fails to make payment for any invoice or other sum owing (whether to MSD or MSD’s Affiliate) on the relevant due date, MSD may:

(a)suspend performance of its obligations under this Agreement until such time as all payments due by Distributor are paid in full;

(b)terminate this Agreement upon [**] prior written notice, without judicial resolution, provided, however, that if Distributor shall cure this defect and make payment to MSD such [**] notice period, this Agreement shall continue in full force and effect.

(c)charge daily interest on the amount outstanding, calculated from the due date of payment to the date of actual payment at an interest rate of [**] percent per annum (or such other maximum interest rate applicable by Law, whichever is higher).

10.Quality.

10.1Quality Agreement. No later than [**] after the Effective Date, but in any event prior to the Promotion Commencement Date, the Parties shall enter into a quality agreement (“Quality Agreement”) with respect to the Products. The Quality Agreement shall set forth, among other things, certain tasks to be performed by each Party with respect to the manufacture, transportation, sampling, testing, retaining of samples, release, and stability testing of Product, as well as tasks related to regulatory reporting, Adverse Event reporting, complaint handling, investigations, and recalls. In the event of any discrepancy or inconsistency between the tasks listed in the Quality Agreement and the terms of this Agreement, the terms of Quality Agreement will govern with respect to quality matters and other similar matters, and the terms of this Agreement shall govern with respect to all other matters; provided, that the Quality Agreement may not be interpreted or construed by either Party as amending or modifying in any way any terms of this Agreement except those terms specifically governed by the Quality Agreement. The Quality Agreement may be modified or amended by the Parties, in writing; provided, that such modification or amendment shall not be deemed to modify or amend the terms of this Agreement.

10.2Receipt, Storage and Distribution.

10.2.1Promptly after each delivery, Distributor shall receive, unload, and store the Products at its own costs at the point of delivery in accordance with the requirements specified herein. Distributor shall be solely liable for any loss or damage to any Products howsoever caused subsequent to the delivery, including any damage caused during subsequent delivery of the same from the warehouses and/or Distribution Center of Distributor to any Party, including its customers, save for any defects due to the manufacture of the Products or the delivery or if the Products do not comply with the relevant specifications or the terms agreed to between MSD and Distributor.

10.2.2Distributor will perform inbound visual inspection of the Products upon each delivery for damages, tampering and signs of contamination. If there are any damages, tampering or signs of contamination apparent from Distributor’s visual inspection, Distributor will Immediately place the Product on hold, and will inform MSD as soon as possible and anyway within ten Business Days after the applicable delivery. The Product will be maintained on hold pending a written disposition statement from MSD.

10.2.3If there is a defect and/or shortage in the Products, Distributor shall send a written defect and/or shortage report to MSD within [**] from the

relevant delivery providing all relevant details of such defect and/or shortage. Upon satisfactory review of the written report, MSD shall provide a response to such written report within [**] after receipt and shall replace the Products or issue a credit note in favor of Distributor for the Supply Price of such Product affected by said defect and/or shortage. Reasonable costs or expenses incurred by Distributor in the replacement or return of MSD’s Products shall be borne by MSD.

10.2.4Distributor shall conduct a visual inspection of the Products for any such defect or non-compliance, provided that: (i) where any Products delivered are contained or enclosed in any packing, Distributor shall not be required to break open, unpack or unwrap such packing and may proceed to store such packing at Distributor’s Distribution Center in the same condition it is received without being obliged to take any steps whatsoever to verify whether the contents of such packing correspond with any information or specifications stated on the packing or ascertain the condition of the contents thereof; and (ii) without prejudice to the generality of the aforementioned, where any packaging of Products delivered purports to contain more than one unit of Products, Distributor shall not, prior to storing such packaging of Products, be obliged to verify whether the number of Products tallies with the number actually therein. Notwithstanding the foregoing, in case of any Latent Defect which Distributor discovers, Distributor shall inform MSD of such Latent Defect in writing within [**] from its discovery of such Latent Defect. Where MSD agrees that such Product contains a Latent Defect, MSD shall replace the Products affected by such Latent Defect within a reasonable time period as mutually agreed to between the Parties or issue a credit note in favor of Distributor for the Supply Price of such Product affected by said Latent Defect. Reasonable costs or expenses incurred by Distributor in the replacement or return of Products with Latent Defects shall be borne by MSD. Where the Parties disagree on whether the Product contains a Latent Defect (“Disagreement”), the Parties shall escalate the matter to the [**]. If the [**] is unable to resolve the Disagreement, a mutually agreed independent Third Party expert shall preside over the Disagreement and its decision shall be final and binding. The fees of such expert shall be borne by the losing Party. Distributor shall have been deemed to have inspected and accepted the relevant Products if it does not notify MSD within the requisite timeframes as stated in this Article.

10.2.5Distributor will check all inbound temperature monitored shipments for temperature alarms (where applicable) and in the case of a temperature alarm indication, will Immediately place the Product on hold, and inform MSD supply site or customer interface of the details of the temperature excursion within [**] after the applicable temperature alarm incursion. The Product will be maintained on hold pending a written disposition statement from MSD. In the event that MSD instructs Distributor to reject such Products, [**]. For avoidance of doubt, the [**].

10.2.6Distributor shall maintain adequate warehouse space in the warehouses and/or Distribution Center for storage of the Products and, if made available, Samples. Each lot of a Product shall be clearly identified to distinguish

it from other lots of the same Product, even though they are physically stored in the same space.

10.2.7Distributor shall store the following non-saleable Products in different locations apart from the saleable Products and Samples: (i) damaged Products; (ii) Deleted Package Units; (iii) Returned Products; (iv) expired Products; and (v) Recalled Products.

10.2.8Distributor agrees that the Product inventory shall be managed on the basis that Product items with the earliest expiry dates will be sold first (First Expiry First Out).

10.2.9Subject to Section 10.2.10, Distributor shall ensure that only its employees authorized to handle MSD’s Products or its authorized sub-distributors will have access to the Products.

10.2.10Distributor shall allow authorized representatives of MSD (or its Affiliates) access to the Distribution Centers, including any Distribution Centers owned or operated by Third Parties, for the purposes of quality inspection and monitoring compliance with this Agreement, pertaining to Products only, and upon prior reasonable notice and during working hours. In the event that such inspection reveals any non-compliance by Distributor with cGDP, applicable Laws or other requirements of this Agreement, Distributor will have [**] from receipt of written notice in which to remedy the shortcoming. Distributor shall not deliver, ship or remove from storage any Product that for any reason, fails to comply with the terms of this Agreement and/or quality principles contained in this Agreement.

10.2.11Unless otherwise agreed by MSD in writing, all Products delivered to the warehouses and/or Distribution Center shall be stored, handled and delivered in accordance with the following requirements;

(a)[**].

(b)[**].

(c)Distributor shall maintain an accurate and complete inventory record of the amount of Products handled, inter alia, lot numbers.

(d)Distributor shall maintain in the warehouses and Distribution Center a 24 hour fire alarm, power loss alarm, and security system(s) that are in line with industrial standards in the Territory, and shall maintain the warehouses and Distribution Center and the storage area in good repair.

(e)Distributor shall ensure that all Products will be transported and delivered to its customers as per the labelled storage conditions.

10.2.12Distributor shall notify MSD of Distributor’s failure to store and handle the Products in accordance with this Agreement within [**] after Distributor

becomes aware of such failure. Distributor shall promptly, within a reasonable timeframe, investigate such failure and provide Distributor a report summarizing the results of its investigation. All such Products shall be quarantined from distribution until the investigation has been concluded. MSD will provide direction or product information for Distributor to assess impact to product within [**] of receipt of Distributor’s report. Distributor must ensure that product negatively impacted is rejected and properly disposed.

10.2.13Distributor shall be obligated to accept, and store in an area designated as the returned products area, any Products returned by its customers, including Products returned after the expiration or termination of this Agreement, or Products that have left the direct control and handling of Distributor or its trained and duly authorized representatives (collectively “Returned Products”).

10.2.14Unless otherwise expressly authorized by MSD in writing, Distributor shall destroy or cause to be destroyed, all Returned Products, all Products the Shelf Life of which has expired, all damaged or defective Products and all Deleted Package Units. Distributor shall (i) arrange for the destruction of the Products in compliance with the applicable Laws in the Territory and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed. Product destruction costs relating to defective Product for which MSD is liable under Section 11.2, shall be borne by MSD.

10.2.15Distributor agrees to notify MSD promptly of any proposed or unannounced visit or any inspection of the warehouses and Distribution Center by representatives of any Agency, so far as such inspection relates to the Products, and if reasonably practicable will permit one or more qualified representatives of MSD to be present during such visit or inspection. If a representative of MSD is not present during such a visit or inspection, Distributor shall promptly provide MSD a summary report in English of the results of such inspection so far as such inspection related to the Products. Distributor shall furnish MSD with summaries of all reports, documents or correspondence in English with respect to any requests or inspections of the warehouses and Distribution Center by an Agency, followed by photocopies of such reports, documents or correspondence. Distributor shall be entitled to redact any part of the reports, documents or correspondence the disclosure of which would put Distributor in breach of its confidentiality obligations to its other clients or principals. Distributor is also responsible for taking necessary corrective action to correct any identified deficiencies.

10.2.16Distributor shall as soon as reasonably practicable, but in any event no later than [**], notify MSD of any complaints regarding any Products stored and handled under this Agreement and shall support any investigation efforts. Distributor shall quarantine the Products that are under investigation or as otherwise reasonably instructed by MSD in writing. In the event that the

investigation is required due to the fault of a Party to this Agreement, the costs of the investigation shall be borne by the at-fault Party. For example, if it occurred due to an error in Distribution which is the responsibility of Distributor, the cost of such error shall be borne by Distributor.

10.2.17Distributor shall comply with the requirements of cGDP that are applicable to its handling, storage and transportation of the Products.

10.2.18Distributor will ensure Products are handled, stored and transported in accordance with the Product specifications and all applicable Laws and other requirements of any Agency.

10.2.19Distributor will transport and handle Products in conditions which will not adversely affect the quality of the Products, which will ensure that all Products meet their respective Product specifications, and which will ensure that no Products become Defective Product.

10.2.20Distributor will be responsible for maintaining distribution records of the Products shipped to customers covering the name, strength, pack size and dosage form of the Product, name and address of the customers, date and quantity shipped, and lot or control number of the Products.

10.2.21Distributor shall not be entitled to perform any quality tests on the Products prior to receipt of the Products from MSD in the Territory but shall be entitled to receive the certificate of analysis for the Products from MSD and perform a visual inspection of the Products in accordance with Sections 10.2.2 and 10.2.4. For clarity, Distributor shall release the Product to market in the Territory in reliance on the certificate of analysis provided by MSD.

10.2.22Any change in the Distribution Centers shall require prior written approval from MSD.

10.3Records Retention. Distributor will in accordance with the applicable Laws, store the original documentation related to the warehousing and Distribution operations of a Product in an environment with limited or controlled access.

10.4Product Quality Complaints. MSD will be responsible for conducting Product quality complaint investigations, and on request will issue reports and follow-up corrective and preventative actions relating to Product quality complaints to customer and/or Agency. Distributor will:

(a)forward inquiries relating to Product quality complaints, diversion, and counterfeit Immediately to MSD in accordance with the Pharmacovigilance Agreement;

(b)forward any and all reports of Adverse Events relating to Product to MSD in accordance with the Quality Agreement

(c)assist MSD in investigating and resolving all Product complaints related to the warehousing and distribution of the Products; and

(d)document and provide MSD with any information relating to the warehousing and Distribution of the Products which is necessary to address a Product complaint or event no later than [**] of notification of a Product quality complaint.

10.5Redress or Repackage.

10.5.1Distributor shall not redress, repackage or re-label or otherwise modify the packaging and label of the Product (including applying any stickers thereto) supplied by MSD.

10.5.2Distributor shall prior to MSD consent, rely on MSD appointed repackaging facility for any redressing / repackaging of Products.

10.6Change of Artwork. MSD and Distributor shall meet within [**] after the Effective Date to develop an artwork transition plan for the planning of artwork changes in respect of the Products (“Artwork Transition Plan”) for the Territory which shall be limited to Distributor’s NDC numbers and addition of Distributor’s name, logo and contact information where applicable as approved by MSD.

10.6.1The Artwork Transition Plan will include:

(a)List of SKUs with the aim of regulatory submission in the [**] unless MSD has planned activity in place for artwork changes in the first [**] in which case the regulatory submission dates will be aligned to this date;

(b)Distributor NDC codes (or timing thereof);

(c)Distributor labeler code and format (for name and logo);

(d)In respect of each SKU the requested change to the SKU packaging;

(e)The estimated timing of the change;

(f)The estimated costs associated with the artwork changes (“Artwork Costs”). The Artwork Costs will include all incremental costs associated with the artwork changes requested by Distributor, including regulatory and transition costs which may include tooling, submission costs and human resources costs (of either MSD or Third Parties). The Artwork Costs will reflect whether or not the submission is Distributor specific or a joint submission based on pre-planned artwork changes by MSD. Distributor shall bear all costs associated with the artwork changes requested by Distributor, including regulatory and transition costs which may include tooling, submission costs and human resources costs (of either MSD or Third Parties); and

(g)Timing of payments by Distributor to MSD.

10.6.2All artwork change requests must comply with regulatory, industry and MSD packaging guidelines and applicable Laws.

11.Returns.

11.1MSD Acceptance of Returns. MSD will only accept returns of Product if the Product return is due to the manufacture of the Product or the transport of the Product by MSD to Distributor or if the Product does not comply with the relevant specifications and MSD will not accept returns of Products that have been supplied under this Agreement from Distributor or its customers for any other reason.

11.2Destruction of Returns. Except where the return is due to the manufacture of the Product or the transport of the Product by MSD to Distributor or if the Product does not comply with the relevant specifications, Distributor shall destroy such Products at its own expense and provide proof of such destruction to MSD. Distributor shall (i) arrange for the destruction of the Products in compliance with the applicable Laws and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed.

12.Regulatory.

12.1Owner of Registrations. MSD shall be the holder of all Marketing Authorizations and other health and governmental registrations necessary for the Products to be marketed in the Territory. For the avoidance of doubt, MSD warrants and undertakes that it shall maintain the Marketing Authorization for the Products in the Territory. Without the prior written consent of MSD, Distributor shall not initiate, undertake, conduct or cause to be conducted, the registration of the Products with any government authorities or Agencies in the Territory, in any way or form. Distributor shall promptly inform MSD of any matter coming to Distributor’s knowledge which may affect the registration of any of the Products and render, at its own cost, such assistance as may be reasonably required by MSD in respect of such registration, including actions required to protect registrations for the Products held by MSD. Without limiting the foregoing, Distributor shall within [**] but no longer than [**] after receipt notify MSD or its Affiliate of any and all inquiries received from any Agency concerning the Product(s) so that MSD can determine the procedure to respond to such queries. MSD shall be responsible for the archiving of all official correspondence with Agencies.

12.2No Changes to Artwork. Distributor may not make any changes or alterations to the packaging and labeling of the Products except where required to comply with any applicable Law and then only with the prior written consent of MSD, such consent not to be unreasonably, withheld, conditioned or delayed.

12.3Non-Clinical/Clinical Studies. Distributor shall not conduct, or supply any Product for, any studies (which includes any interventional and non-interventional study with patients), pre-clinical and clinical trials, marketing studies or post-authorization safety studies nor engage in any other laboratory or research and development work with respect to any of the

Products without the prior written consent of MSD. MSD shall promptly share with Distributor information should MSD publish studies regarding the Products.

12.4Health Technology Benefit Assessment. If the Products become subject of a health technology benefit assessment by an Agency in the Territory, and such Agency requests information about the Products, MSD will provide such information directly to the requesting Agency, if possible, otherwise indirectly via Distributor, at MSD’s sole cost and expense. Unless required by applicable Laws, Distributor hereby warrants that it will not disclose any information to such Agency without prior written approval by MSD. In case of any such benefit assessment, the Parties shall discuss and agree in good faith any implications and modifications of this Agreement necessary to reflect the outcome of such benefit assessment.

12.5Agency Filings. Except as required by Laws, Distributor shall not file to any Agency any documents, submissions, communications or responses related to the Product without the prior written approval of MSD, which approval shall be given in accordance with United States anti-boycott regulations and United States export control regulations. To the extent Distributor receives any correspondence or records, all copies of such correspondence or records shall be forwarded by Distributor to MSD within [**] but no longer than [**] of the date of delivery or receipt by Distributor of any such correspondence. Distributor will provide MSD or its Affiliate with copies and English translations of all such correspondence or records relating to the Product at its own cost. If it is not feasible to obtain an English translation of all such correspondence within [**], but no longer than [**] (whichever is shorter) a summary in English together with the non-English document(s) shall be shared with MSD within the said timeframe, followed by an English translation of the original document within a timeframe as agreed by the Parties.

12.6Website. MSD shall grant Distributor a license to use and shall permit Distributor to access and use the URL “Sivextro.com” at its own cost in connection with the Promotion of the Products hereunder. If so requested by Distributor, MSD will use Commercially Reasonable Efforts to make available to Distributor the Product-specific content available on “Sivextro.com” on or as promptly after the Distribution Commencement Date as practicable; provided, however, that MSD may delete, and is not required to provide to Distributor, the general non-Product-specific content on such website which relates generally to MSD, its Affiliates and its and their general approach to product-specific websites, including without limitation all corporate logos and trade names, [**], general health information content and any links to MSD’s and its Affiliates’ coupon or patient assistance programs or requests. Where Distributor intends to upload any material(s) in connection with the Product(s) (including Product labels) on the internet via sivextro.com, Distributor’s own website or otherwise, such material(s) shall always be subject to review and approval of MSD as additional Promotional Materials and only upon written approval of MSD and subject to conditions of such approval may Distributor proceed with the upload. MSD is responsible for review and approval of all posted materials. The license granted herein and Distributor’s right to use such URL shall expire at the end of the Term and Distributor shall take any and all actions reasonably requested by MSD at the end of the Term to transfer “sivextro.com” back to MSD and its Affiliates.

12.7Pharmacovigilance Agreement. No later than [**] after the Effective Date, but in any event prior to the Promotion Commencement Date, the Parties shall enter into a pharmacovigilance agreement (the “Pharmacovigilance Agreement”) with respect to the

Products. The Pharmacovigilance Agreement shall set forth, among other things, certain tasks to be performed by each Party with respect to the collection, recording, assessment and regulatory reporting of product quality complaints. In the event of any discrepancy or inconsistency between the tasks listed in the Pharmacovigilance Agreement and the terms of this Agreement, the terms of the Pharmacovigilance Agreement will govern with respect to Adverse Event reporting and other similar pharmacovigilance matters, and the terms of this Agreement shall govern with respect to all other matters; provided, that the Pharmacovigilance Agreement may not be interpreted or construed by either Party as amending or modifying in any way any terms of this Agreement except those terms specifically governed by the Pharmacovigilance Agreement. The Pharmacovigilance Agreement may be modified or amended by the Parties, in writing; provided, that such modification or amendment shall not be deemed to modify or amend the terms of this Agreement.

13.Intellectual Property.

13.1Grant of Rights. Subject to the terms of this Agreement, MSD and its Affiliates hereby grant to Distributor the right to use the Trademarks solely to the extent necessary to carry out its obligations to Promote and Distribute Products in the Territory as provided under this Agreement.

13.2Authorized Distributor. Distributor shall have the right in the Territory to indicate that it is the authorized distributor of MSD, or such Affiliate as designated by MSD, with respect to the Products and that MSD or such Affiliate as designated by MSD is the manufacturer of the Products to the extent permitted by applicable Laws. This limited right applies solely to use of the trade name of MSD or its designated Affiliate in standard text and does not include any right to use any logo, design or image nor does it include any right to use any trade name in a distinctive font or in any other stylized format. Any use of MSD’s or its Affiliate’s trade name shall be used only in such form and format as may be reasonably required by MSD from time to time.

13.3Ownership of Trademarks. Distributor acknowledges that MSD, or its Affiliates or designees, own the all the Trademarks in the Territory and Distributor shall include, to the extent permitted by applicable Laws, in any promotional or other materials on which any Trademark is used an appropriate statement acknowledging MSD’s or its Affiliate’s ownership of such Trademark as reasonably directed by MSD. Except as provided in this Section, this Agreement does not constitute a grant to Distributor of any license, property right or interest in the Trademarks or trade names of MSD or the Products. Distributor expressly recognizes, and agrees not to contest, the validity of the title of MSD or MSD Affiliates to all Trademarks or trade names associated to the Products in the Territory, whether or not registered therein.

13.4Trademark Restrictions. Distributor shall not do any of the following:

13.4.1alter, remove, obscure or otherwise modify, in whole or in part, any trade name, Trademark or other trademark of MSD or its Affiliate appearing on any Products, Promotional Material, or other materials provided by MSD to Distributor pursuant to this Agreement;

13.4.2use in relation to the Products any trademarks or trade names other than the Trademarks and trade names of MSD and/or its Affiliates and other than Distributor’s name and corporate logo to the extent provided herein; or

13.4.3register, acquire, or own, or attempt to register, acquire or own, any trademark, company or other entity name, or any domain name, social media handle, or other online username or identifying moniker that includes or incorporates any Trademark in the Territory or trade name of MSD or its Affiliates.

13.5Goodwill.

13.5.1Distributor further undertakes (during the Term and at all times thereafter) to use its best efforts not to do any act which would or might endanger, destroy or similarly affect the value of the goodwill pertaining to any of the Trademarks nor do any act which might support an application to remove any of the Trademarks from a trademark register or cause the trademark registrar to require a disclaimer with respect to any such Trademark or part thereof nor assist any other person, firm, corporation or organization directly or indirectly in any such act.

13.5.2Distributor agrees that all use of the Trademarks by it shall be for the benefit of MSD or its Affiliate, and the goodwill accrued in connection with its use of the Trademarks, whether arising at common law or otherwise, shall accrue to MSD or such Affiliate, and MSD, its Affiliate or any of their successors in title may call for an assignment thereof without any expense to Distributor.

13.6Maintenance of Trademarks. Distributor shall provide to MSD or its designee any information as to the use by Distributor of the Trademarks which MSD or such designee may reasonably request and otherwise render any necessary assistance to MSD or such designee in renewing or otherwise maintaining the Trademarks duly registered. All use of any Trademark or any trade name of MSD or its Affiliate as permitted under this Agreement shall be subject to MSD’s right to inspect and/or approve such material as set forth in this Agreement.

13.7No Assignment or Sublicensing. Distributor shall not have the right to assign, sublicense, or delegate any of its rights under this Article 13 (including to authorize any Third Party to use any Trademarks or trade names of MSD or its Affiliates for any purpose) without the prior written consent of MSD or its Affiliate, which they may withhold in their discretion; provided that that Distributor may delegate its rights under this Article 13 to a subcontractor as permitted pursuant to Section 2.5 of this Agreement.

13.8Notification of Infringement. Distributor shall promptly notify MSD of all cases of infringement of the Trademarks that come to Distributor’s attention, and shall render all assistance reasonably requested in connection with any action taken by MSD. The control of such action, including whether to initiate action and to settle, shall solely be under the control of MSD and its Affiliates. Distributor acknowledges that MSD shall only be liable for reasonable expenses and reasonable attorneys’ fees incurred by Distributor at the specific request of MSD.

13.9Trademark Actions. Distributor shall promptly notify MSD of any claims, threats or actions coming to Distributor’s attention arising out of the use by Distributor of the

Trademarks or of MSD’s or its Affiliate’s trade names in compliance with this agreement. MSD shall undertake the defense of any such claim, threat or action at MSD’s own expense, and Distributor shall render all assistance reasonably requested in connection with any action taken by MSD or its Affiliates.

13.10MSD Patents. The Parties agree that all patents to the Products (“MSD Patents”) shall belong solely and exclusively to MSD or its Affiliates. MSD or its Affiliates shall have the sole right to file proceedings against any alleged infringements of MSD Patents, at its expense. Distributor will promptly notify MSD of any potential infringement of MSD Patents that come to Distributor’s knowledge and MSD shall have the sole right to initiate litigation or other action in the event of a potential infringement, misappropriation or misuse of MSD Patents. If MSD institutes an action against the infringement, misappropriation or misuse of MSD Patents, Distributor agrees to render, at MSD’s cost, all assistance reasonably required in connection with any action taken by with MSD. MSD shall keep Distributor reasonably informed on an ongoing basis regarding the status of any such action.

13.11Alleged Infringement. If a claim of infringement of Third Party patent rights linked to a performance by Distributor of its rights and obligations under this Agreement is brought against Distributor (“Alleged Infringement”), Distributor shall inform MSD Immediately, and the Parties shall discuss on how to proceed with the Alleged Infringement. MSD shall have the final decision rights on how to defend or settle proceedings concerning the Alleged Infringement, subject to the indemnification provisions below.

14.Confidentiality and Non-Use; Publicity.

14.1Disclosure of Confidential Information. Each Party hereto (i) will retain in strict confidence the terms and conditions of this Agreement (including the nature of the services provided) and the Confidential Information of the other Party and (ii) will not disclose the terms and conditions of this Agreement or the Confidential Information of the other Party to any other Third Party, unless otherwise required by Law or judicial or administrative process, without the other Party’s prior written consent.

14.2Permitted Disclosures.

14.2.1Notwithstanding Section 14.1, each Party shall be permitted to disclose Confidential Information of the other Party, if such Confidential Information:

(a)is disclosed by Distributor (or its Affiliates) to an Agency in order to maintain or obtain approval to Promote and Distribute Product, but such disclosure may be only to the extent reasonably necessary to obtain such authorizations;

(b)is disclosed by the receiving Party (or its Affiliates) to agent(s), consultant(s), and/or other Third Parties who are performing obligations of the receiving Party or exercising rights granted to the receiving Party under this Agreement on the condition that such Third Parties agree to be bound by confidentiality and non-use obligations that substantially are no less stringent than those confidentiality and non-use provisions contained in this Agreement;

(c)is deemed necessary by counsel to the receiving Party to be disclosed to such Party’s attorneys, independent accountants or financial advisors for the sole purpose of enabling such attorneys, independent accountants or financial advisors to provide advice to the receiving Party, on the condition that such attorneys, independent accountants and financial advisors agree to be bound by confidentiality and non-use obligations that substantially are no less stringent than those confidentiality and non-use provisions contained in this Agreement; or

(d)is disclosed in connection with a merger or acquisition of a given Party (or its Affiliate) or a divestiture of a portion of such Party’s business related to this Agreement, such Party shall have the further right to disclose the material financial terms of this Agreement to Third Parties involved in such merger or acquisition provided that such Third Parties agrees to be bound by confidentiality and non-use obligations that substantially are no less stringent than those confidentiality and non-use provisions contained in this Agreement.

14.2.2In addition, if a Party is required by judicial or administrative process or Law to disclose Confidential Information that is subject to the non-disclosure provisions of Section 14.1, such Party shall promptly inform the other Party of the disclosure that is being sought in order to provide the other Party an opportunity to challenge or limit the disclosure obligations. Confidential Information that is disclosed by judicial or administrative process or as required by Law shall remain otherwise subject to the confidentiality and non-use provisions of Section 14.1, and the Party disclosing Confidential Information pursuant to law or court order or as required by Law shall take all steps reasonably necessary, including obtaining an order of confidentiality, to ensure the continued confidential treatment of such Confidential Information.

14.2.3Without limiting the generality of the foregoing, it is understood and agreed that the giving of permission by a Party to use or otherwise disclose Confidential Information in a particular instance shall not, in any other instance, operate or be deemed to remove the material from the definition of Confidential Information, or from the protection provided to the same under this Article. It is further understood and agreed that no permitted use or disclosure of Confidential Information hereunder shall be deemed to derogate or otherwise circumscribe the provisions of this Sub-Article which requires that all Confidential Information be returned to the Party that disclosed such Confidential Information at the expiration, cancellation or termination of this Agreement.

14.3Equitable Relief with Respect to Disclosure of Confidential Information. The Parties hereto acknowledge that (i) it would be impossible to measure the damages that would be suffered by the other Party if a Party failed to comply with this Article 14 and (ii) in the event of any such failure, there might not be adequate remedy at law. Therefore, each Party hereto shall be entitled, in addition to any other rights or remedies that it may have, to obtain specific performance by the other Party of the obligations of this Article 14, to obtain immediate injunctive relief without having to post a bond. Neither Party hereto will urge, as a defense to any proceeding for such specific performance or injunctive relief, that the other Party has an adequate remedy at law. In addition, each Party shall be entitled to retain copies of any Confidential Information of

the other Party if and to the extent that it is required to do so by Law. Notwithstanding the foregoing or anything else in this Agreement to the contrary, nothing in this Agreement shall require either Party to return, destroy or delete any Confidential Information of the other Party, including any copies thereof, which may have been captured as part of the receiving Party’s normal data security and IT back-up processes; provided, however, that the terms and conditions in this Agreement shall continue to apply to all such Confidential Information and copies so retained for the longest period permitted by applicable law notwithstanding the expiration of the Term or until such Confidential Information has been properly purged and disposed of.

14.4Return of Confidential Information. Upon the written request of the disclosing Party, the receiving Party shall promptly either return to the disclosing Party, or destroy, all Confidential Information of the disclosing Party, in accordance with the instructions of the disclosing Party, including all notes, summaries, and translations that have been made regarding such Confidential Information, and all copies of the foregoing. In the event destruction is requested by the disclosing Party, the receiving Party shall certify such destruction in writing. Notwithstanding the foregoing, the receiving Party may retain a copy for purposes of exercising any rights under this Agreement (including any rights that survive the termination or expiration of this Agreement) and may archive one copy of Confidential Information for purposes of demonstrating its compliance with this Agreement, subject to confidentiality requirements of this Agreement.

14.5Publicity.

14.5.1Promptly after the Effective Date, Distributor will have the right to publicly release the press release attached hereto as Schedule 14.5.1.

14.5.2Except for disclosing the mere existence of this Agreement to potential customers and government bodies (where requested), Distributor shall not advertise or otherwise make known to others any information regarding this Agreement unless otherwise agreed to by MSD in writing or required by Laws. Distributor further agrees not to use or reference in any advertising, sales promotion, press release or other communication, any MSD company or representative name, endorsement, direct or indirect quote, code, drawing, logo, trademark, specification, or picture without the prior written consent of MSD.

14.5.3Except for disclosing the mere existence of this Agreement to current and potential customers and patients and government bodies (where requested), unless otherwise agreed to by Distributor in writing or required by Laws, MSD shall not advertise or otherwise make known to others any information regarding this Agreement. MSD further agrees not to use or reference in any advertising, sales promotion or press release any Distributor company or representative name, endorsement, direct or indirect quote, code, drawing, logo, trademark, specification, or picture without the prior written consent of Distributor, although MSD and its Affiliates may, at a time they deem appropriate, contact customers which are parties to contracts with MSD or one or more of its Affiliates which include any of the Products to engage in discussions to delete such Product(s) from such contracts and to inform such customers that Distributor will be the

authorized distributor for such Products in the future. On and after the Distribution Commencement Date MSD and its Affiliates, however, shall be entitled to [**].

14.6Survival. The obligations set forth in this Article shall survive for a period of five years from the termination, expiration or other cancellation of this Agreement.

15.Right to Inspect Records and Facilities.

15.1Records. Distributor shall keep accurate records: (i) of its sales efforts, promotional and marketing activities performed under this Agreement; and (ii) in sufficient detail to enable MSD to determine the correctness of any report made under this Agreement, as well as to verify Distributor’s compliance with the other terms of this Agreement (collectively the “Records”). In addition, Distributor shall keep accurate Records in sufficient detail to enable MSD to trace Products distributed in the event of a recall of the Products.

15.2Inspection. Upon the request of MSD and upon prior arrangement with Distributor, Distributor shall permit an auditor or inspector employed or appointed by MSD to have access to such of Distributor’s books, Records and facilities in respect of the Products as may be necessary to monitor Distributor’s compliance with this Agreement. Any such audit or inspection shall be conducted during Distributor’s ordinary business hours and shall not be exercised more than [**] except that if any such audit reveals any failure by Distributor to comply with the terms of this Agreement, then, without limiting MSD’s other rights under this Agreement such [**] limit shall no longer apply. Distributor shall also permit representatives of MSD, upon prior arrangement with Distributor, to have access to the Distribution Centers, including any Distribution Centers owned or operated by Third Parties, during normal business hours in order to inspect the Distribution Centers in respect of the Products and review the inventory status of the Products. Any Confidential Information disclosed by Distributor to such auditor or inspector shall be subject to the provisions of Article 14 hereof.

15.3Survival. MSD’s rights to access and Distributor’s obligations to provide access under this Article shall survive for [**] after the expiration or termination of this Agreement and shall be limited to the books, Records and facilities in respect of the Products only, except where there is an Agency inquiry/scrutiny or there is a report of an Adverse Event or a Product Recall at any time during the Term or within [**] following the expiration or termination of this Agreement, then MSD will retain the right to inspect Distributor’s books related to MSD promotion and distribution activities, Records and facilities in respect of the Products so far as they relate to such an event in order that MSD may determine appropriate action.

16.Personal Data Privacy.

16.1Ownership of Personal Data. The Parties acknowledge that as a result of its performance of duties under this Agreement, it will collect, possess and have access to Personal Data, including those relating to the other Party’s directors, officers, employees and customers. The Parties agree that such Personal Data constitutes Confidential Information and, subject to Article 14 and Section 16.2, is and will remain the property of disclosing Party.

16.2Compliance with Law. Notwithstanding the above, the Parties agree that each shall ensure that any Personal Data collected, used, processed, disclosed and/or transferred

pursuant to its obligations under this Agreement shall at all times be compliant with any applicable data protection Laws. Where a Party discloses Personal Data to the other Party, the Party that discloses such Personal Data shall ensure that it has obtained all relevant consents from, or provided all relevant notices to, the relevant individuals in respect of the collection of such Personal Data, for the purposes for which it will be used, processed, disclosed and/or transferred.

17.Compliance.

17.1Ethical Business Practices.

17.1.1MSD endeavors to hold itself and Distributor to the highest ethical and compliance standards, including basic human rights, encouraging fair and equal treatment for all persons, the provision of safe and healthy working conditions, respect for the environment, the adoption of appropriate management systems and the conduct of business in an ethical manner. Without limiting any of Distributor’s other obligations under the Agreement, and without conflicting with or limiting any of the warranties, obligations or other provisions expressly set forth elsewhere in the Agreement, including its obligations under Section 21.2.2, Distributor agrees that it will abide by the letter and spirit of MSD’s Business Partner Code of Conduct (the “Code”), as in effect from time to time, a copy of which is available at http://www.MSD.com/about/how-we-operate/code-of-conduct/home.html. Distributor agrees that it will provide all documentation reasonably requested by MSD to demonstrate compliance with the Code. In the event of a conflict between the obligations in this Article and the Code, on the one hand, and any other provision in the Agreement, on the other hand, such other provision of the Agreement shall prevail (but only to the extent of the conflict).

17.1.2In performing its obligations hereunder, the Parties further acknowledge that the corporate policy of MSD and its Affiliates requires that MSD’s business be conducted within the letter and spirit of the Law. By signing this Agreement, the Parties agree to conduct the business contemplated herein in a manner which is consistent with all applicable Laws, including any applicable anti-corruption legislation, the U.S. Foreign Corrupt Practices Act and good business ethics as described in this Article and as communicated to Distributor by MSD and/or its Affiliates from time to time. Specifically, MSD and Distributor each warrants and agrees that in connection with this Agreement and MSD’s business relating thereto, it, its Affiliates, their respective representatives, and anyone acting on their behalf (including Distributor’s personnel, agents and subcontractors) shall not offer, make or promise any payment, either directly or indirectly, of money or other assets (hereinafter collectively referred to as “Payment”), to any government, political party or international organization official, candidate or persons acting on behalf of any of the foregoing or directly associated with them including their staff, business partners, close associates and family (hereinafter collectively referred to as “Officials”) where such Payment would constitute a violation of any applicable Law. In addition, regardless of legality, the Parties shall make no Payment, either directly or indirectly, to Officials if such Payment is for the purpose of improperly

influencing decisions or actions with respect to the subject matter of this Agreement or the business activities of MSD or its Affiliates.

17.1.3Distributor represents and warrants that Distributor and its Affiliates have provided complete and accurate information and documentation to MSD and/or its Affiliates, and their representatives in the course of any due diligence that was conducted, including disclosure of any Distributor’s personnel who are in a capacity that may reasonably provide an opportunity to influence decisions or actions with respect to the subject matter of this Agreement or the business activities of MSD or its Affiliates. Distributor also acknowledges and agrees that in the event that Distributor engages an Affiliate, subcontractor or agent, that Distributor will conduct due diligence on such Affiliate, subcontractor or agent consistent with the requirements set forth in this Article, and will maintain adequate records and provide such records to MSD to evidence such due diligence was conducted and any identified risks were mitigated. Distributor shall make all further disclosures as necessary to ensure the information provided remains complete and accurate for the duration of this Agreement. Distributor covenants that any future information and documentation submitted as part of further due diligence or a certification shall be complete and accurate.

17.1.4MSD and Distributor each represents, warrants and covenants that all books, records, invoices, and other documents relating to payments and expenses under this Agreement or any Order are and shall be complete and accurate and reflect in reasonable detail the character and amount of transactions and expenditures.

17.1.5MSD and Distributor each further represents, warrants and agree that no “off the books” or other similar funds will be maintained or used in connection with this Agreement or any Order. Except as expressly provided for in this Agreement, without obtaining the prior written consent of the other Party, which shall not be unreasonably withheld, either Party shall not hire or retain subcontractors or agents who will be interacting with Officials on behalf or at the request of such Party who may have an opportunity to influence decisions or actions with respect to the subject matter of this Agreement or any Order or the business activities of MSD, Distributor or its Affiliates.

17.1.6Distributor agrees to ensure that all of Distributor’s personnel, employees, subcontractors, and its and their respective Affiliates’ representatives, agents and subcontractors involved in performing the obligations under this Agreement are made specifically aware of the compliance requirements under this Article, including by participation of such personnel, employees, agents and subcontractors in mandatory training to be conducted by Distributor regarding such requirements prior to performing any obligations under this Agreement. Distributor further agrees to certify its continuing compliance with the requirements under this Article on a periodic basis during the Term of this Agreement in such form as reasonably required by MSD. Distributor agrees to, and shall cause its personnel, employees or subcontractors to implement and/or sustain a compliance

program, to comply with the requirements of this Article and to maintain adequate records of such compliance program.

17.1.7MSD shall have the right, in its sole discretion to audit the books and records of Distributor to ensure compliance with this Article, including the Code, for the period of [**] following termination and/or expiration of this Agreement and/or any Order, and Distributor shall provide its full cooperation and assistance in any such review conducted by MSD. MSD will provide reasonable advance notice of such an audit, and shall have the right to conduct this audit on its own. If MSD determines that a Third Party auditor is required to conduct such audit, then the appointment of the Third Party auditor shall be mutually agreed to both by MSD and Distributor. Distributor shall acknowledge receipt of MSD’s notice as promptly as practicable after receipt of such notice and will confirm the date on which the audit will occur within [**] after receipt of such notice. MSD or its Third Party auditor may interview Distributor’s employees as part of or in connection with the audit. This audit right shall be in addition to any other audit rights granted in the Agreement. Any Confidential Information disclosed by Distributor to such auditor shall be subject to the provisions of Article 14 hereof.

17.1.8In the event an audit identifies a non-conformance by Distributor with this Article and/or the Code, Distributor will promptly take corrective action to remedy the non-conformance. MSD reserves the right to approve all corrective actions (such approval not to be unreasonably withheld or delayed). Corrective actions shall be implemented by Distributor at Distributor’s expense.

17.1.9In the event Distributor refuses to allow an audit, or fails or refuses to take corrective action, then in addition to any other remedy available to it under this Agreement at law or in equity, MSD reserves the right to terminate this Agreement in the event Distributor fails to cure such refusal or failure within the period agreed in writing between the Parties after written notice from MSD.

17.1.10Any violation of, or any breach of a representation or warranty set forth in this Article shall be a material breach of this Agreement, and in such event the non-defaulting Party may terminate this Agreement immediately without payment of penalty or damages or further performance of any kind.

17.2Trade Compliance.

17.2.1Distributor agrees, and shall cause each of its customers to agree, that (i) no Products or technical data supplied under this Agreement will be exported, re-exported, sold, distributed, or otherwise transferred to any person or entity listed on a U.S. or EU denied parties list, or any other denied parties list issued by another jurisdiction which is applicable to the Products or technical data supplied under this Agreement, as notified by MSD to Distributor from time to time, all of the foregoing collectively referred to as “Denied Parties Lists” (“Trade Restrictions”). As of the date of this Agreement, the Denied Parties Lists consist of the U.S. Treasury Department’s List of Specially Designated Nationals, and

Blocked Persons (https://www.treasury.gov/ofac/downloads/sdnlist.pdf), the U.S. Commerce Department’s Denied Persons List (http://www.bis.doc.gov/dpl/thedeniallist.asp) and Entity List (http://www.bis.doc.gov/entities/default.htm), and the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions (https://webgate.ec.europa.eu/europeaidffsd/fsf#I/files).

17.2.2Failure by Distributor to comply with applicable Trade Restrictions shall constitute a material breach of this Agreement. Distributor agrees to indemnify and hold harmless MSD for Distributor’s non-compliance with applicable Trade Restrictions.

17.2.3Distributor represents and warrants that it is not nor any of its legal representatives, as applicable, are listed on any of the U.S. or EU denied parties lists, or any other denied parties list issued by another jurisdiction which is applicable to the products or technical data supplied under the Agreement, as notified by MSD to it from time to time, all of the foregoing collectively referred to as “Denied Parties Lists”. As of the date of this Agreement, the Denied Parties Lists consist of the U.S. Treasury Department’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) (https://www.treasury.gov/ofac/downloads/sdnlist.pdf), the U.S. Commerce Department’s Denied Persons List (http://www.bis.doc.gov/dpUthedeniallist.asp) and Entity List (http://www.bis.doc.gov/entities/default.htm), and the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions (http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm Instructions to access EU financial sanctions database.pdf). Distributor further represents and warrants that it is not directly owned by 50% or more by a person listed on the SDN List. Distributor further represents and warrants that it shall notify MSD in writing Immediately if it or any of its legal representatives become listed on any of the U.S. or EU denied parties lists or if it becomes owned by 50% or more by a person listed on the SDN List.

17.2.4In case of an inaccuracy in or a breach of the representations and warranties provided in the preceding paragraph by Distributor, MSD has the right, in its sole discretion, to terminate the Agreement immediately and without any penalty.

17.2.5Sections 17.2.1, 17.2.2, 17.2.3 and 17.2.4 shall survive termination or expiry of the Agreement.

17.3Excluded Entities.

17.3.1The term “Violation” as used in this Article shall mean Distributor or its agents or subcontractors, or any of their respective officers or directors has been: (1) convicted of any of the felonies identified among the exclusion authorities listed on the U.S. Department of Health and Human Services, Office of Inspector General (OIG) website, including 42 U.S.C. 1320a-7(a)

(http://oig.hhs.gov/fraud/exclusions/authorities.asp); (2) identified in the OIG List of Excluded Individuals/Entities (LEIE) database (http://oig.hhs.gov/fraud/exclusions.asp) or the U.S. General Services Administration’s list of Parties Excluded from Federal Programs (http://www.epls.gov); or (3) listed by any US Federal agency as being suspended, debarred, excluded, or otherwise ineligible to participate in Federal procurement or non-procurement programs, including under 21 U.S.C. 335a (http://www.fda.gov/ora/compliance_ref/debar/) (each of (1), (2) and (3) collectively the “Exclusions Lists”).

17.3.2Distributor represents and warrants that prior to the Effective Date, it has screened itself, its agents and sub-contractors, and their respective officers and directors against the Exclusions Lists and that it has informed MSD whether it, its agents, subcontractors, or any of their respective officers or directors has been in Violation. For the sake of clarity officers includes any director or company secretary or a person employed in an executive capacity. After the Effective Date, Distributor shall notify MSD in writing Immediately if any such Violation occurs or comes to its attention. MSD shall also have the right, in its sole discretion, to terminate the Agreement Immediately in the event of any such Violation by Distributor.

18.Representations and Warranties.

18.1General Representations and Warranties. Each of Distributor and MSD represents, warrants, covenants and agrees that, at all times during the Term, it (i) is a corporation duly organized and validly existing and in good standing under the laws of its jurisdiction of organization, (ii) is qualified or licensed to do business and in good standing in every jurisdiction where such qualification or licensing is required, (iii) has the corporate power and authority to execute, deliver and perform its obligations under this Agreement, and the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate action, (iv) this Agreement has been duly executed and delivered by it, and (v) this Agreement constitutes the valid and binding obligations of it, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditor’s rights generally, or general principles of equity.

18.2Representations, Warranties and Covenants for Product. MSD represents, warrants and covenants that all Product shall, at the time of delivery: (i) be manufactured in accordance with the specifications and the Laws in effect on the day of delivery; and (ii) have at least the percentage of Remaining Shelf Life pursuant to Section 9.2.4, as evidenced by expiry dating, remaining.

18.3Additional Representations, Warranties and Covenants of Distributor. Distributor represents, warrants and covenants it and that all of its and its Affiliates’ employees, agents and sub-contractors involved in performing the obligations under this Agreement shall comply with all obligations under this Agreement.

18.4Additional Representations, Warranties and Covenants of MSD. MSD represents, warrants and covenants that:

18.4.1to MSD’s knowledge, the Promotion and Distribution of the Products by MSD prior to the Effective Date has not infringed or misappropriated any intellectual property rights of any Third Party;

18.4.2to MSD’s knowledge, no Agency has taken any action or threatened to revoke the Marketing Authorization for any Product or to impose a “black box” warning for any Product; and

18.4.3MSD has not entered into any agreement with any Third Party that would conflict with, contravene, or otherwise be inconsistent with this Agreement.

19.Indemnification; Insurance.

19.1MSD Indemnification. In addition to any other available remedies, MSD hereby agrees to indemnify, defend and hold harmless Distributor, its Affiliates, and their respective officers, directors, employees, shareholders, members, partners, agents, representatives, successors and assigns (collectively, the “Distributor Indemnities”) from and against any and all Third Party Damages based on Third Party Claims imposed on, incurred by or asserted against any of Distributor Indemnitees arising out of or relating to: (i) a breach by MSD of any of its representations, warranties, covenants, agreements, or obligations under this Agreement; or (ii) the alleged or actual infringement of any intellectual property rights of Third Parties arising from the Promotion and Distribution of Products by Distributor so long as such Promotion and Distribution is performed in accordance with all Laws, the terms and conditions set forth in this Agreement, the Territory Promotion Plan or the Annual Sales Plan, as appropriate, and in all cases if done in strict adherence to the Promotional Materials used by MSD and its Affiliates in the Territory and provided by MSD to Distributor; or (iii) any royalties on Net Sales payable by MSD and its Affiliates to any Third Party; or (iv) the negligence or willful misconduct of MSD, its agents, representatives, and/or employees in the performance of any of its obligations under this Agreement; in each case, except to the extent such Third Party Damages or Third Party Claims result from the matters contemplated in Section 19.2.

19.2Distributor Indemnification. In addition to any other available remedies, Distributor hereby agrees to indemnify, defend and hold harmless MSD, its Affiliates, and their respective officers, directors, employees, shareholders, members, partners, agents, representatives, successors and assigns (collectively, the “MSD Indemnities”) from and against any and all Third Party Damages based on Third Party Claims imposed on, incurred by or asserted against any of MSD Indemnitees arising out of or relating to: (i) a breach by Distributor of any of its representations, warranties, covenants, agreements, or obligations under this Agreement; (ii) the alleged or actual infringement of any intellectual property rights of Third Parties arising from the Promotion and Distribution of Products by Distributor, its Affiliates and its approved subcontractors other than in strict accordance with all Laws, the terms and conditions set forth in this Agreement, the Territory Promotion Plan or the Annual Sales Plan, as appropriate, or arising out of the use of any Promotional Materials by Distributor, its Affiliates or its subcontractors which

have been modified from the Promotional Materials used by MSD and its Affiliates in the Territory and provided by MSD to Distributor, unless such modifications were proposed by MSD; or (iii) any and all amounts payable by Distributor and its affiliates or subcontractors to any Third Party; or (iv) the negligence or willful misconduct of Distributor, its agents, representatives and/or employees in the performance of any of its obligations under this Agreement; or (v) any Distributor-related packaging or labeling images (including package inserts) (e.g., trademarks, trade dress and other artwork) provided to MSD by Distributor, in each case, except to the extent such Third Party Damages or Third Party Claims result from the matters contemplated in Section 19.1.

19.3Indemnification Procedures. The indemnified Party agrees to give the indemnifying Party (1) prompt written notice of any claims made for which the indemnified Party knows or reasonably should know the indemnifying Party reasonably may be liable under the foregoing indemnification and (2) the opportunity to defend, negotiate, and settle such claims. Notwithstanding the foregoing, the failure to give such written notice will not affect the indemnification provided hereunder except to the extent the indemnifying Party shall have been actually prejudiced as a result of such failure. The indemnified Party shall provide the indemnifying Party with all information in its possession, and all reasonable authority and all assistance, reasonably necessary to enable the indemnifying Party to carry on the defense of such suit; provided, however, that the indemnified Party reserves the right to retain its own counsel at its own expense to defend itself in such suit.

19.4Settlements. Neither Party shall be responsible to or bound by any settlement made by the other Party without its prior written consent; provided, however, that the indemnifying Party shall not be required to obtain such consent if the settlement involves only the payment of money and will not result in the indemnified Party becoming subject to injunctive or other similar type of relief and provided that such settlement does not require an admission by the indemnified Party and includes an unconditional release of the indemnified Party from all liability on claims that are the subject matter of such proceeding.

19.5Damages. EXCEPT FOR (I) A BREACH OF SUCH PARTY’S OBLIGATIONS UNDER ARTICLE 13, (II) A BREACH OF SUCH PARTY’S OBLIGATIONS UNDER ARTICLE 14 OR (III) SUCH PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES OR ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES OR ITS OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES OR INDIRECT OR CONSEQUENTIAL LOSSES, OR FOR ANY LOSS OF REVENUES OR LOST PROFITS, IN EACH CASE OF ANY KIND, NATURE OR DESCRIPTION WHATSOEVER, SUFFERED OR INCURRED BY SUCH PARTY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR AS A RESULT OF ANY ACTIVITIES HEREUNDER, REGARDLESS OF WHETHER ARISING FROM BREACH OF CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE OR IF SUCH LOSS OR DAMAGE COULD HAVE BEEN REASONABLY FORESEEN. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 19.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR

OBLIGATIONS OF ANY PARTY WITH RESPECT TO ANY THIRD PARTY CLAIMS UNDER SECTION 19.1 OR 19.2.

19.6Insurance.

19.6.1Distributor shall, at all times during the Term, and for a period of [**] following the termination or expiration of this Agreement, maintain, and shall ensure that each of its permitted subcontractors maintains, in full force and effect at all times during the Term the types and amounts of insurance coverage set forth on Schedule 19.6.1. In addition, Distributor shall maintain adequate property insurance to cover buildings, equipment, raw materials and finished product including coverage for product in its care, custody and control.

19.6.2The required insurance coverages shall not be construed to create a limit of Distributor’s liability with respect to its indemnification or other liability under this Agreement. The Distributor shall deliver to MSD, prior to the execution of the Agreement and prior to commencing Manufacturing an insurer or insurer’s agent signed Certificates of Insurance as evidence that policies providing such coverage and limits of insurance are in full force and effect and with insurers, having an AM Best (A-) or higher rating acceptable to MSD. Thereafter, such certificates of insurance shall be provided annually. Such certificates shall provide that not less than [**] advance notice will be given in writing to MSD of any cancellation, termination, or material alteration of said insurance policies. MSD (including all subsidiaries and Affiliates), its officers, directors and employees shall be added by Distributor as additional insureds on all policies, except Workers’ Compensation and Professional Liability.

19.6.3Distributor’s insurers shall waive all rights of subrogation against MSD, its subsidiaries, Affiliates, officers, directors and employees. Distributor’s insurance shall be primary with no contribution by MSD’s insurance. Any additional insurance or limits being requested are at the expense of Distributor, and all deductibles or self-insured retentions are the responsibility of Distributor. If any insurance is on a “claims made basis”, insurance must be maintained for [**] after this Agreement has terminated.

20.Termination. In addition to the termination rights set forth elsewhere in this Agreement:

20.1Termination by MSD Prior to Promotion Commencement Date. The Agreement may be terminated by MSD in its sole discretion upon 30 days’ prior written notice if Distributor has not deployed least [**] qualified, trained and experienced sales representatives in the Territory who (i) are actively engaged in calling on and detailing Distributor’s pharmaceutical product and (ii) have been fully and successfully trained on the Products and are prepared to begin Promoting the Products by [**].

20.2Termination by MSD Prior to Distribution Commencement Date. The Agreement may be terminated by MSD in its sole discretion upon 30 days’ prior written notice if

Distributor has not deployed least [**] qualified, trained and experienced sales representatives in the Territory who have been fully and successfully trained on the Products and are actively engaged in Promoting Products in accordance with this Agreement and the Territory Promotion Plan by [**].

20.3MSD Termination Right for Failure to Achieve Performance. MSD has the right but not the obligation to terminate without compensation to Distributor if in any Calendar Year beginning on or after January 1, 2022 if Distributor fails to purchase Product from MSD, or its designated Affiliate, Products [**]. Prior to MSD exercising its termination right under this Section 20.3, MSD agrees to notify Distributor in writing and then allow Distributor [**] to present its remediation plan to achieve performance, provided, however, that if MSD then determines Distributor’s remediation plan is insufficient in MSD’s reasonable discretion MSD may exercise its right to terminate under this Section 20.3 without any additional delay or opportunity for Distributor to resubmit a revised remediation plan. For purposes of this Section 20.1, “Net Sales” shall be the net sales determined by Distributor in accordance with generally accepted accounting principles in the United States consistently applied and reflected on Distributor’s financial statements as filed with the U.S. Securities and Exchange Commission or, if Distributor is not a publicly traded company, used for management and shareholder reporting.

20.4MSD Termination for Change of Control of Distributor. MSD shall have the right to terminate this Agreement with immediate effect without liability to Distributor regardless of the timing and Distributor’s performance under this Agreement, if Distributor is subject to a Change of Control.

20.5MSD Termination Upon Discontinuance of Product. MSD shall have the right to terminate this Agreement, on an SKU-by-SKU basis, (i) immediately upon written notice to Distributor in the event MSD deletes any Deleted Package Units pursuant to Section 2.4 and (ii) upon not less than [**] prior written notice if MSD elects to withdraw or discontinue supply of a Product or SKU on a global basis.

20.6Material Breach. If either Party shall materially breach this Agreement, the non-breaching Party may give written notice to the other Party, specifying the nature of the material breach and, if such material breach is not remedied within [**] after receipt of such notice (provided, however, that the cure period shall be suspended during any time that a Party seeks resolution of a Dispute as to whether an alleged material breach occurred pursuant to Section 21.5 of this Agreement), then the non-breaching Party shall have the right, in its sole discretion, to immediately terminate this Agreement upon written notice to the breaching Party; provided further, however, that if such breach is by its nature not susceptible of being cured or the giving of such notice would be futile or impracticable, the non-breaching Party may terminate this Agreement immediately without affording the other Party the opportunity to cure such breach.

20.7Bankruptcy. This Agreement may be terminated by written notice given by a Party upon the occurrence of any of the following with respect the other Party: (i) such other Party becomes insolvent, or (ii) voluntary or involuntary proceedings by or against such other Party are instituted in bankruptcy or under any insolvency law, which proceedings, if involuntary, shall not have been dismissed within [**] after the date of filing, or (iii) a receiver or custodian is appointed for such other Party, or proceedings are instituted by or against such other Party for

corporate reorganization or the dissolution of such other Party, which proceedings, if involuntary, shall not have been dismissed within [**] after the date of filing, or (iv) such other Party makes an assignment of substantially all of its assets for the benefit of its creditors, or substantially all of the assets of such other Party are seized or attached and not released within [**] thereafter.

20.8Termination Upon Change of Law. If on the advice of outside counsel either Party determines that the Agreement poses unreasonable legal or economic risk as the result of the enactment or imminent enactment of any Law or a change or imminent change in interpretation of current Laws such that continuing with the Agreement in place would put one or both Parties in jeopardy of violating its obligation to comply with the Law; provided, however, that in the case of legal risk the Parties will negotiate in good faith to amend the Agreement and/or its performance to eliminate such risk while fulfilling their duties to comply with the law

20.9Termination for Other Breaches. Notwithstanding any other provisions herein to the contrary, this Agreement may also be terminated upon written notice by either Party if the other Party’s actions under this Agreement violate any applicable Laws, including any anti-bribery or data protection or data privacy laws, then non-defaulting Party may terminate this Agreement immediately upon written notice to the defaulting Party, without judicial resolution.

20.10Force Majeure. If any Force Majeure Event as described in Section 21.2.23 shall continue for more than [**] which materially interferes with a Party’s ability to perform this Agreement, then either Party shall have the right to terminate the part of this Agreement, upon not less than three months’ written notice to the other.

20.11Effects of Termination. With respect to termination of this Agreement, the Parties shall be obligated as follows:

20.11.1In the event this Agreement is terminated by MSD pursuant to any provision of this Agreement other than Sections 20.2, 20.3, 20.5, 20.8 or 20.10, Distributor shall:

(a)immediately cease all Distribution Activities;

(b)immediately cease all Promotion including any promotion and marketing activities as well as any physician promoting and marketing activity unless otherwise agreed to by MSD in writing, with respect to the Products in the Territory unless otherwise approved by MSD; and

(c)promptly, in respect of any expired Products and all Products remaining unsold at the effective date of such termination, destroy such Products at its cost. Distributor shall (i) arrange for the destruction of the Products in compliance with all applicable Laws and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed.

20.11.2In the event this Agreement is terminated by MSD pursuant to Section 20.2, MSD shall pay to Distributor an amount equal to (i) the Supply Price

of the initial inventory of the Products purchased to enable it to commence Distribution of the Products less (ii) MSD’s cost of goods sold for such inventory, as determined by MSD in accordance with its standard accounting practices, and Distributor shall:

(a)immediately cease all Distribution Activities;

(c)promptly in respect of all Products purchased by Distributor, destroy such Products at its cost. Distributor shall (i) arrange for the destruction of the Products in compliance with all applicable Laws and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed.

20.11.3In the event this Agreement is terminated by MSD pursuant to any of Sections 20.3, 20.5 or 20.8, MSD at its election in its sole discretion, shall either (i) repurchase all unsold inventory of Products in Distributor’s, its Affiliates or its approved subcontractors’ possession at the time MSD’s notice of termination is delivered to Distributor (the “Unsold Inventory”) at the Supply Price paid by Distributor for such inventory or (ii) permit Distributor to continue Distribution Activities and Promotion for the Products until Distributor shall have sold all of the Unsold Inventory or it shall have reached its expiry, but in no event more than [**] after the time of MSD’s notice of termination (such period being referred to the “Wind-Down Period”) and Distributor shall:

(a)cease all Distribution Activities either immediately upon the effective date of such termination or at the end of the Wind-Down Period, as appropriate;

(b)cease all Promotion including any promotion and marketing activities as well as any physician promoting and marketing activity either immediately upon the effective date of such termination or at the end of the Wind-Down Period, as appropriate; and

(c)promptly, in respect of any expired Products and all Products remaining unsold at the effective date of such termination, or at the end of the Wind-Down Period, as appropriate, destroy such Products at its cost. Distributor shall (i) arrange for the destruction of the Products in compliance with all applicable Laws and such destruction shall be carried out at a facility or facilities licensed by the applicable Agency in the Territory, (ii) permit MSD or its representative to be present at such destruction and (iii) provide MSD a certificate certifying the legal destruction of such Products; the certificate shall be supported by a detailed listing of the Products and quantities destroyed.

20.11.4In the event this Agreement is terminated by Distributor pursuant to any of Sections 17.1.10, 20.6, 20.7, 20.8 or 20.9 or Schedule 8.1.1 or by either Party pursuant to Section 20.10, if Distributor has any remaining unexpired stock of the Products left as at the date of the termination of this Agreement, MSD may at its discretion elect to buy back the stock of unexpired Products at the Supply Price or permit Distributor to sell such stock in the Territory as a non-exclusive distributor of the Products for a period of [**] from the effective date of termination or until Distributor has depleted all such remaining stock, whichever is earlier. At the end of such [**] period all remaining stock, if any, will be destroyed by Distributor at its own cost with written certification of destruction provided to MSD.

20.11.5Each Party, in accordance with Articles 14 and 16, shall continue to respect and preserve the confidentiality of all Confidential Information of the other and its respective Affiliates which may come into the possession of such Party during the Term of this Agreement. Upon termination of this Agreement, each Party shall (at the request of the other Party) promptly return or destroy with written confirmation all documents or records containing the other Party’s Confidential Information to the other Party.

20.11.6All Tender sales and committed sales contracts (i.e. hospital and local business orders where a failure to supply will have the result of a financial penalty) which have been agreed in writing in advance by MSD will be novated to MSD or its Affiliate or MSD’s newly appointed distributor if and to the extent so requested by MSD.

20.11.7Unless explicitly agreed by both Parties in writing and except in case of termination due to a breach, upon the termination or expiration of this Agreement in accordance with its terms, neither Party shall be entitled to claim any indemnity, reimbursement, damages, losses or compensation of any kind arising out of or in connection with such termination. The foregoing waiver shall include claims for alleged losses of clientele, goodwill, loss of profits on anticipated sales or the like, and neither Party nor its Affiliates shall have any liability for losses or damages which might result from such termination of this Agreement. In addition, each Party waives any statutory amount which may be allowable or imposed for such termination, whether as liquidated damages or under any other statutory or regulatory authority. Each Party acknowledges that it has decided, and shall continue to decide, on all investments, expenditures and commitments in full awareness of the possibility of losses or damages resulting from termination of this Agreement, and is willing to bear the risk thereof.

20.12Payment of Outstanding Amounts; Accrued Rights: No Further Liabilities. Upon expiration or termination of this Agreement, Distributor and MSD shall promptly settle all outstanding invoices and other monies owed to the other pursuant to this Agreement. The termination or expiration of this Agreement shall not affect the rights and obligations of the Parties accruing prior to such termination or expiration.

20.13Survival. The terms, provisions, representations and warranties contained in this Agreement that by their sense and context are intended to survive the performance thereof by either Party or both Parties hereunder (including in Sections 5.4, 5.6.2, 5.6.5, 5.6.6, 8.1.5, 8.1.11, 8.2.2, 8.2.3, 9.3, 10.1, 10.2.3, 10.2.4, 10.2.5, 10.2.7, 10.2.14, 10.2.16, 10.3, 10.4, 10.5, 12.6, 17.1.7, 17.2, 20.11, 20.12 and 20.13 and Articles 11, 12, 13, 14, 15, 16, 19 and 21) shall so survive the completion of performance, expiration or termination of this Agreement.

21.General Provisions

21.1Non-Solicitation Of Employees.

21.1.1During the Term of this Agreement and for a period of [**] thereafter, unless otherwise agreed in writing, each Party shall not and shall also cause its Affiliates not to, purposefully, directly or indirectly through Third Parties, hire, try to hire or enter into any kind of employment relationship with or entice away any employees of the other Party or its Affiliates in the Territory with whom it became acquainted in connection with the implementation of this Agreement. Without limitation to the generality of the foregoing, such obligation shall apply in particular to sales and service personnel of the other Party or its Affiliates involved in the Promotion of the Products. All the foregoing prohibitions shall not apply in case of a Party’s placement of an advertisement in general circulation for the recruitment of employees not specifically directed to the other Party’s employees.

21.1.2If either Party breaches this Section 21.1, the breaching Party shall pay to the other Party liquidated damages equal to the amount of the annual gross salary of the respective employee or employees. The Parties shall also be entitled to specific performance and injunctive relief, as well as to further damages as remedies for any such breach. Payment of any liquidated damages does not release either Party from their respective obligations under this Section 21.1.

21.2Independent Contractor.

21.2.1In the performance of MSD’s obligations under this Agreement, MSD shall at all times act as and be deemed an independent contractor. Nothing in this Agreement shall be construed to render MSD or any of its employees, agents, or officers, as an employee, joint venture, agent, or partner of Distributor. MSD is not authorized to assume or create any obligations or responsibilities, express or implied, on behalf of or in the name of Distributor. It is understood that the employees, methods, facilities, and equipment of MSD shall at all times be under MSD’s exclusive direction and control.

21.2.2In the performance of Distributor’s obligations under this Agreement, Distributor shall at all times act as and be deemed an independent contractor. Nothing in this Agreement shall be construed to render Distributor or any of its employees, agents, or officers, as an employee, joint venture, agent, or partner of MSD. Distributor is not authorized to assume or create any obligations or responsibilities, express or implied, on behalf of or in the name of MSD. It is

understood that the employees, methods, facilities, and equipment of Distributor shall at all times be under Distributor’s exclusive direction and control.

21.3Force Majeure. No Party shall be liable for a failure or delay in performing any of its obligations under this Agreement (except for the payment of money) if, but only to the extent that, such failure or delay is due to causes beyond the reasonable control of the affected Party, including: (1) acts of God; (2) fire or explosion (except to the extent caused by the negligence or willful misconduct of the affected Party); (3) unusually severe weather; (4) war, invasion, riot or other civil unrest; (5) governmental laws, orders, restrictions, actions, embargoes, or blockages; (6) national or regional emergency; (7) injunctions, strikes, lockouts, labor trouble, or other industrial disturbances; and (8) shortage of supply of non-commodity materials on a global basis (each, a “Force Majeure Event”); provided that the Party affected shall promptly notify the other of the Force Majeure Event and shall exert reasonable efforts to eliminate, cure, or overcome any such causes and to resume performance of its obligations as soon as practicable.

21.4Governing Law; Jurisdiction.

21.4.1This Agreement shall be construed and governed under and in accordance with the laws of the State of New Jersey, without giving effect to the principle of conflict of laws thereof.

21.4.2The Parties agree that any action, suit or proceeding to enforce the rights of either Party under this Agreement or otherwise arising out of this Agreement shall be brought in state or federal courts located in the State of New Jersey having jurisdiction over the subject matter and the Parties (in each case, except to the extent that an alternate method of resolution is specified in other sections of this Agreement).

21.4.3Subject to Section 21.4.2, in any action, suit or proceeding to enforce the rights of either Party under this Agreement or otherwise arising out of this Agreement, each Party, by execution and delivery of this Agreement, expressly and irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action, suit or proceeding by delivery thereof to it by hand or by any other manner provided for in Section 21.8. IN ADDITION, EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, FORUM NON CONVENIENS OR ANY SIMILAR DOCTRINE OR THEORY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

21.5Dispute Resolution. Any dispute arising out of or relating to this Agreement (“Dispute”) shall be resolved in accordance with the procedures specified in this Section 21.5, which shall be the sole and exclusive procedures for the resolution of any such Disputes.

21.5.1The Parties shall attempt in good faith to resolve any Dispute promptly by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of this Agreement. Any Party may give the other Party written notice of any Dispute not resolved in the normal course of business. Within [**] from the date of delivery of such notice, the receiving Party shall submit to the other Party a written response. The notice and response shall include (A) a statement of that Party's position and a summary of arguments supporting that position, and (B) the name and title of the executive who will represent that Party and of any other person who will accompany the executive. Within [**] from the date of delivery of the initial notice, the designated executives of both Parties shall meet at a mutually acceptable time and place including by telephone or video conference if mutually agreed, and thereafter as often as they reasonably deem necessary, to attempt to resolve the Dispute. All reasonable requests for information made by one Party to the other Party shall be honored. All negotiations pursuant to this paragraph are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

21.5.2If the Dispute has not been resolved by negotiation as provided herein within [**] from the date of the initial meeting of the executives provided for above, then, subject to the provisions of Section 21.4, either Party may institute litigation to resolve such Dispute.

21.6Assignment. This Agreement may not be assigned, in whole or in part, whether by operating of law or otherwise (however structured, including by Change of Control or otherwise) without the prior written consent of the other Party; provided, however, that each Party shall have the right, without the prior consent of the other Party, to assign this Agreement, in whole or in part, to any Affiliate of such Party. In addition to the foregoing, MSD shall be entitled to assign the rights and obligations (including by operation of law, judicial process or otherwise) to this Agreement, in whole or in part, (i) to any party in connection with any reorganization, divestiture or other restructuring of its business or product portfolio, or (ii) to any purchaser or other acquiror of any of MSD’s or its Affiliates’ products or operations to which this Agreement relates or any successor to MSD’s business or operations or any portion thereof without prior notice to or consent from Distributor.

21.6.1Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve any Party of responsibility for the performance of any accrued obligation which such Party has hereunder as of the time of such assignment. Any other attempted assignment of this Agreement in violation of this Section 21.6 shall be null and void.

21.6.2The terms and conditions of this Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto and their respective successors and permitted assigns.

21.7Severability. If any provision of this Agreement is found invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall continue in full force and effect. The Parties shall negotiate in good faith to substitute a valid, legal, and enforceable provision that reflects the intent of such invalid or unenforceable provision.

21.8Notices.

21.8.1The term “notice” as used throughout this Agreement, shall mean written notice, except where specifically provided herein to the contrary. Notice shall be delivered by (1) certified mail, return receipt requested (or the equivalent); (2) hand delivery with receipt acknowledged; or (3) overnight courier service that provides a delivery receipt. Notices shall be delivered to the following addresses or to such other address or person as a Party may specify by notice given in accordance with this Section 21.8.1.

If to MSD:

Merck Sharpe & Dohme Corp.
351 North Sumneytown Pike
North Wales, PA 19454
Attention: President, HH-US Market

With a copy to:

Merck Sharpe & Dohme Corp.
2000 Galloping Hill Rd.
Kenilworth, NJ 07033
Attention: Corporate Development

If to Supplier:

Merck Sharpe & Dohme Corp.
351 North Sumneytown Pike
North Wales, PA 19454
Attention: President, HH-US Market

With a copy to:

Merck Sharpe & Dohme Corp.
2000 Galloping Hill Rd.
Kenilworth, NJ 07033
Attention: Head, Corporate Alliance Management

If to Distributor:

Nabriva Therapeutics Ireland DAC

Alexandra House, Office 225/227, The Sweepstakes, Ballsbridge,

Dublin 4, D04 C7H2, Ireland

Attention: Gary Sender, Director

With a copy to:

Nabriva Therapeutics US, Inc.

1000 Continental Drive, Suite 600

King of Prussia, PA 19406

Attention: General Counsel

21.8.2Notice given in accordance with this Section 21.8.1 shall be deemed delivered when received, or upon refusal of receipt.

21.9Cumulative Remedies. Except as otherwise expressly set forth herein, no remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy available under the terms of this Agreement or otherwise available at law or in equity.

21.10Entire Agreement/Amendments; Conflicts.

21.10.1This Agreement, together with all attachments hereto, constitutes the entire agreement between the Parties hereto and shall supersede and take the place of any and all agreements, documents, minutes of meetings, or letters concerning the subject matter hereof that may, prior to the Effective Date, be in existence. Furthermore, this Agreement shall supersede any and all pre-printed terms on any orders, invoices, and other related documents and any and all orders issued by Distributor (or any of its Affiliates). This Agreement may only be amended by a statement in writing to that effect signed by duly authorized representatives of Distributor and MSD.

21.10.2The intent of this Agreement is to include items necessary for the proper execution and completion of the performance under this Agreement. The documents comprised by this Agreement are complementary, and what is required by any one shall be as binding as if required by all.

21.11Counterparts. This Agreement may be executed in two or more counterparts, each of which shall for all purposes be deemed an original and all of which together shall constitute one and the same instrument. In addition, this Agreement may be executed by facsimile or “PDF” and such facsimile or “PDF” signature shall be deemed to be an original. In addition, the Parties may execute this Agreement electronically using digital signatures.

21.12Headings. The headings assigned to the Articles and Sections of this Agreement are for convenience only and shall not limit the scope and applicability of the Articles and Sections.

21.13Non-Waiver. Any Party’s failure to enforce any of the terms or conditions herein or to exercise any right or privilege pursuant hereto, or any Party’s waiver of any breach under this Agreement, shall not be construed to be a waiver of any other terms, conditions, or privileges, whether of a similar or different type.

21.14Further Assurances. Each Party agrees to execute such further papers, agreements, documents, instruments and the like as may be necessary or desirable to effect the purpose of this Agreement and to carry out its provisions.

21.15U.N. Convention On International Sale Of Goods. The Parties hereby expressly agree that the U.N. Convention on International Sales of Goods shall not apply.

21.16English Language. If there exist versions of this Agreement, or any Schedules, Attachments, or Orders, or any amendments hereto or thereto, in any language other than English, the binding version of all of the foregoing shall be the English version, except as otherwise required by the Laws. All notices and other written documentation provided by a Party to the other Party under this Agreement shall be in English, unless otherwise agreed to by the Parties.

21.17Review By Legal Counsel. Each of the Parties agrees that it has read and had the opportunity to review this Agreement with its legal counsel. Accordingly, the rule of construction that any ambiguity contained in this Agreement shall be construed against the drafting Party shall not apply.

21.18Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer upon any Third Party, any rights, remedies, obligations or liabilities.

21.19Interpretation. In this Agreement, unless otherwise specified, (i) “includes” and “including” and words of similar import shall mean includes and including without limitation; (ii) words denoting any gender shall include all genders; (iii) words denoting the singular shall include the plural and vice versa; (iv) the Exhibits, Schedules and other attachments form part of the operative provision of this Agreement and references to this Agreement shall, unless the context otherwise requires, include references to the Exhibits, Schedules and attachments; (v) the word “or” is disjunctive but not necessarily exclusive; (vi) references to “Articles”, “Sections” and “subsections” in this Agreement shall be to Articles, Sections and subsections respectively, of this Agreement unless otherwise specifically provided; and (vii) references to any Articles or Sections include Sections and subsections that are part of the reference Article or Section (e.g., a section numbered “Section 2.2(a)” would be part of “Section 2.2”, and references to “Article 2” or “Section 2.2” would refer to material contained in the subsection described as “Section 2.2(a)”). Words and abbreviations that have known or technical trade meanings are used in this Agreement in accordance with such recognized meanings.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be duly executed and delivered in its name and on its behalf, all as of the day and year first above written.

MSD INTERNATIONAL GMBH	NABRIVA THERAPEUTICS IRELAND DESIGNATED ACTIVITY COMPANY


By:__/s/ Franz Escherich_____________	By:__/s/ Gary Sender______________
Name: Escherich, Franz	Name: Gary Sender
Title: Director	Title: Director


MERCK SHARP & DOHME CORP.


By:__/s/ Riad El-Dada__________________
Name: Riad El-Dada
Title: President US Human Health

Schedule 7.1

to Sales Promotion and Distribution Agreement

Supply Prices

Supply price for Product (the “Supply Price”) shall be as set forth on or determined from this Schedule 7.1.

Initial Supply Price, Other Than Samples:

The Supply Price from MSD’s availability of Product, no later than the end of the Transition Period, to December 31, 2021 is set forth in the following table:

Product Format:	Supply Price:
Tablet Blister Product	$[**] per Tablet Blister Product (6-count package equivalent)
Tablet Bottle Product	$[**] per Tablet Bottle Product (30-count package equivalent)
Injection Product	$[**] per Injection Product

Follow-on Supply Price Calculation, Other Than Samples:

The Supply Price after December 31, 2021, including any subsequent Extension Terms, shall be determined as follows:

Tier 1

For the total of Tablet Blister Product and Tablet Bottle Product sold in each Calendar Year from one tablet up to and including [**] tablets, the Supply Price shall be $[**] per Tablet Blister Product and $[**] per Tablet Bottle Product. For purpose of clarity, [**] tablets packaged in blister packs equal [**] Tablet Blister Product units and [**] tablets packaged in bottles equal [**] Tablet Bottle Product units.

For Injection Product sold in each Calendar Year from one single-dose vial up to and including [**] single-dose vials, the Supply Price shall be $[**] per Injection Product.

Tier 2

For the total of Tablet Blister Product and Tablet Bottle Product sold in each Calendar Year in excess of [**] tablets, the Supply Price shall be $[**] per Tablet Blister Product and $[**] per Tablet Bottle Product.

For Injection Product sold in each Calendar Year or pro-rated Calendar Year in excess of [**] single-dose vials, the Supply Price shall be $[**] per Injection Product.

The Supply Price in either Supply Price Tier may be adjusted by MSD for each Calendar Year thereafter during the Term based upon [**].

Supply Price for Samples

[**].

EXHIBIT 31.1

CERTIFICATIONS

I, Theodore Schroeder, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nabriva Therapeutics plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Theodore Schroeder
	Theodore Schroeder
	Chief Executive Officer
	(Principal Executive Officer)

Dated: August 6, 2020

EXHIBIT 31.2

CERTIFICATIONS

I, Gary Sender, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nabriva Therapeutics plc;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Gary Sender
	Gary Sender
	Chief Financial Officer
	(Principal Financial Officer)

Dated: August 6, 2020

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nabriva Therapeutics plc (the “Company”) for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Theodore Schroeder, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Theodore Schroeder
	Theodore Schroeder
	Chief Executive Officer
	(Principal Executive Officer)

Dated: August 6, 2020

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nabriva Therapeutics plc (the “Company”) for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gary Sender, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary Sender
	Gary Sender
	Chief Financial Officer
	(Principal Financial Officer)

Dated: August 6, 2020

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 31, 2020
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-37558
Entity Registrant Name	Nabriva Therapeutics plc
Entity Incorporation, State or Country Code	L2
Entity Address, Address Line One	25-28 North Wall Quay
Entity Address, Address Line Two	IFSC
Entity Address, City or Town	Dublin 1
Entity Address, Country	IE
Entity Tax Identification Number	00-0000000
Entity Address, Postal Zip Code	00000
City Area Code	353 1
Local Phone Number	649 2000
Title of 12(b) Security	Ordinary Shares, nominal value $0.01 per share
Trading Symbol	NBRV
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Shares Outstanding		143,822,279
Entity Central Index Key	0001641640
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 49,660	$ 86,019
Restricted cash	229	392
Short-term investments	175	175
Accounts receivable, net and other receivables	3,228	2,744
Inventory	5,196	682
Prepaid expenses	3,921	1,158
Total current assets	62,409	91,170
Property, plant and equipment, net	2,176	2,474
Intangible assets, net	97	91
Long-term receivables	368	378
Total assets	65,050	94,113
Current liabilities:
Accounts payable	2,620	4,673
Accrued expense and other current liabilities	8,376	11,966
Total current liabilities	10,996	16,639
Non-current liabilities
Long-term debt	7,477	34,502
Other non-current liabilities	2,116	1,698
Total non-current liabilities	9,593	36,200
Total liabilities	20,589	52,839
Commitments and contingencies (Note 12)
Stockholders' Equity:
Ordinary shares, nominal value $0.01, 1,000,000,000 ordinary shares authorized at June 30, 2020; 94,545,116 and 142,965,483 issued and outstanding at December 31, 2019 and June 30, 2020, respectively	1,430	945
Preferred shares, par value $0.01, 100,000,000 shares authorized at June 30, 2020; None issued and outstanding
Additional paid in capital	558,446	517,044
Accumulated other comprehensive income	27	27
Accumulated deficit	(515,442)	(476,742)
Total stockholders' equity	44,461	41,274
Total liabilities and stockholders' equity	$ 65,050	$ 94,113

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Consolidated Balance Sheets
Ordinary stock, nominal value (in dollars per share)	$ 0.01	$ 0.01
Ordinary stock, authorized shares	1,000,000,000	1,000,000,000
Ordinary stock, issued shares	142,965,483	94,545,116
Ordinary stock, outstanding shares	142,965,483	94,545,116
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized shares	100,000,000	100,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
Consolidated Statements of Operations - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues:
Total revenue	$ 487,000	$ 525,000	$ 1,276,000	$ 2,228,000
Operating expenses:
Cost of product sales	(368,000)		(376,000)
Research and development expenses	(6,500,000)	(8,074,000)	(11,444,000)	(15,612,000)
Selling, general and administrative expenses	(8,072,000)	(13,427,000)	(24,097,000)	(26,836,000)
Total operating expenses	(14,940,000)	(21,501,000)	(35,917,000)	(42,448,000)
Loss from operations	(14,453,000)	(20,976,000)	(34,641,000)	(40,220,000)
Other income (expense):
Other income (expense), net	(634,000)	56,000	164,000	126,000
Interest income	16,000	72,000	80,000	82,000
Interest expense	(251,000)	(904,000)	(1,275,000)	(1,803,000)
Loss on extinguishment of debt			(2,757,000)
Loss before income taxes	(15,322,000)	(21,752,000)	(38,429,000)	(41,815,000)
Income tax benefit (expense)	(119,000)	45,000	(271,000)	(109,000)
Net loss	$ (15,441,000)	$ (21,707,000)	$ (38,700,000)	$ (41,924,000)
Loss per share
Basic and Diluted ($ per share)	$ (0.14)	$ (0.30)	$ (0.37)	$ (0.59)
Weighted average number of shares:
Basic and Diluted	112,778,258	72,526,441	103,686,706	70,624,583
Product revenue, net
Revenues:
Total revenue	$ (48,000)		$ 108,000
Collaboration revenue
Revenues:
Total revenue	7,000		152,000	$ 1,000,000
Research premium and grant revenue
Revenues:
Total revenue	$ 528,000	$ 525,000	$ 1,016,000	$ 1,228,000

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock/Ordinary Shares	Additional paid in capital	Accumulated other comprehensive income	Accumulated deficit	Total
Stockholders' equity, beginning balance at Dec. 31, 2018	$ 670	$ 461,911	$ 27	$ (393,978)	$ 68,630
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018	67,019
Consolidated Statements of Changes in Stockholders' Equity
Issuance of ordinary shares	$ 43	10,014			10,057
Issuance of ordinary shares (in shares)	4,317
Equity transaction costs		(270)			(270)
Stock-based compensation expense		1,907			1,907
Net loss				(20,217)	(20,217)
Stockholders' equity, ending balance at Mar. 31, 2019	$ 713	473,562	27	(414,195)	60,107
Stockholders' equity, ending balance (in shares) at Mar. 31, 2019	71,336
Stockholders' equity, beginning balance at Dec. 31, 2018	$ 670	461,911	27	(393,978)	68,630
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018	67,019
Consolidated Statements of Changes in Stockholders' Equity
Net loss					(41,924)
Stockholders' equity, ending balance at Jun. 30, 2019	$ 729	478,551	27	(435,902)	43,405
Stockholders' equity, ending balance (in shares) at Jun. 30, 2019	72,906
Stockholders' equity, beginning balance at Dec. 31, 2018	$ 670	461,911	27	(393,978)	68,630
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2018	67,019
Stockholders' equity, ending balance at Dec. 31, 2019	$ 945	517,044	27	(476,742)	41,274
Stockholders' equity, ending balance (in shares) at Dec. 31, 2019	94,545
Stockholders' equity, beginning balance at Mar. 31, 2019	$ 713	473,562	27	(414,195)	60,107
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2019	71,336
Consolidated Statements of Changes in Stockholders' Equity
Issuance of ordinary shares	$ 16	3,691			3,707
Issuance of ordinary shares (in shares)	1,570
Equity transaction costs		(523)			(523)
Stock-based compensation expense		1,821			1,821
Net loss				(21,707)	(21,707)
Stockholders' equity, ending balance at Jun. 30, 2019	$ 729	478,551	27	(435,902)	43,405
Stockholders' equity, ending balance (in shares) at Jun. 30, 2019	72,906
Stockholders' equity, beginning balance at Dec. 31, 2019	$ 945	517,044	27	(476,742)	41,274
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2019	94,545
Consolidated Statements of Changes in Stockholders' Equity
Issuance of ordinary shares	$ 5	181			186
Issuance of ordinary shares (in shares)	479
Shares issued in connection with the vesting of restricted stock units	$ 1	(1)
Shares issued in connection with the vesting of restricted stock units (in shares)	85
Equity transaction costs		(39)			(39)
Stock-based compensation expense		1,752			1,752
Net loss				(23,259)	(23,259)
Stockholders' equity, ending balance at Mar. 31, 2020	$ 951	518,937	27	(500,001)	19,914
Stockholders' equity, ending balance (in shares) at Mar. 31, 2020	95,109
Stockholders' equity, beginning balance at Dec. 31, 2019	$ 945	517,044	27	(476,742)	41,274
Stockholders' equity, beginning balance (in shares) at Dec. 31, 2019	94,545
Consolidated Statements of Changes in Stockholders' Equity
Net loss					(38,700)
Stockholders' equity, ending balance at Jun. 30, 2020	$ 1,430	558,446	27	(515,442)	44,461
Stockholders' equity, ending balance (in shares) at Jun. 30, 2020	142,965
Stockholders' equity, beginning balance at Mar. 31, 2020	$ 951	518,937	27	(500,001)	19,914
Stockholders' equity, beginning balance (in shares) at Mar. 31, 2020	95,109
Consolidated Statements of Changes in Stockholders' Equity
Issuance of ordinary shares	$ 476	40,891			41,367
Issuance of ordinary shares (in shares)	47,578
Shares issued in connection with the vesting of restricted stock units	$ 2	(2)
Shares issued in connection with the vesting of restricted stock units (in shares)	185
Shares issued in connection with the employee stock purchase plan	$ 1	42			43
Shares issued in connection with the employee stock purchase plan (in shares)	93
Equity transaction costs		(2,709)			(2,709)
Stock-based compensation expense		1,287			1,287
Net loss				(15,441)	(15,441)
Stockholders' equity, ending balance at Jun. 30, 2020	$ 1,430	$ 558,446	$ 27	$ (515,442)	$ 44,461
Stockholders' equity, ending balance (in shares) at Jun. 30, 2020	142,965

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities
Net loss	$ (38,700)	$ (41,924)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash other income/expense, net	(15)	(3)
Non-cash interest income	3	28
Non-cash interest expense	218	371
Loss on extinguishment of debt	2,757
Depreciation and amortization expense	209	245
Amortization of right-of-use assets	171	211
Stock-based compensation	3,103	3,728
Other, net	39	(20)
Changes in operating assets and liabilities:
Increase in long-term receivables	10	(282)
Increase in accounts receivable, net and other receivables and prepaid expenses	(3,247)	470
Increase in inventory	(4,514)
Increase/(decrease) in accounts payable	(1,950)	(346)
Decrease in accrued expenses and other liabilities	(3,427)	(4,106)
Increase/(decrease) in other non-current liabilities	4	(52)
Increase/(decrease) in income tax liabilities	(33)	10
Net cash used in operating activities	(45,372)	(41,670)
Cash flows from investing activities
Purchases of plant and equipment and intangible assets	(85)	(57)
Changes in restricted cash	(163)
Net cash used in investing activities	(248)	(57)
Cash flows from financing activities
Proceeds from equity offerings and warrants	38,414
Proceeds from at-the-market facility	3,688	13,592
Proceeds from long-term debt, net of issuance costs		80
Proceeds from employee stock purchase plan	43	170
Repayments of long-term borrowings	(30,000)
Equity transaction costs	(2,977)	(414)
Net cash provided by financing activities	9,168	13,428
Effects of foreign currency translation on cash and cash equivalents	(70)	40
Net decrease in cash, cash equivalents and restricted cash	(36,522)	(28,259)
Cash, cash equivalents and restricted cash at beginning of period	86,411	102,003
Cash, cash equivalents and restricted cash at end of period	49,889	73,744
Supplemental disclosure of cash flow information:
Interest paid	1,147	1,109
Equity transaction costs included in accounts payable and accrued expenses	$ 319	$ 498

Organization and Business Activities

6 Months Ended

Jun. 30, 2020

Organization and Business Activities

Organization and Business Activities

1. Organization and Business Activities

Liquidity

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Preparation

statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

Inventory

6 Months Ended

Jun. 30, 2020

Inventory

Inventory

3. Inventory


		As of		As of
		December 31, 2019		June 30, 2020
(in thousands)		2019		2020
Raw materials	$	—	$	1,783
Work in process		498		3,180
Finished goods		184		233
Total Inventory	$	682	$	5,196

Fair Value Measurement

6 Months Ended

Jun. 30, 2020

Fair Value Measurement

Fair Value Measurement

4. Fair Value Measurement

US GAAP establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

●

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

●

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (as exchange rates).

●

The following table presents the financial instruments measured at fair value and classified by level according to the fair value measurement hierarchy:


(in thousands)	Level 1		Level 2		Level 3		Total
December 31, 2019
Assets:
Cash equivalent:
Money market fund	$	15,050	$	—	$	—	$	15,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	15,225	$	—	$	—	$	15,225


(in thousands)	Level 1		Level 2		Level 3		Total
June 30, 2020
Assets:
Cash equivalent:
Money market fund	$	8,050	$	—	$	—	$	8,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	8,225	$	—	$	—	$	8,225

Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 30, 2020

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

5. Accrued Expenses and Other Liabilities


	As of		As of
(in thousands)	December 31, 2019		June 30, 2020
Research and development related costs	$	1,347	$	1,084
Payroll and related costs		6,327		3,800
Accounting, tax and audit services		420		575
Manufacturing and inventory		639		757
Other		3,233		2,160
Total other current liabilities	$	11,966	$	8,376

Debt

6 Months Ended

Jun. 30, 2020

Debt

Debt

6. Debt

investors in any private financing upon the same terms and conditions afforded to such other investors for as long as there are amounts outstanding under the Loan Agreement.

Long-term debt as December 31, 2019 and June 30, 2020 consisted of the following:


	As of		As of
	December 31		June 30
(in thousands)	2019		2020
Term loan payable	$	35,000	$	5,000
End of term fee		443		1,905
Unamortized debt issuance costs		(1,742)		(244)
Carrying value of term loan		33,701		6,661
Other long-term debt		801		816
Total long-term debt	$	34,502	$	7,477

Maturities of long-term debt as of June 30, 2020 were as follows:


(in thousands)		June 30, 2020
2020	$	—
2021		1,156
2022		2,493
2023		1,351

Revenue

6 Months Ended

Jun. 30, 2020

Revenue

Revenue

7. Revenue


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2020		2019		2020
Product revenue, net	$	—	$	(48)	$	—	$	108
Collaboration revenues		—		7		1,000		152
Research premium		351		301		744		591
Government grants		174		227		484		425
Total	$	525	$	487	$	2,228	$	1,276

The $1.0 million of collaboration revenue for the six months ended June 30, 2019 reflects the upfront payment under the Sunovion License Agreement received in April 2019 (see Note 11).

The following tables summarizes gross-to-net (“GTN”) adjustments for the periods presented:


	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2020		June 30, 2020
Product revenue, gross	$	149	$	398
GTN accruals
Chargebacks and cash discounts		5		13
Medicaid and Medicare rebates		18		46
Other returns, rebates, discounts and adjustments		35		92
Total GTN accruals		58		151
Product revenue		91		247
Adjustments to prior period accruals
Returns reserve (1)		(349)		(349)
GTN accrual adjustments		210		210
Product revenue, net	$	(48)	$	108

(1) The Company recorded a returns reserve adjustment for slow-moving inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors as of June 30, 2020.

Share-Based Payments

6 Months Ended

Jun. 30, 2020

Share-Based Payments

Share-Based Payments

8. Share-Based Payments

Stock Option Plan 2015

The following table summarizes information regarding the Company’s stock option awards under the SOP 2015 for the six months ended June 30, 2020:


		Weighted
		average
		exercise	Aggregate
		price in	intrinsic
Stock Option Plan 2015	Options	$ per share	value
Outstanding as of January 1, 2020	2,290,594	8.33
Granted	—	—
Exercised	—	—
Forfeited	63,179	9.02
Outstanding as of June 30, 2020	2,227,415	8.31	$	—
Vested and exercisable as of June 30, 2020	2,073,469	8.23	$	—

The weighted average remaining contractual life of the options as of June 30, 2020 is 5.9 years.

2017 Share Incentive Plan

At June 30, 2020, 1,829,811 ordinary shares were available for future issuance under the 2017 Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2017 Plan for the six months ended June 30, 2020:


		Weighted
		average
		exercise		Aggregate
		price in $		intrinsic
2017 Plan	Options	per share		value
Outstanding as of January 1, 2020	4,422,664	3.55
Granted	1,290,500	1.35
Exercised	—	—
Forfeited	(748,874)	2.56
Outstanding as of June 30, 2020	4,964,290	3.13	$	—
Vested and exercisable as of June 30, 2020	1,968,950	4.21	$	—


Input parameters
Range of expected volatility		63.8% - 64.0%
Expected term of options (in years)		6.1
Range of risk-free interest rate		0.8% - 1.5%
Dividend yield		—

The weighted average remaining contractual life of the options as of June 30, 2020 is 8.7 years.

Restricted Stock Units (“RSUs”)

The following table summarizes information regarding our restricted stock unit awards under the 2017 Plan at June 30, 2020:


		Weighted
		average fair
2017 Plan	RSUs	value per share
Outstanding as of January 1, 2020	901,686	3.69
Granted	1,557,300	1.35
Vested and issued	(334,210)	2.03
Forfeited	(230,792)	1.83
Outstanding as of June 30, 2020	1,893,984	1.83

2019 Inducement Share Incentive Plan

On April 28, 2020, the board of directors resolved not to make any further awards under the 2019 Inducement Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2019 Inducement Plan for the six months ended June 30, 2020:


		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2019 Inducement Plan	Options	per share	value
Outstanding as of January 1, 2020	605,650	2.14
Granted	182,000	1.35
Exercised	—	—
Forfeited	(392,000)	2.02
Outstanding as of June 30, 2020	395,650	1.96	$	—
Vested and exercisable as of June 30, 2020	40,224	2.64		—


Input parameters
Expected volatility		63.7% - 64.0%
Expected term of options (in years)		6.1
Risk-free interest rate		1.0% - 1.4%
Dividend yield		—

The weighted average remaining contractual life of the options as of June 30, 2020 is 9.2 years.

Inducement Awards Outside of the 2019 Inducement Plan


Input parameters
Expected volatility	59.8	%
Expected term of options (in years)	6.1
Range of risk-free interest rate	2.9	%
Dividend yield	—

The weighted average remaining contractual life of the options as of June 30, 2020 is 8.1 years.

2020 Share Incentive Plan

Employee Stock Purchase Plan

Income Tax Expense

6 Months Ended

Jun. 30, 2020

Income Tax Expense

Income Tax Expense

9. Income Tax Expense

Earnings (Loss) per Share

6 Months Ended

Jun. 30, 2020

Earnings (Loss) per Share

Earnings (Loss) per Share

10. Earnings (Loss) per Share

Basic and diluted loss per share

Company’s potential ordinary share equivalents are antidilutive since the Company had net losses for each period presented below.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2019		2020		2019		2020
Net loss for the period	$	(21,707)	$	(15,441)	$	(41,924)	$	(38,700)
Weighted average number of shares outstanding		72,526,441		112,778,258		70,624,583		103,686,706
Basic and diluted loss per share	$	(0.30)	$	(0.14)	$	(0.59)	$	(0.37)


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2020	2019	2020
Stock option awards	8,363,789	10,274,855	8,363,789	10,274,855
Restricted stock units	1,524,642	1,893,984	1,524,642	1,893,984

Sinovant and Sunovion License Agreements

6 Months Ended

Jun. 30, 2020

Sinovant and Sunovion License Agreements

Sinovant and Sunovion License Agreements

11. Sinovant and Sunovion License Agreements

Sinovant License Agreement

Sunovion License Agreement

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Commitments and Contingencies

12. Commitments and Contingencies

Leases

For the six months ended June 30, 2020, the Company’s operating lease expense was $0.8 million.

As of June 30, 2020, the lease term of the King of Prussia operating leases was 3.4 years and the discount rate was 9.8%.

As of June 30, 2020, other information related to the operating leases were as follows:

Operating Cash Flow Supplemental Information:


(in thousands)	June 30, 2020
Cash paid for amounts included in the measurement of the operating lease liabilities	$	252
Right-of-use assets obtained in exchange for operating lease obligations	$	1,476

The following table sets forth by year the required future payments of operating lease liabilities:


(in thousands)	June 30, 2020
2020	$	255
2021		515
2022		522
2023		533
Total lease payments		1,825
Less imputed interest		(327)
Present value of operating lease liabilities	$	1,498

Legal Proceedings

Other Commitments and Contingencies

The Company has no contingent liabilities in respect of legal claims arising in the ordinary course of business.

Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events

Subsequent Events

13. Subsequent Events

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2020
Summary of Significant Accounting Policies
Basis of Preparation	Basis of Preparation The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and U.S. Securities and Exchange Commission (“SEC”) regulations for quarterly reporting. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial information as of June 30, 2020 and for the three and six months ended June 30, 2019 and 2020 are unaudited. The December 31, 2019 balance sheet was derived from audited consolidated financial statements but does not include all disclosures required by US GAAP. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2020 and results of operations for the three and six months ended June 30, 2019 and 2020. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2019 and 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, any other interim periods or any future year or period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2019 contained in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 12, 2020. The Company’s significant accounting policies are described in Note 2 of the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies.
Recent Accounting Pronouncements	Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company has not adopted any new accounting pronouncements for the six months ended June 30, 2020.

Inventory (Tables)

6 Months Ended

Jun. 30, 2020

Inventory

Schedule of inventory


		As of		As of
		December 31, 2019		June 30, 2020
(in thousands)		2019		2020
Raw materials	$	—	$	1,783
Work in process		498		3,180
Finished goods		184		233
Total Inventory	$	682	$	5,196

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Measurement

Schedule of the financial instruments measured at fair value and classified by level according to the fair value measurement hierarchy


(in thousands)	Level 1		Level 2		Level 3		Total
December 31, 2019
Assets:
Cash equivalent:
Money market fund	$	15,050	$	—	$	—	$	15,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	15,225	$	—	$	—	$	15,225


(in thousands)	Level 1		Level 2		Level 3		Total
June 30, 2020
Assets:
Cash equivalent:
Money market fund	$	8,050	$	—	$	—	$	8,050
Short term investments:
Term deposits		175		—		—		175
Total Assets	$	8,225	$	—	$	—	$	8,225

Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Accrued Expenses and Other Liabilities

Schedule of accrued expenses and other liabilities


	As of		As of
(in thousands)	December 31, 2019		June 30, 2020
Research and development related costs	$	1,347	$	1,084
Payroll and related costs		6,327		3,800
Accounting, tax and audit services		420		575
Manufacturing and inventory		639		757
Other		3,233		2,160
Total other current liabilities	$	11,966	$	8,376

Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt

Schedule of long-term debt


	As of		As of
	December 31		June 30
(in thousands)	2019		2020
Term loan payable	$	35,000	$	5,000
End of term fee		443		1,905
Unamortized debt issuance costs		(1,742)		(244)
Carrying value of term loan		33,701		6,661
Other long-term debt		801		816
Total long-term debt	$	34,502	$	7,477

Schedule of maturities of long-term debt


(in thousands)		June 30, 2020
2020	$	—
2021		1,156
2022		2,493
2023		1,351

Revenue (Tables)

6 Months Ended

Jun. 30, 2020

Revenue

Summary of revenue by type


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2019		2020		2019		2020
Product revenue, net	$	—	$	(48)	$	—	$	108
Collaboration revenues		—		7		1,000		152
Research premium		351		301		744		591
Government grants		174		227		484		425
Total	$	525	$	487	$	2,228	$	1,276

Summary of gross-to-net ("GTN") adjustments


	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2020		June 30, 2020
Product revenue, gross	$	149	$	398
GTN accruals
Chargebacks and cash discounts		5		13
Medicaid and Medicare rebates		18		46
Other returns, rebates, discounts and adjustments		35		92
Total GTN accruals		58		151
Product revenue		91		247
Adjustments to prior period accruals
Returns reserve (1)		(349)		(349)
GTN accrual adjustments		210		210
Product revenue, net	$	(48)	$	108

Share-Based Payments (Tables)

6 Months Ended

Jun. 30, 2020

Share-Based Payments

Summary of information regarding restricted stock awards


		Weighted
		average fair
2017 Plan	RSUs	value per share
Outstanding as of January 1, 2020	901,686	3.69
Granted	1,557,300	1.35
Vested and issued	(334,210)	2.03
Forfeited	(230,792)	1.83
Outstanding as of June 30, 2020	1,893,984	1.83

Stock Option Plan 2015

Share-Based Payments

Summary of information regarding stock option awards


		Weighted
		average
		exercise	Aggregate
		price in	intrinsic
Stock Option Plan 2015	Options	$ per share	value
Outstanding as of January 1, 2020	2,290,594	8.33
Granted	—	—
Exercised	—	—
Forfeited	63,179	9.02
Outstanding as of June 30, 2020	2,227,415	8.31	$	—
Vested and exercisable as of June 30, 2020	2,073,469	8.23	$	—

2017 Share Incentive Plan

Share-Based Payments

Summary of information regarding stock option awards


		Weighted
		average
		exercise		Aggregate
		price in $		intrinsic
2017 Plan	Options	per share		value
Outstanding as of January 1, 2020	4,422,664	3.55
Granted	1,290,500	1.35
Exercised	—	—
Forfeited	(748,874)	2.56
Outstanding as of June 30, 2020	4,964,290	3.13	$	—
Vested and exercisable as of June 30, 2020	1,968,950	4.21	$	—

Summary of assumptions used for valuation of options


Input parameters
Range of expected volatility		63.8% - 64.0%
Expected term of options (in years)		6.1
Range of risk-free interest rate		0.8% - 1.5%
Dividend yield		—

2019 Inducement Plan

Share-Based Payments

Summary of information regarding stock option awards


		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2019 Inducement Plan	Options	per share	value
Outstanding as of January 1, 2020	605,650	2.14
Granted	182,000	1.35
Exercised	—	—
Forfeited	(392,000)	2.02
Outstanding as of June 30, 2020	395,650	1.96	$	—
Vested and exercisable as of June 30, 2020	40,224	2.64		—

Summary of assumptions used for valuation of options


Input parameters
Expected volatility		63.7% - 64.0%
Expected term of options (in years)		6.1
Risk-free interest rate		1.0% - 1.4%
Dividend yield		—

Inducement Awards Outside of the 2019 Inducement Plan

Share-Based Payments

Summary of assumptions used for valuation of options


Input parameters
Expected volatility	59.8	%
Expected term of options (in years)	6.1
Range of risk-free interest rate	2.9	%
Dividend yield	—

Earnings (Loss) per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings (Loss) per Share

Schedule of basic and diluted loss per share


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands, except per share data)	2019		2020		2019		2020
Net loss for the period	$	(21,707)	$	(15,441)	$	(41,924)	$	(38,700)
Weighted average number of shares outstanding		72,526,441		112,778,258		70,624,583		103,686,706
Basic and diluted loss per share	$	(0.30)	$	(0.14)	$	(0.59)	$	(0.37)

Schedule of ordinary share equivalents excluded from the calculations of diluted loss per share


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2019	2020	2019	2020
Stock option awards	8,363,789	10,274,855	8,363,789	10,274,855
Restricted stock units	1,524,642	1,893,984	1,524,642	1,893,984

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies

Schedule of operating cash flow supplemental information


(in thousands)	June 30, 2020
Cash paid for amounts included in the measurement of the operating lease liabilities	$	252
Right-of-use assets obtained in exchange for operating lease obligations	$	1,476

Schedule of future payments of operating lease liabilities, ASC 842


(in thousands)	June 30, 2020
2020	$	255
2021		515
2022		522
2023		533
Total lease payments		1,825
Less imputed interest		(327)
Present value of operating lease liabilities	$	1,498

Organization and Business Activities (Details) - USD ($)				1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
	May 29, 2020	May 08, 2020	Mar. 20, 2020	May 31, 2020	Apr. 30, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Mar. 11, 2020	Jun. 25, 2019
Liquidity
Cash, cash equivalents and short-term investments						$ 50,100,000		$ 50,100,000
Selling, General and Administrative Expense					$ 676,000	$ 8,072,000	$ 13,427,000	$ 24,097,000	$ 26,836,000
Nominal value						$ 0.01		$ 0.01		$ 0.01
Jefferies LLC \| At-the-market offering
Liquidity
Maximum aggregate gross proceeds under the sales agreement												$ 50,000,000.0
Proceeds from at-the-market facility						$ 3,400,000		$ 18,000,000.0
Net proceeds from sale of stock						$ 3,300,000		$ 17,200,000
Jefferies LLC \| At-the-market offering \| Maximum
Liquidity
Proceeds from at-the-market facility		$ 32,000,000.0
Jefferies LLC \| At-the-market offering \| Ordinary Shares
Liquidity
Number of shares issued						6,133,108		13,117,034
Purchasers \| Purchase agreement
Liquidity
Number of shares issued				41,445,373						13,793,106
Proceeds from at-the-market facility				$ 38,000,000.0						$ 20,100,000
Number of ordinary shares that can be purchased by warrant holders				41,445,373						13,793,106
Share and warrant price	$ 0.91686									$ 1.45
Exercise price				$ 0.792						$ 1.90
Term				2 years						3 years
Loan Agreement \| Term loan
Liquidity
Repayment of debt			$ 30,000,000.0					$ 30,000,000.0
Aggregate principal amount of debt outstanding											$ 35,000,000.0

Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory
Raw materials	$ 1,783
Work in process	3,180	$ 498
Finished goods	233	184
Total Inventory	5,196	$ 682
Obsolete inventory non-cash reserve	$ 400

Fair Value Measurement (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Short-term investments:
Transfer of assets from Level 1 to 2	$ 0	$ 0
Transfer of assets from Level 2 to 1	0	0
Transfer of liabilities from Level 1 to 2	0	0
Transfer of liabilities from Level 2 to 1	0	0
Recurring
Cash equivalent:
Money market funds	8,050	15,050
Short-term investments:
Term deposits	175	175
Total Assets	8,225	15,225
Level 1 \| Recurring
Cash equivalent:
Money market funds	8,050	15,050
Short-term investments:
Term deposits	175	175
Total Assets	$ 8,225	$ 15,225

Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued expenses and other liabilities
Research and development related costs	$ 1,084	$ 1,347
Payroll and related costs	3,800	6,327
Accounting, tax and audit services	575	420
Manufacturing and inventory	757	639
Other	2,160	3,233
Total other current liabilities	$ 8,376	$ 11,966

Debt - Summary (Details) - USD ($)			1 Months Ended	6 Months Ended	12 Months Ended
Debt - Summary (Details) - USD ($)	Mar. 20, 2020	Mar. 11, 2020	Feb. 29, 2020	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Debt
Loss on extinguishment of debt				$ (2,757,000)
Term loan
Debt
End of term fee				5,000,000	$ 35,000,000
Loan Agreement \| Term loan
Debt
Maximum borrowing capacity						$ 75,000,000.0
Principal amount of advances outstanding		$ 35,000,000.0
Interest rate (as a percent)					9.80%
Fee due at maturity, as a percentage of aggregate advances					6.95%
The amount in excess of which prepayments may be made					$ 5,000,000.0
Repayment of debt	$ 30,000,000.0			30,000,000.0
Percent of net product revenue sales target		70.00%	80.00%
Minimum liquidity requirement			$ 40,000,000.0
Minimum amount to be maintained in cash and cash equivalents		$ 3,000,000.0
Maximum value of lender option to purchase equity securities				2,000,000.0
End of term loan charge payment		2,100,000
End of term loan charge		$ 300,000	$ 600,000
Loan origination costs				1,300,000
Initial fee paid to lender				700,000
Loss on extinguishment of debt				2,700,000
End of term fee				5,000,000.0
Loan Agreement \| Term loan \| Prime rate
Debt
Variable rate basis					interest minus 5.50%
Variable interest rate margin (as a percent)					9.80%
Variable rate adjustment (as a percent)					(5.50%)
Loan Agreement \| Term loan \| Initial Advance
Debt
Principal amount of advances outstanding						25,000,000.0
Loan Agreement \| Term loan \| Tranche 7 Advance
Debt
Maximum borrowing capacity						$ 5,000,000.0
Additional tranches				$ 5,000,000.0
Loan Agreement \| Term loan \| Prepayment during the first 12 months following initial closing
Debt
Prepayment penalty as a percentage of the amount being repaid					3.00%
Loan Agreement \| Term loan \| Prepayment after the first 12 months following initial closing but before 24 months
Debt
Prepayment penalty as a percentage of the amount being repaid					2.00%
Loan Agreement \| Term loan \| Prepayment after the first 24 months following initial closing but before maturity
Debt
Prepayment penalty as a percentage of the amount being repaid					1.00%

Debt - Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Long-term debt
Total long-term debt	$ 7,477	$ 34,502
Maturities of long-term debt
2021	1,156
2022	2,493
2023	1,351
Term loan
Long-term debt
Term loan payable	5,000	35,000
End of term fee	1,905	443
Unamortized debt issuance costs	(244)	(1,742)
Total long-term debt	6,661	33,701
Other long-term debt
Long-term debt
Total long-term debt	$ 816	$ 801

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue
Revenue accounted for under Topic 606	$ 487	$ 525	$ 1,276	$ 2,228
Product revenue, gross	100		400
Collaboration revenue
Revenue
Revenue accounted for under Topic 606	7		152	1,000
Collaboration revenue - Upfront payment
Revenue
Revenue accounted for under Topic 606	(48)		108
Product revenue, gross	149		398
Collaboration revenue - Variable consideration
Revenue
Revenue accounted for under Topic 606	7		152	1,000
Research premium
Revenue
Revenue accounted for under Topic 606	301	351	591	744
Government grants
Revenue
Revenue accounted for under Topic 606	$ 227	$ 174	$ 425	$ 484

Revenue - Summary of Gross-To-Net ("GTN") Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Disaggregation of Revenue [Line Items]
Product revenue, gross	$ 100		$ 400
Adjustments To prior period accruals
Product revenue, net	487	$ 525	1,276	$ 2,228
Collaboration revenue - Upfront payment
Disaggregation of Revenue [Line Items]
Product revenue, gross	149		398
GTN accruals
Chargebacks and cash discounts	5		13
Medicaid and Medicare rebates	18		46
Other returns, rebates, discounts and adjustments	35		92
Total GTN accruals	58		151
Product revenue	91		247
Adjustments To prior period accruals
Returns reserve	(349)		(349)
GTN accrual adjustments	210		210
Product revenue, net	$ (48)		$ 108
XENLETA
Adjustments To prior period accruals
Percentage of inventory held			50.00%

Share-Based Payments - SOP 2015 (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 23, 2017	Aug. 25, 2016	Sep. 23, 2015	Apr. 02, 2015
Stock Option Plan 2015
Options
Outstanding at beginning of year (in shares)			2,290,594
Forfeited (in shares)			(63,179)
Outstanding at end of year (in shares)	2,227,415		2,227,415
Vested and exercisable at end of year (in shares)	2,073,469		2,073,469
Weighted average exercise price in $ per share
Outstanding balance at beginning of year (in dollars per share)			$ 8.33
Forfeited (in dollars per share)			9.02
Outstanding balance at end of year (in dollars per share)	$ 8.31		8.31
Vested and exercisable balance at end of year (in dollars per share)	$ 8.23		$ 8.23
Stock Option Plan 2015 \| Stock Options
Share-Based Payments
Vesting period			4 years
Exercise period			10 years
Additional disclosures
Share-based compensation expense	$ 0.3	$ 0.7	$ 0.6	$ 1.6
Weighted-average remaining contractual life			5 years 10 months 24 days
Total unrecognized compensation related to unvested options	$ 0.8		$ 0.8
Recognition period			6 months
Stock Option Plan 2015 \| Stock Options \| Vesting period, year one
Share-Based Payments
Vesting period			1 year
Percentage that vests during the period			25.00%
Stock Option Plan 2015 \| Stock Options \| Vesting period, years 2-4
Share-Based Payments
Percentage that vests during the period			75.00%
Monthly vesting percentage			2.083%
Nabriva Therapeutics AG ("Nabriva Austria") \| Redomiciliation Transaction \| Common Stock
Share-Based Payments
Number of shares to be awarded for each option when exercised					1
Nabriva Therapeutics AG ("Nabriva Austria") \| Redomiciliation Transaction \| Ordinary Shares
Share-Based Payments
Number of shares to be awarded for each option when exercised					10
Nabriva Therapeutics AG ("Nabriva Austria") \| Stock Option Plan 2015 \| Common Stock
Share-Based Payments
Maximum number of shares authorized							177,499	95,000
Nabriva Therapeutics AG ("Nabriva Austria") \| Stock Option Plan 2015 \| Ordinary Shares
Share-Based Payments
Maximum number of shares authorized						346,235

Share-Based Payments - 2017 Share Incentive Plan (Details) - 2017 Share Incentive Plan $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 26, 2017 shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Dec. 31, 2018 item
Options
Outstanding at beginning of year (in shares)				4,422,664
Granted (in shares)				1,290,500
Forfeited (in shares)				(748,874)
Outstanding at end of year (in shares)		4,964,290		4,964,290
Vested and exercisable at end of year (in shares)		1,968,950		1,968,950
Weighted average exercise price in $ per share
Outstanding balance at beginning of year (in dollars per share) \| $ / shares				$ 3.55
Granted (in dollars per share) \| $ / shares				1.35
Forfeited (in dollars per share) \| $ / shares				2.56
Outstanding balance at end of year (in dollars per share) \| $ / shares		$ 3.13		3.13
Vested and exercisable balance at end of year (in dollars per share) \| $ / shares		$ 4.21		$ 4.21
Fair Value Assumptions
Weighted-average remaining contractual life				8 years 8 months 12 days
Stock Options
Share-Based Payments
Vesting period				10 years
Fair Value Assumptions
Expected term of options (in years)		6 years 1 month 6 days
Stock-Based Compensation Expense
Share-based compensation expense \| $		$ 0.5	$ 0.8	$ 1.1	$ 1.3
Weighted-average grant date fair value (in dollars per share) \| $ / shares				$ 0.80
Unrecognized compensation expense
Total unrecognized compensation related to unvested options \| $		3.9		$ 3.9
Recognition period				1 year 1 month 6 days
Stock Options \| Minimum
Fair Value Assumptions
Expected volatility (as a percent)				63.80%
Risk-free interest rate (as a percent)				0.80%
Term of U.S. treasury securities used to estimate risk free interest rate				5 years
Stock Options \| Maximum
Fair Value Assumptions
Expected volatility (as a percent)				64.00%
Risk-free interest rate (as a percent)				1.50%
Term of U.S. treasury securities used to estimate risk free interest rate				7 years
SARs
Share-Based Payments
Vesting period				10 years
Restricted Stock Units ("RSUs")
Share-Based Payments
Vesting period				4 years
Fair Value \| $				$ 0.4
Stock-Based Compensation Expense
Share-based compensation expense \| $		0.4	$ 0.4	1.0	$ 0.6
Unrecognized compensation expense
Total unrecognized compensation related to unvested options \| $		$ 2.6		$ 2.6
Recognition period				1 year 3 months 18 days
Restricted Stock Units
Weighted average grant date fair value per share \| $ / shares				$ 1.35
Number of shares outstanding				901,686
Granted				1,557,300
Vested and issued				(334,210)
Forfeited				(230,792)
Number of shares outstanding		1,893,984		1,893,984
weighted average fair value per share
Weighted average fair value at the beginning \| $ / shares				$ 3.69
Granted \| $ / shares				1.35
Vested and issued \| $ / shares				2.03
Forfeited \| $ / shares				1.83
Weighted average fair value at the end \| $ / shares		$ 1.83		$ 1.83
Restricted Stock Units ("RSUs") \| Vesting period, year one
Restricted Stock Units
Percentage that vests during the period				25.00%
Restricted Stock Units ("RSUs") \| Employees
Share-Based Payments
Number of vesting periods \| item						3
Vesting period				4 years		6 months
Restricted Stock Units
Percentage that vests during the period				25.00%
Ordinary Shares
Share-Based Payments
Number of shares authorized	3,000,000
Additional shares authorized	3,438,990
Shares available for grant		1,829,811		1,829,811
Ordinary Shares \| Minimum
Share-Based Payments
Annual increase, to be added on the first day of each fiscal year (in shares)	2,000,000
Annual increase, to be added on the first day of each fiscal year (as a percent)	4.00%
XENLETA \| Restricted Stock Units ("RSUs") \| Immediate vesting upon regulatory approval
Restricted Stock Units
Percentage that vests during the period						50.00%
XENLETA \| Restricted Stock Units ("RSUs") \| Vesting upon the one-year-anniversary of FDA approval
Restricted Stock Units
Percentage that vests during the period						50.00%
CONTEPO \| Restricted Stock Units ("RSUs") \| Immediate vesting upon regulatory approval
Restricted Stock Units
Percentage that vests during the period						50.00%
CONTEPO \| Restricted Stock Units ("RSUs") \| Vesting upon the one-year-anniversary of FDA approval
Restricted Stock Units
Percentage that vests during the period						50.00%

Share-Based Payments - 2019 Inducement Share Incentive Plan (Details) - 2019 Inducement Plan - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Mar. 12, 2019
Options
Outstanding at beginning of year (in shares)			605,650
Granted (in shares)			182,000
Forfeited (in shares)			(392,000)
Outstanding at end of year (in shares)	395,650		395,650
Vested and exercisable at end of year (in shares)	40,224		40,224
Weighted average exercise price in $ per share
Outstanding balance at beginning of year (in dollars per share)			$ 2.14
Granted (in dollars per share)			1.35
Forfeited (in dollars per share)			2.02
Outstanding balance at end of year (in dollars per share)	$ 1.96		1.96
Vested and exercisable balance at end of year (in dollars per share)	$ 2.64		$ 2.64
Share-based compensation expense	$ 0.1	$ 0.1	$ 0.1	$ 0.1
Unrecognized compensation expense
Total unrecognized compensation related to unvested options	$ 0.4		$ 0.4
Recognition period			1 year 6 months
Ordinary Shares
Share-Based Payments
Shares reserved for future issuance					2,000,000
Weighted average exercise price in $ per share
Weighted-average grant date fair value (in dollars per share)			$ 0.79
Stock Options
Share-Based Payments
Exercise period			10 years
Fair Value Assumptions
Expected volatility (as a percent)			59.80%
Expected term of options (in years)			6 years 1 month 6 days
Risk-free interest rate (as a percent)			2.90%
Weighted-average remaining contractual life			9 years 2 months 12 days
Stock Options \| Minimum
Fair Value Assumptions
Expected volatility (as a percent)			63.70%
Risk-free interest rate (as a percent)			1.00%
Stock Options \| Maximum
Fair Value Assumptions
Expected volatility (as a percent)			64.00%
Risk-free interest rate (as a percent)			1.40%
SARs
Share-Based Payments
Exercise period			10 years

Share-Based Payments - Inducement Awards Outside of the 2019 Inducement Plan (Details) - USD ($) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended
	Jul. 25, 2018	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Inducement Awards Outside of the 2019 Inducement Plan
Share-Based Payments
Share-based compensation expense		$ 0.1	$ 0.1	$ 0.2	$ 0.2
Additional disclosures
Weighted-average remaining contractual life				8 years 1 month 6 days
Total unrecognized compensation related to unvested options		$ 0.9		$ 0.9
Recognition period				1 year 1 month 6 days
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option
Share-Based Payments
Vesting period	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 3.53	$ 2.05		$ 2.05
Exercise period	10 years
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option \| Chief Executive Officer
Share-Based Payments
Options granted during the period	850,000
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option \| Vesting period, year one
Share-Based Payments
Percentage that vests during the period	25.00%
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option \| Vesting period, years 2-4
Share-Based Payments
Percentage that vests during the period	75.00%
Monthly vesting period	36 months
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option \| Upon receipt of FDA approval
Share-Based Payments
Percentage that vests during the period	50.00%
Inducement Awards Outside of the 2019 Inducement Plan \| Non-statutory option \| First anniversary of FDA approval
Share-Based Payments
Percentage that vests during the period	50.00%
Inducement Awards Outside of the 2019 Inducement Plan \| Restricted Stock Units ("RSUs")
Share-Based Payments
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 3.53
Inducement Awards Outside of the 2019 Inducement Plan \| Restricted Stock Units ("RSUs") \| Chief Executive Officer
Share-Based Payments
Options granted during the period	150,000
2019 Inducement Plan
Share-Based Payments
Options granted during the period				182,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price		$ 1.96		$ 1.96		$ 2.14
Share-based compensation expense		$ 0.1	$ 0.1	$ 0.1	$ 0.1
Additional disclosures
Total unrecognized compensation related to unvested options		$ 0.4		$ 0.4
Recognition period				1 year 6 months

Share-Based Payments - 2020 Share Incentive Plan (Details) - Ordinary Shares - 2020 Share Incentive Plan - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Mar. 04, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted during the period		1,837,500
Exercise price (in dollars per share)		$ 1.35
Stock-based compensation	$ 51	$ 65
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares reserved for future issuance			9,300,000

Share-Based Payments - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan - shares	1 Months Ended	6 Months Ended
	Aug. 31, 2018	Jun. 30, 2020
Share-Based Payments
Maximum number of shares authorized under plan (in shares)	500,000
ESPP Share Pool as a percentage of total number of ordinary shares outstanding		0.10%
Purchase discount as a percentage of current market price		15.00%

Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Tax Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Expense
Income tax benefit expense	$ 119	$ (45)	$ 271	$ 109

Earnings (Loss) per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Basic and diluted loss per share
Net loss for the period	$ (15,441)	$ (23,259)	$ (21,707)	$ (20,217)	$ (38,700)	$ (41,924)
Weighted average number of shares outstanding	112,778,258		72,526,441		103,686,706	70,624,583
Basic and diluted loss per share	$ (0.14)		$ (0.30)		$ (0.37)	$ (0.59)

Earnings (Loss) per Share - Anti-Dilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Stock Options
Anti-dilutive stock options
Ordinary share equivalents excluded from the calculations of diluted earnings per share	10,274,855	8,363,789	10,274,855	8,363,789
Restricted Stock Units ("RSUs")
Anti-dilutive stock options
Ordinary share equivalents excluded from the calculations of diluted earnings per share	1,893,984	1,524,642	1,893,984	1,524,642

Sinovant and Sunovion License Agreements (Details) $ in Thousands	1 Months Ended	3 Months Ended				6 Months Ended
	Mar. 31, 2018 USD ($)	Jun. 30, 2020 USD ($) item	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2020 USD ($) item	Jun. 30, 2019 USD ($)	Jul. 10, 2020 USD ($)
License Agreement
Revenue accounted for under Topic 606		$ 487		$ 525		$ 1,276	$ 2,228
Collaboration revenue - Upfront payment
License Agreement
Revenue accounted for under Topic 606		(48)				108
Collaboration revenue - Variable consideration
License Agreement
Revenue accounted for under Topic 606		7				152	$ 1,000
Sunovion Pharmaceutics Canada, Inc. \| Collaboration revenue - Upfront payment
License Agreement
Revenue not accounted for under Topic 606						$ 1,000
License Agreement \| Sinovant Sciences, LTD
License Agreement
Notice period for termination of agreement						180 days
License Agreement \| Sinovant Sciences, LTD \| Achievement of certain regulatory and commercial milestones
License Agreement
Maximum contingent milestone payment		91,500				$ 91,500
License Agreement \| Sinovant Sciences, LTD \| Subsequent regulatory approval
License Agreement
Maximum contingent milestone payment		4,000				4,000
License Agreement \| Sinovant Sciences, LTD \| Clinical trial application submission
License Agreement
Proceeds from license agreement, milestone					$ 1,500
License Agreement \| Sinovant Sciences, LTD \| FDA approval
License Agreement
Revenue accounted for under Topic 606			$ 5,000
License Agreement \| Sinovant Sciences, LTD \| Additional regulatory approvals and annual sales targets
License Agreement
Remaining milestone payments		$ 86,500				$ 86,500
License Agreement \| Sinovant Sciences, LTD \| Collaboration revenue - Upfront payment
License Agreement
Revenue accounted for under Topic 606	$ 5,000
License Agreement \| Sunovion Pharmaceutics Canada, Inc.
License Agreement
Number of deliverables \| item		2				2
License agreement regulatory milestone payment receivable								$ 500

Commitments and Contingencies - Operating Leases (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 EUR (€)	Jun. 30, 2020 USD ($)
Leases
Operating lease liabilities		$ 1,498
Operating lease expense		$ 800
King of Prussia
Leases
Weighted-average remaining lease term of operating leases		3 years 4 months 24 days
Weighted-average discount rate (as a percent)		9.80%
Lease Agreement \| King of Prussia, Pennsylvania
Leases
Operating lease, existence of option to renew	false	false
Lease Agreement \| Vienna, Austria
Leases
Operating lease, existence of option to terminate	true	true
Termination notice period	6 months	6 months
Lease Agreement \| Dublin, Ireland
Leases
Operating lease, existence of option to renew	true	true
Operating lease, monthly based fixed amount \| €	€ 7,000
Lease Agreement \| Dublin, Ireland \| Minimum
Leases
Operating lease, renewal term		3 months

Commitments and Contingencies - Additional Lease Disclosures and Other Commitments and Contingencies (Details)	6 Months Ended
	Jun. 30, 2020 USD ($)
Operating Cash Flows Supplemental Information:
Cash paid for amounts included in the measurement of the operating lease liabilities	$ 252,000
Right-of-use assets obtained in exchange for operating lease obligations	1,476,000
Future payments of operating lease liabilities, ASC 842
2020	255,000
2021	515,000
2022	522,000
2023	533,000
Total lease payments	1,825,000
Less imputed interest	(327,000)
Present value of operating lease liabilities	1,498,000
Other Commitments and Contingencies
Contingent liabilities	$ 0