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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark one)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2020
or
☐
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
(State or other jurisdiction of incorporation or organization)
25-28 North Wall Quay
IFSC, Dublin 1, Ireland
(Address of principal executive offices)
Not applicable
(I.R.S. Employer Identification No.)
Not applicable
(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
Ordinary Shares, nominal value $0.01 per share
Trading Symbol
NBRV
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ⌧
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ⌧
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 ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Emerging growth company ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act). Yes ☐ No ⌧
As of June 30, 2020 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the registrant’s voting
securities held by non-affiliates was approximately $95.2 million based on the last reported sale price of the registrant’s ordinary shares on June 30, 2020. As of February 28,
2021, the registrant had 25,024,653 ordinary shares outstanding.
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NABRIVA THERAPEUTICS plc
INDEX TO REPORT ON FORM 10-K
Item 1:
Item 1A:
Item 1B
Item 2:
Item 3:
Item 4:
Item 5:
Item 6:
Item 7:
Item 7A:
Item 8:
Item 9:
Item 9A:
Item 9B:
Item 10:
Item 11:
Item 12:
Item 13:
Item 14:
Item 15:
Item 16:
PART I
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
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FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements that involve substantial risks and
uncertainties. All statements contained in this Annual 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 commercialize 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 successfully commercialize SIVEXTRO and realize value from our agreement with Merck &
Co., Inc.;
● our ability to build, manage and maintain a sales force for the commercialization of XENLETA, SIVEXTRO
and CONTEPO, if approved;
● 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;
● 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 plans to pursue development of other product candidates including XENLETA for the treatment of
infections in patients with cystic fibrosis;
● 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;
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● 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;
● 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;
● 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 including additional licensing agreements for XENLETA
outside the United States, Canada and the greater China region;
● 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;
● risks of relying on external parties such as contract manufacturing and sales organizations;
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● 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-K.
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 Annual Report 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-K, 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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RISK FACTOR SUMMARY
Our business is subject to a number of risks of which you should be aware before making an investment decision.
Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you
should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors”, together
with the other information in this Annual Report.
● We depend heavily on the success of XENLETA, SIVEXTRO and CONTEPO. The U.S. Food and Drug
Administration, or FDA, has approved XENLETA for oral and intravenous use for the treatment of community-
acquired bacterial pneumonia, or CABP. SIVEXTRO was approved by the FDA for oral and intravenous use of
adults and adolescents for the treatment of acute bacterial skin and skin structure infections, or ABSSSI, and
CONTEPO is being developed for complicated urinary tract infections, or cUTI. If we are unable to obtain
marketing approval for CONTEPO, or if we fail in our commercialization efforts for XENLETA and/or
SIVEXTRO, or experience significant delays in doing so, our business will be materially harmed.
● We have incurred significant losses since our inception and anticipate that we will incur losses for at least the next
several years and may never generate profits from operations or maintain profitability.
● 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.
● 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. 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.
● The number 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.
● 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.
● 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 adequate value from the agreement.
● 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 products and product candidates.
● 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.
● Business interruptions resulting from the SARS-CoV-2 infection causing COVID-19 outbreak or similar public
health crises have caused and could continue to cause a disruption of the commercialization of our products and
the development of our product candidates and adversely impact our business.
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● 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.
● 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.
● If serious adverse or undesirable side effects are identified in XENLETA, SIVEXTRO, 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.
● We are a “smaller reporting company”, and the reduced disclosure requirements applicable to smaller reporting
companies may make our ordinary shares less attractive to investors.
● 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 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.
● 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 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.
● 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.
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ITEM 1. BUSINESS
Overview
PART I
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 rights to two approved products, XENLETA and
SIVEXTRO, as well as one development 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. We began to market SIVEXTRO in the United
States in September 2020 after entering into a Sales Promotion and Distribution Agreement with subsidiaries of Merck in
July 2020. SIVEXTRO is approved for treatment of acute bacterial skin and skin structure infections, or ABSSSI, caused
by certain susceptible Gram-positive microorganisms. In June 2020, the FDA issued a second complete response letter, or
CRL, for CONTEPO. 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. During a meeting with the FDA in October 2020, the
FDA informed us that it has not yet determined how it will conduct international inspections during the COVID-19
pandemic. We may potentially develop XENLETA and CONTEPO for additional indications. Both XENLETA
formulations and CONTEPO were granted Qualified Infectious Disease Product, or QIDP, and Fast Track designation by
the FDA. Incentives for QIDP status include an additional five years of exclusivity, in addition to any other exclusivity
periods, as well as fast track and priority review status, for which both XENLETA formulations and CONTEPO are
eligible for.
XENLETA
Discovered and developed by our team, XENLETA is a semi-synthetic pleuromutilin antibiotic that is the first in
its class for intraveneous, or IV, and oral administration in humans. It inhibits the synthesis of a specific protein on the
bacterial ribosome, which is required for bacteria to grow, by binding with high affinity and specificity at molecular targets
that are different than other antibiotic classes causing cell death. Based on results from two global, Phase 3 clinical trials,
we believe XENLETA is well-positioned for use as first-line monotherapy for the treatment of CABP due to its novel
mechanism of action, short five-day course of therapy for oral XENLETA, targeted spectrum of activity, resistance profile,
achievement of substantial drug concentrations in lung tissue and fluid, availability of oral and IV formulations and a
generally well-tolerated profile. We believe XENLETA represents a potentially important new treatment option for the five
to six million adults in the United States diagnosed with CABP each year.
We believe that pleuromutilin antibiotics can help address the major public health threat posed by bacterial
resistance, which the World Health Organization, or WHO, characterized in 2017 as one of the biggest threats to human
health. Increasing resistance to antibiotics used to treat CABP is a growing concern and has become an issue in selecting
the appropriate initial antibiotic treatment prior to determining the specific microbiological cause of the infection, referred
to as empiric treatment. For example, the U.S. Centers for Disease Control and Prevention, or CDC, has classified
Streptococcus pneumoniae, the most common respiratory pathogen, as a serious threat to human health as a result of
increasing resistance to currently available antibiotics. In a recent retrospective cohort study of Streptococcus pneumoniae
blood and pulmonary isolates from U.S. sites, macrolide resistance was observed in 47.3% of S. pneumoniae obtained from
respiratory cultures, and 29.6% from blood cultures. As macrolide resistance in respiratory isolates was greater than 25% in
all regions of the U.S, clinicians should consider alternatives to macrolide monotherapy for community acquired
pneumonia in the U.S. according to current treatment guidelines.
In addition, the CDC recently reported on the growing evidence of widespread resistance to macrolides, widely
used antibiotics that disrupt bacterial protein synthesis, in Mycoplasma pneumoniae, a common cause of CABP that is
associated with significant morbidity and mortality. Furthermore, Staphylococcus aureus, including methicillin-resistant S.
aureus, or MRSA, which has also been designated as a serious threat to human health by the CDC, has emerged as a more
common cause of CABP in some regions of the world, and a possible pathogen to be covered with empiric therapy.
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As a result of increasing resistance to antibiotics and the wide array of potential pathogens that cause CABP, the
current standard of care for hospitalized patients with CABP whose treatment is initiated in the hospital usually involves
first-line empiric treatment with a combination of antibiotics (cephalosporins and macrolides) or monotherapy with a
respiratory fluoroquinolone. In patients where MRSA is suspected, fluoroquinolones are also typically administered in
combination with other antibiotics. Combination therapy presents the logistical challenge of administering multiple drugs
with different dosing regimens, with some drugs available only as IV, and may increase the risk of drug-drug interactions
and the potential for serious side effects. Fluoroquinolones are associated with safety and tolerability concerns, including a
relatively high risk for developing Clostridium difficile infection and because of their generally broad spectrum of activity,
increasing rates of resistance for uropathogens.
The FDA has communicated safety information about fluoroquinolones, advising that when used systemically, in
the form of tablets, capsules and injectable preparations, fluoroquinolones are associated with disabling and potentially
permanent serious side effects. In December 2018, the FDA warned prescribers of an increase in the occurrence of rare but
serious events of ruptures or tears in the main artery of the body, called the aorta. These tears, called aortic dissections, or
ruptures of an aortic aneurysm can lead to dangerous bleeding or even death. Prior communications pertaining to the safety
of fluoroquinolones occurred in July 2018 (significant decreases in blood sugar and certain mental health side effects), July
2016 (disabling side effects of the tendons, muscles, joints, nerves, and central nervous system), May 2016 (restricting use
for certain uncomplicated infections), August 2013 (peripheral neuropathy), and July 2008 (tendinitis and tendon rupture).
The European Medicines Agency, or EMA, has also reviewed this class and has modified prescribing information
restricting use, as well as outlining some of the safety risks. We believe these concerns have contributed to the decreasing
use of fluoroquinolones and restriction of their use within a growing number of hospitals.
Many currently available antibiotic therapies are only available for IV administration and are prescribed for seven
to fourteen days, meaning that continued treatment requires prolonged hospitalization or a switch to a different antibiotic
administered orally, with the attendant risk that the patient might respond differently.
Effective January 1, 2017, the Joint Commission & Center for Medicare and Medicaid Services, or CMS, began
requiring all U.S. hospitals to have Antibiotic Management guidelines, also known as “Stewardship” Committees, in place
to identify antibiotics most appropriate and targeted to each individual patient’s infection. Past efforts to “cast the widest
net possible” with broad-spectrum antibiotics that affect many types of bacteria have caused problems, such as C. difficile
infections, by killing good bacteria or increased antibiotic resistance in other bacteria in different areas of the body.
Additionally, in 2016, the Infectious Diseases Society of America and the Society for Healthcare Epidemiology of
America, or IDSA/SHEA, updated their Antibiotic Stewardship guidelines for antibiotic use. We believe that three key
goals from these guidelines are applicable to the treatment of CABP:
● Reduce use of antibiotics associated with a high risk of C. difficile infections;
● Increase use of oral antibiotics as a strategy to improve outcomes or decrease costs; and
● Reduce antibiotic therapy to the shortest effective duration.
Consistent with the Antimicrobial Stewardship principles, we believe that XENLETA could be well suited as
either a first-line or second-line empiric monotherapy for the treatment of CABP patients in the hospital setting, outpatient-
transition of care or in the community setting, because of its novel mechanism of action, complete spectrum of activity for
CABP pathogens, including against multidrug resistant strains, achievement of substantial drug concentrations in lung
fluids and lung immune cells, the flexibility to step down from IV to oral administration as both oral and IV formulations
are available and a favorable safety and tolerability profile.
On September 9, 2019, we announced that the oral and IV formulations of XENLETA were available in the
United States for the treatment of CABP through major specialty distributors. This followed the approval by the FDA of
our NDA for XENLETA on August 19, 2019 for the treatment of adults with CABP. 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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We primarily market XENLETA to community-based physicians. This strategy has been implemented given
XENLETA’s convenient 5-day dosing of its oral formulation and given that it is widely covered under most commercial
insurance plans.
We entered into a license and commercialization agreement in March 2019 with Sunovion Pharmaceuticals
Canada Inc., or Sunovian, for the commercial rights to XENLETA in Canada. On July 16, 2020, we announced that
Sunovian received approval from Health Canada to market oral and IV formulations of XENLETA® (lefamulin) for the
treatment of community-acquired pneumonia, or CAP, in adults, with the related Notice of Compliance from Health
Canada dated July 10, 2020.
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 CAP, in adults
following a review by the European Medicines Agency, or EMA. The EC approved XENLETA for countries of the
European Economic Area, or EEA, and United Kingdom, or U.K. 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 throughout the approved territory. We intend
to work with a commercial partner to make XENLETA available to patients in the EEA and U.K.
SIVEXTRO
On July 15, 2020, we announced that we entered into a Sales Promotion and Distribution Agreement, the
Distribution Agreement, with MSD International GmbH, or MSD, and Merck Sharp & Dohme Corp., or the Supplier, each
a subsidiary of Merck & Co. Under the Distribution Agreement, MSD appointed us 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. We
have agreed to employ a sales force or retain the services of a contract sales organization to fulfill our obligations under the
Distribution Agreement. In September 2020, we began a small and focused sales effort, by utilizing 15 sales
representatives in a virtual and in-person community-based sales effort with Amplity Health. We expanded this effort to 60
sales representatives in November 2020 and we may expand it further in 2021.
SIVEXTRO is an oxazolidinone-class antibacterial indicated in adults and patients 12 years of age and older for
the treatment of ABSSSI caused by susceptible isolates of the following Gram-positive microorganisms: Staphylococcus
aureus, including methicillin-resistant, or MRSA, and methicillin-susceptible, or MSSA, isolates, Streptococcus pyogenes,
Streptococcus agalactiae, Streptococcus anginosus group (including Streptococcus anginosus, Streptococcus intermedius
and Streptococcus constellatus), and Enterococcus faecalis.
CONTEPO
On July 24, 2018, we completed the acquisition of Zavante Therapeutics, Inc., or Zavante, a privately-held late
clinical-stage biopharmaceutical company focused on developing novel therapies to improve the outcomes of hospitalized
patients. Zavante’s lead product candidate is CONTEPO™ (fosfomycin for injection, previously referred to as ZTI-01 and
ZOLYD).
The prevalence of antibiotic-resistant bacteria is increasing and is considered a significant threat to global health.
In particular, the CDC and the WHO consider antibiotic resistance to be an urgent and critical threat to human health. The
prevalence of lactamase enzymes among Gram-negative pathogens threatens the usefulness of many beta -lactam
antibiotics and has resulted in greater reliance on last line antibiotics, including carbapenems. Complicated urinary tract
infections, or cUTIs, including acute pyelonephritis, or AP, are among the most common infections due to multi-drug
resistant, or MDR bacteria, including carbapenem-resistant Enterobacteriaceae, or CRE, and are often healthcare-
associated. Global mortality attributable to CRE infections has been estimated in some studies to be over 20% and reflects
the need for safe, alternative, carbapenem-sparing options.
CONTEPO is a novel, potentially first-in-class investigational IV antibiotic in the United States with a broad
spectrum of Gram-negative and Gram-positive activity, including activity against most MDR strains such as
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extended-spectrum beta-lactamase-, or ESBL-producing Enterobacteriaceae. Intravenous fosfomycin has been approved
for a number of indications and utilized for over 45 years in Europe to treat a variety of serious bacterial infections,
including cUTIs. CONTEPO utilizes a new dosing regimen that optimizes its pharmacokinetics and pharmacodynamics.
We believe these attributes, the extensive worldwide clinical experience and the positive efficacy and safety results from
the Phase 2/3 clinical trial support CONTEPO as a first-line treatment for cUTIs, including AP, suspected to be caused by
MDR pathogens. At least 20% of cUTIs are caused by MDR bacteria and limited treatment options are available in the
U.S. In addition, non-clinical data have shown that CONTEPO acts in combination with certain other antibiotics to
improve bacterial killing.
We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI including acute
pyelonephritis, or AP, in adults in the United States, to the FDA in October 2018. The NDA submission is utilizing the
505(b)(2) regulatory pathway and is supported by a robust data package, including a pivotal Phase 2/3 clinical trial (known
as ZEUS™), which met its primary endpoint of statistical non-inferiority to high dose piperacillin/tazobactam in patients
with cUTI, including AP. In April 2019, the FDA issued a CRL in connection with our 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 requested that issues related to facility inspections and manufacturing deficiencies at our active pharmaceutical
ingredient contract manufacturer be addressed prior to the FDA approving the NDA. We 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. We resubmitted our 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 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 caused by the COVID-19 pandemic. 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 continue to interact with FDA to discuss its plans
for conducting inspections at their sites. On October 30, 2020, we participated in a Type A meeting with the FDA to obtain
any new information related to the FDA’s pending conduct of inspections of foreign manufacturers during the COVID-19
pandemic that has negatively impacted a number of FDA product reviews, including the CONTEPO NDA. The FDA
informed us that it has not yet determined how it will conduct international inspections during the COVID-19 pandemic.
As a result, next steps and specific timing of the CONTEPO NDA resubmission cannot be finalized until the FDA issues
industry guidance. We and others in the industry that have been impacted await future communication from the FDA as it
continues to assess the options available under existing regulations and laws to conduct these foreign facility inspections.
CONTEPO has been granted Qualified Infectious Disease Product, or 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.
Our Strategy
We are a biopharmaceutical company engaged in the commercialization and research and development of novel
anti-infective agents to treat serious infections. The key elements of our strategy are:
● Maximize the commercial potential of XENLETA for CABP, SIVEXTRO for ABSSSIs and CONTEPO for
cUTIs. We own exclusive, worldwide rights to XENLETA and U.S. rights to CONTEPO and we have out
licensed the rights to XENLETA in Canada and China. We plan to continue to explore licensing of rights to
XENLETA in other territories outside the United States. Our initial target patient population for XENLETA
in the United States will consist of adult patients with moderate to severe CABP and the initial target
population for CONTEPO will be hospitalized adult patients with complicated urinary tract infections and/or
acute pyelonephritis. If CONTEPO receives marketing approval from the FDA, we plan to commercialize it
in the United States with internal or external sales resources. We believe CONTEPO
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has an innovative profile which, if approved, would support its adoption in the United States for adult cUTI
patients treated in the hospital. XENLETA also has the opportunity to be adopted as outpatient transition of
care from the hospital, or Emergency Department, or as an out-patient treatment in a community setting, each
of which we believe represents a significant commercial opportunity. Outside the United States we expect to
utilize a variety of types of collaboration, distribution and other marketing arrangements with multiple third
parties to commercialize XENLETA in such markets. We currently have a Market Access team that is
working with large payors, including managed care organizations to secure favorable formulary placement
for XENLETA and SIVEXTRO. In addition we offer Patient Assistance Programs to reduce the cost of our
drugs at the point of sale. Medical science liaisons are engaging with health care providers to serve as a
resource for learning about XENLETA. SIVEXTRO is a novel oxazolidinone class antibiotic to treat
susceptible Gram-positive pathogens including MRSA, one of the serious public health threats identified by
the CDC. Available in both IV and oral formulations, SIVEXTRO was approved by the FDA for the
treatment of adults with ABSSSI, such as cellulitis, wound infections, and Erysipelas and in 2020 the label
was expanded to include adolescents 12 years of age and older. In September 2020, we started utilizing an
experienced sales force managed by Amplity Health, to call on approximately 7,800 community based health
care professionals in areas with high levels of managed care coverage that are high prescribers of antibiotics
that are used for both CABP and ABSSSI.
● Pursue the continued development of XENLETA in additional indications. We are evaluating the cost and
benefits of the continued development of XENLETA for indications in addition to CABP. Pediatric oral
formulation development is ongoing, and a Phase 1 clinical trial of intravenous lefamulin in pediatric patients
is ongoing. We believe XENLETA may have the potential to treat infections in patients with CF, ABSSSI,
ventilator-associated bacterial pneumonia, or VABP, or hospital-acquired bacterial pneumonia, or HABP, and
sexually transmitted infections, or STIs. In addition, we may explore longer duration of treatment with
XENLETA to support development of a treatment for osteomyelitis and prosthetic joint infections. We
believe that XENLETA would be differentiated from other treatment options for these potential indications
because of its novel mechanism of action, spectrum of activity, including activity against multi-drug resistant
pathogens, achievement of substantial concentrations in relevant tissues, availability as both an IV and oral
formulation and favorable safety and tolerability profile. We continue to evaluate these opportunities and
consider their development if and when there is adequate funding which meets our business and financial
objectives.
● Continue the development of CONTEPO for a pediatric indication. We are continuing the development of
CONTEPO for use in pediatric patients with cUTIs. 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. As a result of COVID-19, research sites were temporarily closed for enrolment for a
large part of 2020, and in 2021, only a minority of sites are currently screening patients and allowing access
to the institution. As a result, the timelines will be modified to reflect approximately a two-year delay due to
COVID-19.
● Evaluate business development opportunities and potential collaborations. 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. We plan 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. We may consider out-licensing certain
products for certain market segments. Potential collaborations may provide us with funding and access to the
scientific, development, regulatory and commercial capabilities of the collaborators. We expect to continue to
explore opportunities from domestic and international governments, foundations, and non-governmental
entities to provide additional funding and support for potential future development programs.
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Background
Anti-Bacterial Market and Scientific Overview
Antibiotics that are active against both Gram-positive and Gram-negative bacteria are referred to as broad
spectrum, while those that are active only against a select subset of Gram-positive or Gram-negative bacteria are referred to
as narrow spectrum. Bacteria that cause infections are often referred to as bacterial pathogens. Because it often takes from
24 to 72 hours to definitively identify the particular bacterial pathogen causing an infection, and the difficulty associated
with obtaining adequate bacterial cultures in some patients and infections, the causative pathogen(s) often remains
unidentified. Since the introduction of antibiotics in the 1940s, numerous new antibiotic classes have been discovered and
developed for therapeutic use. The development of new antibiotic classes and new antibiotics within a class is important
because of the ability of bacteria to develop resistance to existing mechanisms of action of currently approved antibiotics.
However, the pace of discovery and development of new antibiotic classes slowed considerably in the past few decades.
The CDC estimates that the pathogens responsible for more than 70% of U.S. hospital infections are resistant to at least one
of the antibiotics most commonly used to treat them. The CDC also estimated in 2019 that annually in the United States at
least 2.8 million people become infected with bacteria that are resistant to antibiotics and at least 35,000 people die as a
direct result of these infections.
Antibiotic resistance is primarily caused by genetic mutations in bacteria selected by exposure to antibiotics that
do not kill all of the bacteria. In addition to mutated bacteria being resistant to the drug used for treatment, many bacterial
strains can also become cross-resistant, meaning that they become resistant to multiple classes of antibiotics. As a result,
the effectiveness of many antibiotics has declined, limiting physicians’ options to treat serious infections and exacerbating
a global health issue. For example, the WHO estimated in 2014 that people with infections caused by MRSA, a highly
resistant form of bacteria, are 64% more likely to die than people with a non-resistant form of the bacteria. Resistance can
increase the cost of healthcare because of the potential for lengthier hospital stays and more intensive care. Growing
antibiotic resistance globally, together with the low level of investment in research and development, is considered one of
the biggest global health threats. In 2010, the WHO stated that antibiotic resistance is one of the three greatest threats to
human health. Partially in response to this threat, the U.S. Congress passed the GAIN Act in 2012, which provides
incentives, including access to expedited FDA review for approval, fast track designation and five years of potential data
exclusivity extension for the development of new QIDPs. Additional legislation is also being considered in the United
States, including the Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms Act of 2019, or
DISARM, which is intended to establish a new reimbursement framework to enable product specific reimbursement to
hospitals for anti-infective products. In addition, the Centers for Medicare Services, or CMS, have launched an alternative
New Technology Add-On Payment, or NTAP, to increase access to innovative antibiotics for hospital inpatients, by
improving reimbursement rates for new generation anti-infectives, and specifically those considered QIDP.
In 2018, sales of antibiotics to treat humans totaled approximately $45 billion globally. Although judicious use of
antibiotics is important to reduce the rate of antibiotic resistance, this approach alone cannot fully address the threat from
increasing antibiotic resistance. New antibiotics, and particularly new antibiotic classes, are needed to ensure the
availability of effective antibiotic therapy in the future.
Community-Acquired Bacterial Pneumonia, or CABP
Market Overview
The U.S. National Center for Health Statistics estimated that between 1988 and 1994 there were approximately
5.6 million cases of pneumonia per year in the United States. More recently, based on our combined analysis of the CDC’s
2007 National Ambulatory Medical Care Survey, the National Hospital Ambulatory Medical Care Survey and 2013 data
from the Healthcare Cost and Utilization Project we estimate that over 5.0 million adults are treated annually for CABP in
the United States and that while many of these adult CABP patients have their treatment initiated in a hospital, including
emergency departments, a significant percentage of them are treated as outpatients in community settings.
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Our analysis of the LexisNexis data also indicates that approximately 2.4 million of these adult CABP patients
were treated as inpatients with IV or injectable antibiotics, and we found that the majority of CABP patients enter the
hospital inpatient setting following the initiation of antibiotic therapy during an Emergency Department, or ED, visit.
Additionally, our analyses show that approximately 1.4 million adult CABP patients were treated with antibiotic courses,
IV or oral, in the ED or as hospital outpatients and subsequently released without hospital admission.
Based on data collected from July 1, 2015 through June 30, 2018, on the Medicare.gov Hospital Compare website,
the current national rate of readmissions for Medicare pneumonia patients is 16.6%, which is the percentage of patients
who have had a recent hospital stay that must return to a hospital for unplanned care within 30 days of being discharged.
The national average death rate for Medicare pneumonia patients, excluding Medicare Advantage plan data, is 15.6%,
which is the percentage of patients who die, for any reason, within 30 days of admission to a hospital.
Based on data from LexisNexis® Risk Solutions, a leading provider of healthcare data and analytics solutions, as
well as analysis of data from US hospitals and other healthcare facilities, we determined that the number of adult CABP
patients who were treated with antibiotic therapy in hospitals in the United States exceeded 3.8 million for full-year 2016.
Our analysis of the LexisNexis data also indicates that approximately 2.4 million of these adult CABP patients were treated
as inpatients with IV/injectable antibiotics, and we find that the majority of CABP patients enter the hospital inpatient
setting following the initiation of antibiotic therapy during an ED visit. Additionally, our analyses show that approximately
1.4 million adult CABP patients were treated with antibiotic courses (IV or oral) in the ED or as hospital outpatients and
subsequently released without hospital admission.
Additionally, approximately 1.4 million adult CABP patients were treated with antibiotic courses (IV or oral) in
the ED or as hospital outpatients and subsequently released without hospital admission. Furthermore, as a result of our
market research in 2017-18, we believe that once adult CABP patients are released from ED or are discharged from U.S.
hospitals, approximately 60-70%, receive oral antibiotic outpatient prescriptions as continuation of their antibiotic
treatment. As hospitals look to minimize the total cost of care and duration of hospital stay for CABP patients toward
improved outcomes, efficient transition of adult CABP inpatients to an oral antibiotic treatment as outpatient therapy can
significantly reduce days of hospitalization and overall treatment cost.
IQVIA estimated that in 2017 approximately 2 million adult CABP patients were actively treated with antibiotics
from prescribers in community clinics, e.g. primary care offices and at other non-hospital based sites of urgent care. As a
result, we believe that approximately 6 million CABP patients are treated with antibiotics in the United States on an annual
basis and 6 out of every 10 adult CABP patients have treatment initiated in a hospital setting versus. the community setting.
Overall, the impact of pneumonia is serious as based on CDC data, approximately 50,000 patients died from
CABP in the United States in 2014.
Causes of CABP
Pneumonia can be caused by a variety of micro-organisms, with bacteria being the most common identifiable
cause. CABP refers to bacterial pneumonia that is acquired outside of a hospital setting. Signs and symptoms of CABP
include cough, fever, sputum production and chest pain. A number of different types of bacteria can cause CABP, including
both Gram-positive and Gram-negative bacteria. Pneumonia that is caused by atypical bacterial pathogens often has
different symptoms and responds to different antibiotics than pneumonia caused by pathogens referred to as typical
bacteria. However, atypical bacteria are not uncommon. The most common bacterial pathogens noted in current treatment
guidelines from the Infectious Diseases Society of America, or IDSA, for hospitalized CABP patients who are not in the
intensive care unit are Streptococcus pneumoniae, Mycoplasma pneumoniae, Haemophilus influenzae, Chlamydophila
pneumoniae, and Legionella species. In addition, IDSA notes the emergence of resistance to commonly utilized antibiotics
for CABP, specifically drug-resistant S. pneumoniae and community-acquired MRSA, or CA-MRSA, as a major
consideration in choosing empiric therapy. However, a majority of patients do not have a pathogen identified using routine
diagnostic tests available to physicians.
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Currently Available Treatment Options
In 2019, based on the most likely bacteria to cause CABP, IDSA and the American Thoracic Society, or ATS,
updated their recommendations for the empiric treatment of non-severe hospitalized patients with CABP without risk
factors for MRSA and P. aeruginosa with either:
● a combination of a cephalosporin plus a macrolide or
● monotherapy with a respiratory fluoroquinolone; or
● combination therapy with a β-lactam and doxycycline when macrolides or fluoroquinolones are
contraindicated.
Given concerns over increasing drug resistance (macrolides) and safety issues (macrolides, fluoroquinolones), the
guidelines noted a need for additional research of new therapeutic agents, like XENLETA, for adults with CABP. As a new
therapeutic agent for the treatment of CABP, we believe the treatment of CABP with XENLETA is consistent with the
guidelines.
Regarding outpatient therapy, the updated guidelines now only conditionally recommend macrolide monotherapy
for CABP patients with or without comorbidities or risk factors only if local pneumococcal macrolide resistance is less
than 25% and reiterated that physicians need to be aware of the local susceptibility profiles of the common bacterial
pathogens associated with CABP because of increasing resistance to first-line antibiotics. For example, rates of
pneumococcal resistance to macrolides now exceed 25% in most areas of the US and resistance to tetracyclines (another
first line outpatient recommended therapy) exceed 25% in some areas, while resistance in M. pneumoniae associated with
severe disease has been recently reported by the CDC in the United States. Antibiotic resistance is widespread to various
degrees throughout the world.
Limitations of Currently Available Treatment Options
When confronted with a new patient suffering from a serious infection caused by an unknown pathogen, a
physician may be required to quickly initiate first-line empiric antibiotic treatment, often with a combination of antibiotics,
to stabilize the patient prior to definitively diagnosing the particular bacterial infection. However, currently available
antibiotic therapies for first-line empiric treatment of CABP suffer from significant limitations.
Bacterial Resistance and Spectrum of Activity
As a result of bacterial resistance, the effectiveness of many antibiotics has declined. For example, the CDC
estimates that in 30% of severe S. pneumoniae cases, the bacterial pathogen is fully resistant to one or more clinically
relevant antibiotics, with 44% of strains resistant to a macrolide in the United States. Antibiotic resistance has a significant
impact on mortality and contributes heavily to healthcare system costs worldwide. According to the CDC, cases of resistant
pneumococcal pneumonia result in 32,000 additional doctor visits, approximately 19,000 additional hospitalizations and
7,000 deaths each year. None of the currently available treatment options provides a spectrum of antibacterial coverage as a
monotherapy that sufficiently covers all of the most common bacterial causes of CABP, including multi-drug resistant
strains.
Difficult, Inconvenient and Costly Regimens
Currently available antibiotics used to treat CABP and other serious infections can be difficult, inconvenient and
costly to administer. Physicians typically prefer IV administration for patients hospitalized with more serious illness to
ensure adequate delivery of the drug. Many IV antibiotics are prescribed for seven to 14 days or more and patients can be
hospitalized for much or all of this period or require in-home IV therapy. The diagnosis related group, or DRG,
reimbursement system often used in the U.S. hospital setting pays a fixed fee for an episode of CABP that may not fully
compensate hospitals for the duration of hospitalized care. Prolonged IV treatment that extends the period of
hospitalization may cause hospital costs to increase in excess of the fixed reimbursement fee, resulting in significant
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negative financial impact on healthcare institutions. In addition, to address all likely bacterial pathogens in a patient with a
more serious illness, IDSA guidelines recommend using a combination of antibiotics. Combination therapy presents the
logistical challenge of administering multiple drugs with different dosing regimens and may increase the risk of drug-drug
interactions. While IV treatment delivers the drug more rapidly than is typical orally, once a patient is stabilized, oral
treatment with the same drug would allow for more convenient and cost-effective out-patient treatment. Because many
commonly used antibiotics are only available in IV form, a switch to an oral therapy requires changing to a different
antibiotic, which may be less effective for the patient due to the different mechanism of action of the drug prescribed upon
discharge.
Adverse Effects
Currently available antibiotic therapies can have serious side effects. These side effects may include severe
allergic reactions, decreased blood pressure, nausea and vomiting, suppression of platelets, pain and inflammation at the
site of injection, muscle, renal and oto-toxicity, optic and peripheral neuropathies, aortic dissection, valvular abnormalities,
tendinopathy, hypoglycemia and headaches. At times, these side effects may be significant and require discontinuation of
therapy. As a result, some treatments require clinicians to closely monitor patients’ blood levels and other parameters,
increasing the expense and inconvenience of treatment. This risk may be increased with combination therapy, which
exposes patients to potential adverse effects from each of the antibiotics used in treatment. For example, fluoroquinolones
are associated with tendon rupture, peripheral neuropathy and, more recently, valvular abnormalities, aortic aneurysm
and/or dissection. In addition, fluoroquinolones have been associated with an increased frequency of C. difficile colitis, an
overgrowth of a bacteria in the colon that produces a toxin that results in inflammation of the colon and repeated bouts of
watery diarrhea. This has resulted in limitations on the use of fluoroquinolones in several countries. In November 2015, the
FDA convened an Advisory Committee meeting to review the benefits and risks of fluoroquinolones in less severe
indications, such as uncomplicated UTI, acute bacterial sinusitis and acute bacterial exacerbations of chronic bronchitis.
Based on the committee’s recommendation, in July 2016, the FDA approved changes to the labels of fluoroquinolones to
indicate that fluoroquinolones should be reserved for use in patients who have no other treatment options for the
indications mentioned above, because the risk of these serious side effects generally outweighs the benefits in these
patients. These changes included a requirement that a separate patient Medication Guide be given with each prescription
that describes the safety issues associated with this class of drugs. In December 2018, an FDA review found that
fluoroquinolone antibiotics can increase the occurrence of rare but serious events of ruptures or tears in the main artery of
the body, called the aorta. These tears, called aortic dissections, or ruptures of an aortic aneurysm can lead to dangerous
bleeding or even death. They can occur with fluoroquinolones for systemic use given by mouth or through an injection. As
a result, fluoroquinolone use has declined substantially in recent years.
Our Solution : XENLETA for the treatment of CABP
We believe that XENLETA, which is the first new class of antibiotic approved by the FDA in nearly 20 years for
CABP, can fill the current treatment gap by providing clinicians the ability to treat a patient with suspected or confirmed
CAPB where may be concerns about resistance, or adverse event profiles for available antibiotic classes, or for elderly
patients or patients with co-morbidities where they are at higher risk for negative outcomes from pneumonia. XENLETA
has proven efficacy and a favorable safety profile as an empiric, short-course monotherapy for the treatment of CABP with
targeted activity against Gram-positive, Gram-negative, and atypical bacteria that are commonly associated with CABP,
including drug-resistant strains. The novel mechanism of action of XENLETA provides for a low risk of resistance
development and low probability of cross resistance with other antibiotics, which is important given the increase in
antimicrobial resistance to relevant CABP pathogens. XENLETA, with IV and oral formulations, and no need for a loading
dose, has versatility to meet the health care provider and patient’s clinical needs. For example, XENLETA can be utilized
in patients as an IV antibiotic in the hospital setting with discharge on oral therapy, which provides significant advantages
to the patients’ health while potentially reducing the total cost of care to the hospital. Additionally, we believe a short
course treatment with XENLETA oral monotherapy could benefit moderate to severe CABP patients treated in the
Emergency Department, or ED, by potentially avoiding hospitalization. And finally, XENLETA can be utilized effectively
in the community by primary care practitioners who can potentially avoid an ED visit, thereby, reducing patient
hospitalization exposure and related significant associated costs to managed care plans.
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ABSSSIs
Market Overview
Acute bacterial skin and skin-structure infections, or ABSSSIs, are very common and are characterized by a wide
range of disease presentations. Over 10.7 million unique patients are diagnosed annually with ABSSSIs and lead to over
850,000 hospitalizations based on our market research. The vast majority of ABSSSI patients are successfully treated in the
community setting with oral medications. The frequency of ABSSSI is increasing. From 2000 to 2004, total hospital
admissions attributed to ABSSSIs increased by 30%, followed by another 17% increase from 2005 to 2011. During a
similar time period, from 1993 to 2005, the number of emergency department visits attributed to ABSSSIs almost tripled,
from 1.2 million to 3.4 million patients. The increase in frequency of ABSSSI is attributed to the spread of resistant
bacteria, in particular, community-associated methicillin-resistant Staphylococcus aureus, or CA-MRSA. ABSSSI includes
infections of deeper soft tissues, cellulitis, wound infections, burns, and major abscesses. They often lead to substantial
morbidity and mortality, can be resource intensive and incur high healthcare costs.
Causes of ABSSSIs
ABSSSIs are a frequent reason for seeking care at in both the outpatient and hospital settings. Staphylococcus
aureus is one of the most common pathogens associated with these infections, and the emergence of community-associated
methicillin-resistant Staphylococcus aureus, or MRSA, has represented a significant challenge in their treatment.
Gram-positive bacteria, in particular S. aureus, S. pyogenes, and other ß-hemolytic streptococci are the most
common pathogens in ABSSSI. Of increasing concern is the rapidly rising frequency of ABSSSI caused by MRSA. There
has been a dramatic increase in the occurrence of CA-MRSA infections since 2000. In many U.S. cities CA-MRSA is the
most common pathogen cultured from patients with skin and skin structure infections in emergency departments. The
emerging incidence of resistance to multiple antibiotics in pathogens makes ABSSSI increasingly difficult to treat. The
most recent practice guidelines published by the IDSA for the treatment of SSTIs reflect the impact of MRSA, because a
large focus is on antibiotic regimens covering S aureus, in particular, MRSA. The introduction of community-associated
MRSA organisms has also influenced the selection of empirical antibiotic therapy to treat ABSSSIs. Additionally,
knowledge of regional microbial resistance and susceptibility patterns is essential to identify appropriate empirical
coverage for MRSA. Therefore, empiric coverage for MRSA has been recommended for treatment of skin and soft tissue
infections, given the high community prevalence of MRSA. Empiric antibiotic therapy with activity against MRSA is
particularly important in the following circumstances:
● History of MRSA infection
● Recurrent infection in the setting of underlying predisposing condition(s)
● Skin and soft tissue infection not associated with purulence, in the setting of inadequate clinical response (within
72 hours) to antibiotic therapy with no activity against MRSA
It is recommended that ABSSSI patients with mild infection (localized involvement with no systemic symptoms),
due to known or suspected MRSA, may be treated with oral antibiotic therapy. However, treatment with IV formulations of
antibiotic therapy may be appropriate in the following circumstances:
● Extensive soft tissue involvement
● Signs of systemic toxicity
● Rapid progression of clinical manifestations
● Persistence or progression of symptoms after 48 to 72 hours of oral therapy
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● Immunocompromise
● Proximity of soft tissue infection to an indwelling device (such as a prosthetic joint or a vascular graft); soft tissue
infection should be considered a manifestation of device infection if it originates on the skin directly overlying
the prosthesis site.
About MRSA
According to the CDC, “Antibiotic resistance threats in the United States, 2019” report, in contrast to the 2013
report, while the burden of antibiotic-resistance threats in the U.S. was greater than initially estimated, deaths are
decreasing. However, the number of Americans who must deal with antibiotic resistant infections remains high. According
to the CDC, more than 2.8 million antibiotic-resistant infections occur in the U.S. yearly and lead to the deaths of 35,000
Americans.
One of the serious public health threats identified by the CDC is methicillin-resistant Staphylococcus aureus
(MRSA), which continues to be a clinical and economic burden. Based on CDC 2019 report, there were 323,700 estimated
MRSA cases in hospitalized patients in 2017, and an estimated 10,600 deaths in the U.S due to MRSA. The European
Centre for Disease Prevention and Control (ECDC) estimates that more than four million European Union (EU) patients
acquire healthcare acquired infections (HAIs) annually, resulting in 37,000 deaths and that a large proportion of these
deaths are due to the most common multidrug-resistant bacteria, including MRSA. According to the ECDC, MRSA is still
the most commonly identified antimicrobial-resistant pathogen in hospitals in many parts of the world, including Europe,
the Americas, North Africa, the Middle East, and Asia. Data from the Eurosurveillance journal estimates MRSA infections
affect more than 150,000 patients annually in the EU.
Currently Available Treatment Options
Since it may take as long as 48 to 72 hours to identify the pathogen(s) causing an infection and most of the
currently available oral therapy options that cover resistant pathogens are narrow-spectrum treatments, physicians
frequently prescribe two or more antibiotics to treat a broad-spectrum of potential pathogens. In general, empiric therapy
choice has typically been guided by the patients’ clinical circumstances including regional antibiotic resistance patterns,
allergy history, and concomitant medications A recent 12 month analysis of oral treatment options in the outpatient setting
by IQVIA indicated cephalosporins, sulfonamide/trimethoprim combos, tetracyclines and fluroquinolones are some of the
most frequently prescribed oral treatments for certain serious bacterial skin infections. However, these commonly
prescribed generics must be dosed more frequently, and many have adverse drug effects such drug-drug interactions and
central nervous system effects. The efficacy of tetracyclines is supported by susceptibility testing and observational and
retrospective reports; however their efficacy for treatment of skin and soft tissue infections due to MRSA has not been
rigorously evaluated or compared in clinical trials. Fluroquinolones are not recommended as a treatment option for
ABSSSIs caused by MRSA because of decreased susceptibility of MRSA to fluoroquinolones, which also highlights the
need for additional treatment options for skin infections that are caused by fluoroquinolone-resistant organisms.
Limitations of Currently Available Treatment Options
The most common treatments for serious bacterial infections are cephalosporins (Keflex),
sulfonamide/trimethoprim combinations (Bactrim), tetracyclines and fluroquinolone (Baxdela). The lack of an effective
bioequivalent oral formulation of these and many other commonly prescribed antibiotics requires continued IV therapy,
which is inconvenient for the patient and may result in longer hospital stays and greater cost. Alternatively, because of the
absence of the same antibiotic in an oral, well-tolerated formulation, physicians may switch the patient to a different orally
available antibiotic at the time of hospital discharge. This carries the risk of new side effects and possible treatment failure
if the oral antibiotic does not cover the same bacteria that were being effectively treated by the IV antibiotic therapy. While
linezolid is a twice-daily IV and oral therapy, it is a narrow-spectrum treatment that is associated with increasing bacterial
resistance, side effects from interactions with other therapies and other serious safety concerns.
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Adverse Effects
Concerns about antibiotic safety and tolerability are among the leading reasons why patients stop treatment and
fail therapy. The most commonly used antibiotics to treat ABSSSIs, such as cephalosporins, sulfonamide/trimethoprim
combos, and fluroquinolones are associated with safety and tolerability concerns. For example, Bactrim
(sulfonamide/trimethosprim) is associated with severe reactions including Stevens-Johnsons syndrome a rare and serious
disorder of the skin and mucus membranes. As previously noted, fluoroquinolones are associated with tendon rupture,
peripheral neuropathy and, more recently, valvular abnormalities, aortic aneurysm and/or dissection. In addition,
fluoroquinolones have been associated with an increased frequency of C. difficile colitis, an overgrowth of a bacteria in the
colon that produces a toxin that results in inflammation of the colon and repeated bouts of watery diarrhea. Linezolid
should not be taken by patients who are also on many commonly prescribed anti-depressants, such as monoamine oxidase
inhibitors and serotonin reuptake inhibitors.
Our Solution : SIVEXTRO for the treatment of ABSSSI
SIVEXTRO (tedizolid phosphate) is a novel oxazolidinone class antibiotic to treat susceptible Gram-positive
pathogens including MRSA, one of the serious public health threats identified by the CDC.
SIVEXTRO, available in both IV and oral formulations, was approved by the FDA in 2014 for the treatment of
adults with ABSSSI such as cellulitis, wound infections and erysipelas and in 2020 the label was expanded to include
adolescents 12 years of age and older.
Administered once-daily, SIVEXTRO offers an effective, short six-day course of therapy. Convenient dosing
enables greater patient compliance and is one of the key therapeutic and commercial benefits of the drug over existing
treatments, many of which must be taken more frequently and for longer periods of time. Sivextro has proven efficacy and
demonstrated 80% early clinical response in 48-72 hours, so clinicians know that the drug will work quickly and is well
tolerated with a low incidence of side effects. There is no need for monitoring and no drug-drug interactions with SSRIs,
another significant competitive advantage, and SIVEXTRO is not a substrate for hepatic CYP450. Additionally, many
older ABSSSI treatments can only be administered intravenously, and therefore require hospital treatment leading to
increased healthcare costs.
cUTIs
Market Overview
Infections due to a bacterial pathogen that are resistant to one or multiple antibiotic classes have become
increasingly common and present a risk to our fight against infectious diseases and the management of complications in
vulnerable patients. According to the CDC, more than 2.8 million hospital infections caused by bacteria resistant to one or
more antibiotics occur every year in the United States, and over 35,000 patients with an antibiotic-resistant pathogen die
each year.
The prevalence of antibiotic-resistant bacteria is increasing and is considered a significant threat to global health.
In particular, the CDC and the WHO consider antibiotic resistance to be an urgent and critical threat to human health. The
prevalence of Beta-lactamase enzymes among Gram-negative pathogens threatens the usefulness of many Beta-lactam
antibiotics and has resulted in greater reliance on last line antibiotics, including carbapenems.
cUTIs, including AP, are among the most common infections due to MDR bacteria, including CRE, and are often
healthcare-associated. Global mortality attributable to CRE infections has been estimated in some studies to be over 20%
and reflects the need for safe, alternative, carbapenem-sparing
Surveillance and epidemiological studies suggest that some traditional, first-line antibiotics may no longer be
acceptable choices for early therapy. In one large-scale surveillance study, approximately one out of three patients
hospitalized in the United States with cUTI, a complicated intra-abdominal infection, hospital-associated pneumonia, or a
bloodstream infection did not receive timely effective antibiotic therapy, and this delay was associated with increased
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morbidity and mortality. The rate of antibiotic resistance appears to be two to four times higher in patients who were
admitted to the hospital from a nursing home or were recently hospitalized. Antibiotic therapy within the past six months
has also been identified as a risk factor for antibiotic resistance.
New classes of antibiotics that are effective against drug-resistant pathogens are needed for early, appropriate
treatment of serious infections in hospitalized patients and to treat patients who have failed to respond to standard, first-line
antibiotics due to acquired drug resistance.
For over 45 years, oral and IV formulations of fosfomycin have been used in the European Union, Australia,
Canada, Africa, Asia, and South America, and an oral formulation of fosfomycin has been used in the United States. Oral
fosfomycin is available in the United States as single-dose therapy for cystitis and is noted as an appropriate treatment
option for cystitis in treatment guidelines by the Infectious Diseases Society of America and the CDC. However, oral
administration of fosfomycin provides inadequate concentrations that are required for treatment of more serious infections
due to its limited bioavailability and dose-limiting gastrointestinal tolerability.
Outside of the United States, IV fosfomycin is approved for patients with a variety of infections, often severe,
including cUTI, bacteremia, osteomyelitis, nosocomial lower respiratory tract infections, surgical site infections, bone and
joint infections, endocarditis, skin infections and bacterial meningitis. The efficacy and safety profile of IV fosfomycin has
been established by more than 45 years of clinical use outside of the United States and has been evaluated in more than 60
clinical studies. Fosfomycin has retained high in vitro activity with a low and stable resistance profile, and continues to be
suitable for use as a monotherapy for cUTI despite long term use.
Causes of cUTIs
cUTI is defined as a clinical syndrome characterized by pyuria (the presence of puss in the urine) and a
documented microbial pathogen on culture of urine or blood, accompanied by local and systemic signs and symptoms,
including fever, chills, malaise, flank pain, back pain or costo-vertebral angle pain or tenderness that occur in the presence
of a functional or anatomical abnormality of the urinary tract, or in the presence of catheterization. Indwelling urethral
catheters account for 70% to 80% of cUTIs, or 1 million cases per year in the United States. Catheter-associated UTI is the
most common cause of secondary bloodstream infections and is linked to increased morbidity and mortality. Patients with
pyelonephritis, regardless of underlying abnormalities of the urinary tract, are considered a subset of patients with cUTI.
cUTI are usually caused by a greater variety of pathogens, with a greater likelihood of associated antimicrobial
resistance, than uncomplicated UTIs, or uUTIs. Escherichia coli, or E. coli, is isolated in approximately 75% to 95% of
uUTIs and approximately 50% of cUTIs and is the most common etiologic agent of cUTIs. Additional commonly-
identified Gram-negative uropathogens include other Enterobacteriaceae (such as Klebsiella spp., Proteus spp.,
Enterobacter cloacae) and non-fermenting Gram-negative bacilli (such as Pseudomonas aeruginosa, or P. aeruginosa, and
Acinetobacter spp.). Gram-positive organisms, such as Enterococci and coagulase-negative Staphylococci, may also be
contributing pathogens.
Limitations of Currently Available Treatment Options
We believe bacterial resistance against antimicrobials has created the need for more antibiotic treatment options,
particularly among MDR, Gram-negative bacilli (including CRE, ESBL, producers, and MDR P. aeruginosa). Gram-
negative antimicrobial resistance is particularly common among urinary tract pathogens. Enterobacteriaceae, including E.
coli and Klebsiella pneumoniae, or K. pneumoniae, may acquire plasmids that encode ESBLs and confer resistance to
third-generation cephalosporins and other broad-spectrum antibiotics. Third-generation cephalosporins and Beta-lactamase
inhibitors, or BLIs, are also commonly ineffective against Enterobacteriaceae that generate AmpC enzymes.
The recent spread into hospitals of Enterobacteriaceae expressing emergent Beta-lactamases, including members
of the serine carbapenemases and metallo-Beta-lactamases, endanger antibiotic options. The lack of available and effective
antibiotic classes for these organisms has created an unmet medical need. For example, infections with
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CRE are difficult to treat, as there are limited treatment choices available. Mortality rates as high as 40% to 50% have been
associated with CRE infections, making them a serious threat to public health. The available treatment choices are
associated with serious potential toxicity, in the case of colistin and aminoglycosides, or concerns of allergy or
hypersensitivity, in the case of Beta-lactams or penicillin derivatives.
Our Solution: CONTEPO for the Treatment of cUTI
● CONTEPO is an IV formulation of fosfomycin and the sole member of the epoxide antibiotic class.
● CONTEPO has a different mechanism of action than other IV antibiotics available in the United States.
● CONTEPO has a broad spectrum of in vitro activity against a variety of clinically important MDR Gram-
negative pathogens, including ESBL-producing Enterobacteriaceae, CRE, and Gram-positive pathogens,
including methicillin-resistant Staphylococcus aureus, or MRSA, and vancomycin-resistant enterococci.
● CONTEPO has demonstrated in in vitro studies additivity or synergy when used in combination with other
classes of antibiotic agents in pre-clinical trials.
● CONTEPO has a small molecular size, which may enable high levels of tissue penetration and facilitates
renal elimination, both of which are important for treatment of cUTIs.
● CONTEPO is supported by a long history of IV fosfomycin use outside the United States in a variety of
indications, including cUTI.
● CONTEPO has completed the ZEUS Study, a pivotal registrational Phase 2/3 clinical trial in cUTI, achieving
non-inferiority to an active comparator.
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 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 complicated urinary tract
infections, bacteremia, pneumonia and skin infections with little resistance shown to date.
CONTEPO works differently than other IV antibiotics approved in the United States. CONTEPO inhibits an early
step in bacterial cell wall synthesis, so the cell wall lacks integrity and the bacteria die quickly. We believe that because of
its different mechanism of action, we have not observed any cross resistance to date between CONTEPO and any of the
existing classes of intravenous antibiotics. In addition, CONTEPO has demonstrated in in vitro studies an additive or
synergistic antibacterial effect with other classes of antibiotics when used in combination therapy, and has been shown to
restore susceptibility of resistant strains.
Our Products and Product Candidate
XENLETA
Overview
XENLETA is a semi-synthetic derivative of the naturally occurring antibiotic, pleuromutilin, which was originally
identified from a fungus called Pleurotus mutilius. XENLETA inhibits the synthesis of bacterial protein, which is required
for bacteria to grow. XENLETA acts by binding to the peptidyl transferase center, or PTC, on the bacterial ribosome in
such a way that it interferes with the interaction of protein production at two key sites known as the “A” site and the “P”
site, resulting in the inhibition of bacterial proteins and the cessation of bacterial growth. XENLETA’s binding occurs with
high affinity, high specificity and at molecular sites that are different than other
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antibiotic classes. We believe that XENLETA’s novel mechanism of action is responsible for the lack of cross-resistance
with other antibiotic classes that we have observed in our preclinical studies and clinical trials and a low propensity for
development of bacterial resistance to XENLETA. The binding of XENLETA to the PTC on the bacterial ribosome is
depicted in the graphic below.
We believe that XENLETA is well suited to be used empirically as monotherapy for the treatment of respiratory
tract infections, such as CABP, because of its spectrum of antibacterial activity against both the typical and atypical
pathogens causing CABP. XENLETA is a pleuromutilin antibacterial indicated for the treatment of adults with CABP
caused by susceptible microorganisms. In addition, in preclinical studies, XENLETA showed potent antibacterial activity
against a variety of Gram-positive bacteria, Gram-negative bacteria and atypical bacteria, including multi-drug resistant
strains. In preclinical studies and in Phase 1 clinical trials, XENLETA achieved substantial concentrations in the epithelial
lining fluid, or ELF, of the lung, the site infected during pneumonia. XENLETA also provides the ability to switch from IV
to oral therapy and maintain therapy with the same antibacterial treatment. The efficacy of XENLETA in humans has been
shown in a proof-of-concept clinical Phase 2 trial with 207 patients with ABSSSI (acute bacterial skin and skin structure
infections) comparing two XENLETA doses (100 mg and 150 mg i.v. q12 h) with vancomycin (≥ 1,000 mg) over 5-
14 days. This trial enrolled patients with severe skin and skin structure infections, excluding any patients with minor and
uncomplicated infections. In total, 90.8 % of patients in the Modified Intent to Treat, or mITT population had S. aureus
infection; 69.1 % of patients had MRSA. The results of the clinical Phase 2 trial in ABSSSI provided the first proof of
concept for the systemic use of a pleuromutilin antibiotic for the treatment of serious bacterial infections in humans.
Thereafter, the clinical program for XENLETA progressed with completion of two Phase 3 clinical trials in CABP (LEAP
1, LEAP 2). These trials demonstrated that XENLETA treatment, administered as IV only, IV to oral, and oral only
regimens, was non-inferior to the standard of care moxifloxacin for the treatment of adults with CABP. Each trial provided
independent evidence of the treatment effect and safety in this population with unmet medical need.
The FDA has designated each of the IV and oral formulations of XENLETA as a QIDP, which provides for the
extension of statutory exclusivity periods in the United States for an additional five years upon FDA approval of the
product for the treatment of CABP and granted fast track designation to these formulations of XENLETA. Fast track
designation is granted by the FDA to facilitate the development and expedite the review of drugs that treat serious
conditions and fill an unmet medical need. The fast track designation for the IV and oral formulations of XENLETA will
allow for more frequent interactions with the FDA, the opportunity for a rolling review of any NDAs, eligibility for priority
review and a shortening of the FDA’s goal for taking action on a marketing application from ten months to six
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months. Two NDAs for IV and oral formulations of XENLETA for treatment of CABP were submitted to the FDA
December 19, 2018 and were approved on August 19, 2019. On July 16, 2020, we announced that Sunovion
Pharmaceuticals Canada Inc., received approval from Health Canada to market oral and intravenous formulations of
XENLETA for the treatment of CAP in adults, with the Notice of Compliance from Health Canada dated July 10, 2020. 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 for the treatment of community-acquired pneumonia, in adults
following a review by the 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 accross the European Economic Area, or EEA, and United Kingdom, or U.K.
We own exclusive, worldwide rights to XENLETA, other than our rights in People’s Republic of China, Hong
Kong, Macau, and Taiwan, which were licensed to Sinovant, and Canada, which was licensed to Sunovian. XENLETA is
protected by issued patents in the United States, Europe and Japan covering composition of matter, which are scheduled to
expire no earlier than 2028. We also have been granted patents for XENLETA relating to process and pharmaceutical
crystalline salt forms in the United States, which are scheduled to expire no earlier than 2031 before any regulatory
exclusivity such as QIPD or pediatric extensions are applied. In addition, we own a family of pending patent applications
directed to pharmaceutical compositions of XENLETA, which if issued would be scheduled to expire no earlier than 2036.
Key Attributes of XENLETA
We believe that the combination of the following key attributes of XENLETA, observed in clinical trials and
preclinical studies, differentiates XENLETA from currently available antibiotics and make XENLETA well suited for use
as a first-line or second-line empiric monotherapy for the treatment of CABP.
The preclinical studies and clinical trials we have conducted to date suggest that XENLETA’s novel mechanism of
action is responsible for the low risk of cross resistance observed with other antibiotic classes and a low propensity for
development of bacterial resistance to XENLETA. As a result of the favorable safety and tolerability profile we have
observed in our clinical trials to date, we believe XENLETA has the potential to present fewer complications relative to the
use of current therapies.
Based on our market research, we also believe that the availability of both IV and oral formulations of
XENLETA, and an option to switch to oral treatment, could reduce the length of a patient’s hospital stay and the overall
cost of care.
Targeted Spectrum of Activity for CABP Pathogens and Low Propensity for the Development of Bacterial Resistance
We expect XENLETA’s spectrum of antibacterial activity against typical and atypical pathogens could eliminate
the need to use a combination of antibiotics for the treatment of CABP. In our completed Phase 2 clinical trial, IV
XENLETA achieved a high cure rate against multi-drug resistant Gram-positive bacteria, including MRSA. In addition, in
preclinical studies, XENLETA showed activity against a variety of Gram-positive bacteria, including S. pneumoniae and
S. aureus, that are resistant to other classes of antibiotics, Gram-negative bacteria, including H. influenzae and
M. catarrhalis, and atypical bacteria, including C. pneumoniae, M. pneumoniae and L. pneumophila. Included in
XENLETA’s spectrum of activity are all bacterial pathogens identified by IDSA as the most common causes of CABP for
hospitalized patients who are not in the intensive care unit, as well as strains of the above listed bacteria that are resistant to
other classes of antibiotics, including penicillins, cephalosporins, fluoroquinolones and macrolides.
Based on observations from our preclinical studies and clinical trials of XENLETA, as well as industry experience
with pleuromutilins used in veterinary medicine over the last 40 years, we believe that XENLETA’s novel mechanism of
action is responsible for the low risk of cross-resistance observed with other antibiotic classes and a low propensity for
development of bacterial resistance to XENLETA.
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Convenient Dosing Regimen; Potential for Switching from IV to Oral Treatment
We have developed both an IV and oral formulation of XENLETA, which we utilized in our clinical trials of
XENLETA for the treatment of CABP. The administration of XENLETA as a monotherapy avoids the need for the
complicated dosing regimens typical of multi-drug cocktails. We believe the availability of both IV and oral administration,
and an option to switch to oral treatment, would be more convenient for patients and could reduce the length of a patient’s
hospital stay and the overall cost of care. The potential reduction in the overall cost of care could be particularly
meaningful to healthcare institutions, as the DRG reimbursement system pays a fixed fee for the treatment of CABP
regardless of the length of hospital stay.
The efficacy and safety of XENLETA in adult patients with CABP was shown in two pivotal Phase 3 clinical
trials (LEAP 1 and LEAP 2). The two trials were designed in accordance with US and EU regulatory guidelines and
conducted in parallel from 2016 to 2018. Design elements of the Phase 3 clinical trials were broadly comparable. Both
were global, multicenter, randomized, double-blind, active-controlled, non-inferiority studies to establish the efficacy and
safety of XENLETA against the standard-of-care moxifloxacin in the treatment of adult subjects with CABP. In LEAP 1,
subjects were treated with IV study drug and could be switched to oral study drug at the discretion of the Investigator after
3 full days (6 doses) of IV treatment if, in the opinion of the Investigator, pre-defined criteria were met. In LEAP 2,
subjects were treated with XENLETA for five days (ten doses) compared to seven days of moxifloxacin (seven doses).
LEAP 1 (IV to Oral) Phase 3 Clinical Trial
In LEAP 1, a total of 551 subjects with Pneumonia Outcomes Research Team (PORT) Risk Class III to V who
required IV antibiotic therapy as initial treatment for the current episode of CABP were randomized 1:1 to treatment with
XENLETA 150 mg IV every 12 hours (n=276) or moxifloxacin 400 mg IV every 24 hours (n=275). Subjects could be
switched from IV to oral study drug (XENLETA 600 mg orally every 12 hours or moxifloxacin 400 mg orally every
24 hours) at the discretion of the Investigator after three full days (six doses) of IV treatment if pre-defined criteria were
met. If the investigator determined that MRSA was a probable pathogen at Screening, adjunctive linezolid 600 mg IV
every 12 hours was to be added to the moxifloxacin group and linezolid placebo was to be added to the XENLETA group.
The protocol defined different primary endpoints for the FDA and EMA to address regional differences in
regulatory requirements for the development of antibacterial drugs to treat CABP. The FDA primary endpoint (EMA
secondary endpoint) was the percentage of subjects with an Early Clinical Response, or ECR, of responder at 96 ± 24-
hours after the first dose of study drug in the Intent-to-treat, or ITT, Analysis Set. The EMA co-primary endpoints (FDA
secondary endpoints) were the percentages of subjects with an Investigator’s Assessment of Clinical Response (IACR) of
success at Test of Cure (TOC) Visit (5 to 10 days after the last dose of study drug) in the mITT and Clinically Evaluable at
Test of Cure, or CE-TOC Analysis Sets.
Of the 551 subjects randomized, 546 received any amount of study drug (Safety Analysis Set: 273 XENLETA,
273 moxifloxacin). The mean total duration of study drug treatment (IV and oral combined) was approximately seven days
in each treatment group. The two treatment groups were generally well balanced with respect to demographics and baseline
characteristics. Overall, 59.9% of subjects were male. The overall mean age was 60.3 years; 43.6% were ≥65 years and
18.1% were ≥75 years. Overall, 72.1% of subjects were classified as PORT Risk Class III, 26.5% were PORT Risk
Class IV, and 1.3% were PORT Risk Class V.
LEAP 1 met its primary objective and demonstrated that XENLETA is non-inferior to moxifloxacin with or
without adjunctive linezolid for the treatment of adult subjects with CABP based on the FDA and EMA primary endpoints.
The ECR responder rate (FDA primary endpoint) was 87.3% in the XENLETA group and 90.2% in the moxifloxacin group
(treatment difference −2.9%; 95% CI: −8.5, 2.8). The lower limit of the 95% CI for the difference in ECR responder rates
was greater than the non-inferiority margin of −12.5%. Success rates for IACR at TOC (EMA co-primary endpoints) were
81.7% in the XENLETA group and 84.2% in the moxifloxacin group (treatment difference −2.6%; 95% CI: −8.9, 3.9) in
the mITT group, and 86.9% in the XENLETA group and 89.4% in the moxifloxacin group
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(treatment difference −2.5%; 95% CI: −8.4, 3.4) in the CE-TOC group. The lower limit of the 95% CI for the difference in
IACR success rates was greater than the non-inferiority margin of −10% for both groups.
Early Clinical Response rates for the most frequently identified baseline pathogens in the Microbiological Intent-
to-treat, or microITT, group were: S. pneumoniae (88.2% XENLETA vs 93.8% moxifloxacin), H. influenzae (92.2%
XENLETA vs 94.7% moxifloxacin), M. catarrhalis (92.0% XENLETA vs 100.0% moxifloxacin), M. pneumoniae (84.2%
XENLETA vs 90.0% moxifloxacin), L. pneumophila (88.9% XENLETA vs 85.7% moxifloxacin), and C. pneumoniae
(90.9% XENLETA vs 94.7% moxifloxacin). ECR responder rates for S. aureus were 100.0% in both treatment groups.
Responder rates among resistant pathogens were high in the XENLETA group (e.g., 100.0% for penicillin-intermediate
S. pneumoniae [PISP], penicillin-resistant S. pneumoniae [PRSP], multi-drug resistant S. pneumoniae, or MDRSP, and
macrolide-resistant S. pneumoniae), although the number of resistant pathogens was low.
Both XENLETA and moxifloxacin were well tolerated in the IV ± oral treatment regimens administered in the
study. A similar rate of treatment-emergent adverse events, or TEAEs, was observed (38.1% vs 37.7% in the XENLETA
and moxifloxacin groups, respectively). Gastrointestinal events were the most frequently reported TEAEs in both treatment
groups (6.6% XENLETA, 13.6% moxifloxacin), with the difference between groups driven by an imbalance in TEAEs of
diarrhea (0.7% XENLETA, 7.7% moxifloxacin). No gastrointestinal TEAEs led to discontinuation of study drug in either
treatment group.
Administration site reactions of any type occurred more frequently for XENLETA (7.7%) than moxifloxacin
(3.7%). The most common individual TEAE was infusion site pain, affecting eight (2.9%) subjects in the XENLETA
group, and no subjects in the moxifloxacin group. One subject in each treatment group had an infusion site reaction that led
to discontinuation of study drug.
The incidence of TEAEs leading to discontinuation of study drug was 2.9% XENLETA and 4.4% for
moxifloxacin. The only TEAE preferred terms leading to discontinuation for more than 1 subject per treatment group were
electrocardiogram (ECG) QT prolonged (one XENLETA-treated subject and three moxifloxacin-treated subjects) and
infectious pleural effusion (one XENLETA-treated subject and two moxifloxacin-treated subjects).
Serious TEAEs occurred in 7.0% of subjects in the XENLETA group and 4.8% of subjects in the moxifloxacin
group and were most frequently reported in the Infections and Infestations System Organ Class, or SOC (2.9% XENLETA,
1.5% moxifloxacin).
Nine deaths (five in the XENLETA group and, four in the moxifloxacin group) occurred by Day 28. Two
additional deaths were reported after Day 28 (i.e., after the intended Late Follow-up [LFU] Visit): one XENLETA-treated
subject on Day 32 and one moxifloxacin-treated subject on Day 48. None of the deaths was assessed as related to study
drug by the Investigators.
There were no clinically meaningful trends or pattern of changes identified in hematology or chemistry laboratory
parameters. No subjects met Hy’s Law criteria.
LEAP 2 (Oral Only) Phase 3 Clinical Trial
In LEAP 2, a total of 738 subjects with PORT Risk Class II to IV who were appropriate candidates for oral
antibiotic therapy for the current episode of CABP were randomized 1:1 to treatment with XENLETA (n=370) or
moxifloxacin (n=368). Subjects received either XENLETA 600 mg orally every 12 hours for 5 days (10 doses) or
moxifloxacin 400 mg orally every 24 hours for seven days (seven doses). The primary and secondary objectives were
identical to those in LEAP 1.
Of the 738 subjects randomized, 736 received any amount of study drug (Safety Analysis Set: 368 XENLETA,
368 moxifloxacin). The mean duration of exposure to active XENLETA was 5.0 days, compared with 6.7 days of active
moxifloxacin, which reflects the intended duration of active treatment for each drug as per the study design. The two
treatment groups were generally well balanced with respect to demographics and baseline characteristics. Overall, 52.4%
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of subjects were male. The overall mean age was 57.5 years; 37.5% were ≥65 years and 16.3% were ≥75 years. Overall,
50.4% of subjects were classified as PORT Risk Class II, 37.7% were PORT Risk Class III, and 11.1% were PORT Risk
Class IV.
LEAP 2 met its primary objective and demonstrated that XENLETA is non-inferior to moxifloxacin for the
treatment of adult subjects with CABP based on the FDA and EMA primary endpoints. The ECR responder rate (FDA
primary endpoint) was 90.8% in the XENLETA group and 90.8% in the moxifloxacin group (treatment difference 0.1%;
95% CI: −4.4, 4.5). The lower limit of the 95% CI for the difference in ECR responder rates was greater than the non-
inferiority margin of −10%. Success rates for IACR at TOC (EMA co-primary endpoints) were 87.5% in the XENLETA
group and 89.1% in the moxifloxacin group (treatment difference −1.6%; 95% CI: −6.3, 3.1) in the mITT group, and
89.7% in the XENLETA group and 93.6% in the moxifloxacin group (treatment difference −3.9%; 95% CI: −8.2, 0.5) in
the CE-TOC group. The lower limit of the 95% CI for the difference in IACR success rates was greater than the non-
inferiority margin of −10% for both groups.
Early Clinical Response rates for the most frequently identified baseline pathogens in the microITT group were:
S. pneumoniae (89.4% XENLETA vs 91.3% moxifloxacin), H. influenzae (89.3% XENLETA vs 91.7% moxifloxacin),
M. pneumoniae (100.0% in both groups), M. catarrhalis (85.7% XENLETA vs 100.0% moxifloxacin), L. pneumophila
(81.3% XENLETA vs 94.1% moxifloxacin), and C. pneumoniae (93.8% XENLETA vs 100.0% moxifloxacin). ECR
responder rates for S. aureus were 100.0% in both treatment groups. Responder rates among resistant pathogens were high
in the XENLETA group (e.g., 100.0% for PISP, PRSP, MDRSP, and MRSA), although the number of resistant pathogens
was low.
Both XENLETA and moxifloxacin were well tolerated in the oral treatment regimens administered in the study.
The overall incidence of TEAEs was higher in the XENLETA group (32.6%) than in the moxifloxacin group (25.0%),
which was driven by a difference in the incidence of mild/moderate Gastrointestinal Disorders. For XENLETA and
moxifloxacin, respectively, the most frequently reported individual TEAEs in this category (and for the study overall) were
diarrhea (12.2% vs 1.1%), nausea (5.2% vs 1.9%), and vomiting (3.3% vs 0.8%). Among the XENLETA-treated subjects
reporting each of these TEAEs, approximately 75% had mild events and the remainder had moderate events. The only
severe gastrointestinal adverse event, which was also serious, was a case of inguinal hernia strangulated in a moxifloxacin-
treated subject. There were no severe or serious gastrointestinal adverse events among XENLETA-treated subjects.
Furthermore, gastrointestinal events led to study drug discontinuation for 3 XENLETA-treated subjects (due to vomiting or
abdominal pain) and one moxifloxacin-treated subject (due to vomiting). One patient who had a positive clinical response
to XENLETA was later diagnosed with a C. difficile infection during an extended hospital stay.
The incidence of TEAEs leading to discontinuation of study drug was 3.3% for the XENLETA group and 2.4%
for the moxifloxacin group.
Serious TEAEs occurred in 4.6% of XENLETA-treated subjects and 4.9% of moxifloxacin-treated subjects, most
frequently in the Infections and Infestations category (2.4% and 1.4%, respectively).
In each treatment group, three (0.8%) subjects died by Day 28. Deaths of two additional XENLETA-treated
subjects were reported after Day 28 (i.e., after the intended LFU Visit): one subject on Day 57 and one subject on Day 271.
None of the deaths was assessed as related to study drug by the Investigators.
No clinically meaningful trends or pattern of changes were identified in hematology or chemistry laboratory
parameters. Two unique XENLETA-treated subjects had either an ALT or an aspartate aminotransferase (AST) value
>10 × the upper limit of normal, or ULN; in both cases the transaminase increases were transient with no associated
increase in serum bilirubin. No subjects met Hy’s Law criteria.
Electrocardiogram analyses demonstrated increases from baseline in the QTcF interval in both treatment groups,
but the magnitude of the change in the XENLETA treatment group was smaller than that caused by moxifloxacin. In this
study the mean change from baseline in QTcF interval at the steady state assessment was 9.5 msec for XENLETA and 11.6
msec for moxifloxacin. Post-baseline QTcF increases of >60 msec occurred in 1.1% of
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XENLETA-treated subjects and 1.9% of moxifloxacin-treated subjects. No associated cardiac arrhythmias of concern were
observed. No adverse trends in vital signs in either treatment group were observed.
Phase 1 Pediatric Clinical Trial
Not unlike treatment of infectious diseases in adults, the management of pediatric infections has become more
difficult due to the continuing rise in resistance in bacteria. Further complicating antimicrobial selection in the pediatric
population is the need for agents to be very well tolerated and available in a final dosage form that can be easily
administered to children. Based upon the in vitro antimicrobial spectrum of activity, along with the safety profile observed
to date, we believe XENLETA is appropriate for evaluation for the treatment of a variety of pediatric infections, including
those affecting the respiratory tract and skin and skin structure. We have an agreed Pediatric Investigation Plan, or PiP, and
Pediatric Study Plan, or PSP, with the EMA and FDA, respectively. Pediatric oral formulation development is ongoing with
initiation of a relative bioavailability and pharmacokinetic study with said oral formulation in 2019, and we initiated a
Phase 1 clinical trial evaluating safety, tolerability and PK of intravenous XENLETA in pediatric patients in mid-2018.
Additional Potential Indications for XENLETA
Cystic Fibrosis
Cystic fibrosis, or CF, is a genetically inherited multi-system rare disorder caused by defects in the CFTR gene
(CF transmembrane conductance regulatory), located on chromosome 7, with a gene carrier rate of 1 in 25. CF is the most
common, life-limiting recessive genetic disorder in a caucasian population. It is believed that up to 30,000 people have
cystic fibrosis in the United States with approximately 1,000 new patient diagnoses yearly. CF is predominantly a disorder
of caucasians occurring in about 1 of every 3,200 live births compared to 1 in 15-17,000 live births in African Americans.
In many cases, CF is apparent soon after birth and most patients are diagnosed by age 3. Approximately 10% of those
affected were diagnosed after 18 years of age, but this figure has decreased due to newborn screening.
The disruption in chloride transport at the cellular level leads to dehydrated secretions within the lungs. Hence,
pulmonary disease is the leading cause of morbidity and mortality in patients with CF because impaired muco-ciliary
clearance in the lungs leads to recurrent pulmonary infections, inflammation, bronchiectasis and progressive lung function
decline. One of the major factors influencing the impact on the lungs is infection. Based on the CF Foundation 2018
Annual Report, infections are a leading cause of loss of lung function and take a significant physical and emotional toll,
making them a top concern for people with CF. It is estimated that that approximately half of the CF population will
continue to require improved anti-infective treatments over the next 20 years.
Staphylococcus aureus is a ubiquitous commensal bacterial pathogen isolated in the respiratory tract and is
commonly colonized in the respiratory tracts of CF patients. It is one of the main causes of recurrent acute pulmonary
infections. According to the 2018 CF Foundation Patient Registry, 70.3% of patients with CF have Staphylococcus aureus
isolated from their respiratory tract, of which 55.2% is methicillin-sensitive Staphylococcus aureus, or MSSA. What is
concerning many CF clinicians is the increase in methicillin-resistant Staphylococcus aureus, or MRSA, which was
identified in 25.0% of patients because MRSA is associated with greater lung damage, pulmonary function deterioration
and increased risk of death.
STIs
Urethritis and cervicitis caused by N. gonorrhoeae, C. trachomatis or M. genitalium are frequently occurring
sexually transmitted infections in the United States and Europe. Left untreated, these infections can cause serious health
problems, particularly in women, including chronic pelvic pain, life-threatening ectopic pregnancy and infertility.
Resistance in these organisms to the most commonly prescribed antibacterial treatments poses a serious public health
threat. For example, the CDC estimates that half of all infections of the clinical isolates of N. gonorrhoeae are resistant to
at least one currently available antibiotic.
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In preclinical studies, XENLETA has shown high potency against N. gonorrhoeae, C. trachomatis and M.
genitalium, including strains resistant to currently available antibacterial agents.
Osteomyelitis
The incidence of osteomyelitis, which is an infection of the bone, is increasing. The most common causative
organism is S. aureus. In the United States, the prevalence of MRSA in these cases ranges from 33% to 55%. Up to 90% of
cases of hematogenous osteomyelitis, most frequently in children, are caused by S. aureus. We believe that XENLETA has
the potential to be an effective treatment option for osteomyelitis. XENLETA has shown substantial tissue penetration and
activity against the most common causative organism in all forms of osteomyelitis. We believe that based on the safety
profile observed to date, XENLETA will be well tolerated for the long term use necessary for the treatment of both adult
and pediatric patients with osteomyelitis. The current standard of care for these infections is treatment with vancomycin.
We believe the ability to administer XENLETA by either the IV or oral route would provide a significant advantage over
agents, such as vancomycin, that can only be administered by IV.
Prosthetic Joint Infections
Infection occurs in approximately 1% of joint replacement surgeries. Although the incidence of infection has been
decreasing, the total number of replacement operations has been rising, such that, overall, there is increasing morbidity.
The majority of these infections are caused by three organisms: coagulase negative staphylococci, S. aureus (including
MRSA) and streptococci, all organisms that are susceptible to XENLETA. The preferred treatment for joint infections with
MRSA is vancomycin, with daptomycin and linezolid as alternatives. Vancomycin and daptomycin are administered only
by IV for this indication, and linezolid has side effects that affect long term use. We believe that XENLETA could provide
an alternative for both IV and oral therapy for these infections cases.
A 2018 Cochrane Review on interventions for the eradication of methicillin-resistant Staphylococcus aureus
(MRSA) in people with cystic fibrosis reviewed the available literature to evaluate the effectiveness of current treatment
regimens. Despite showing MRSA eradication in CF patients is possible, it is not clear what the long- term implications are
as only two studies were identified and the quality of the evidence was found to be very low or low for the different
outcomes. For acute pulmonary exacerbations due to MRSA, treatment with trimethoprim-sulfamethoxasole or
doxycycline, and for moderate or severe exacerbations or if the prior regimens fail, treatment with oral linezolid,
intravenous vancomycin or intravenous ceftaroline is recommended. There are limited treatment options in patients and
each of the aforementioned drugs have potential safety concerns such as hypersensitivity reactions, bone marrow
suppression or renal toxicity. More information on dosage and administration is needed to evaluate the effectiveness of
antibiotic therapy to ensure optimal patient outcomes. Hence, there is an unmet need for new treatment options to treat
Staphylococcal pulmonary infections, specifically acute pulmonary exacerbations due to MRSA.
We believe XENLETA has an opportunity to provide CF patients with MRSA infection an alternative treatment
option. XENLETA is a potent anti-staphylococcal antibiotic from the pleuromutilin class. It has been demonstrated to be
highly effective in in vitro and in vivo studies of S. aureus infection, both MSSA and MRSA. Further it has been shown to
achieve high concentrations in the lung fluid and lung macrophages. XENLETA has been developed and approved for the
treatment of community-acquired bacterial pneumonia (including those caused by S. aureus) in the U.S., EU, and Canada
as an oral tablet and a sterile intravenous product. XENLETA is not metabolized renally and is not nephrotoxic. We believe
the confluence of non-clinical and clinical data, as well as the availability of a well-tolerated and effective oral formulation
uniquely positions lefamulin to potentially address the major unmet need of exacerbations of cystic fibrosis caused by S.
aureus, both MSSA and MRSA. We intend to commence a Phase 1 clinical trial to evaluate the pharmacokinetics, safety and
tolerability of XENLETA in patients with CF. Results from this trial will inform further development of XENLETA as a
treatment for staphylococcal lung infections in this patient population.
Sexually Transmitted Infections (STIs)
The US Centers for Disease Control and Prevention (CDC) reports gonorrhea (caused by Neisseria gonorrhoeae)
as one of the most common STIs in the US, with more than 800,000 cases estimated to occur each year. Left untreated,
these infections can cause serious health problems, particularly for women, including chronic pelvic pain,
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life-threatening ectopic pregnancy, and infertility. Gonorrhea infection also increases a person’s risk of contracting and
transmitting human immunodeficiency virus. Chlamydial infections and gonorrhea are the most frequently reported
sexually transmitted and reportable infections in both Europe and the US with high occurrence rates among young persons,
particularly women.
The World Health Organisation (WHO) has estimated that the total number of new cases of Chlamydia
trachomatis (CT) and Neisseria gonorrhoeae (NG) globally per year was 131 and 78 million, respectively (WHO, 2019).
In Europe, 409,646 cases of C. trachomatis were reported in 2017 (ECDC, 2019), and 75,349 cases of N. gonorrhoeae
were reported in 2016 (ECDC, 2018). In the US, 1,708,569 cases of C. trachomatis (CDC, 2018a) and 555,608 cases of N.
gonorrhoeae were reported to CDC in 2017 (CDC, 2018b).
STI organisms are progressively developing resistance to antibiotics prescribed for treatment: sulfonilamides,
penicillin, cephalosporins, azithromycin, tetracycline, and ciprofloxacin, and gonococcal resistance to all of these
antibiotics have been reported globally. Declining susceptibility to cefixime (an oral cephalosporin antibiotic) resulted in a
change to the CDC treatment guidelines in 2015, so that dual therapy with ceftriaxone (an injectable cephalosporin) and
azithromycin is now the only CDC recommended treatment regimen for gonorrhea. The emerging threat of cephalosporin
resistance highlights the need for continued surveillance of N. gonorrhoeae antimicrobial susceptibility (CDC, 2018b). In
2014, 38.2% of all N. gonorrhoeae collected in the national surveillance program exhibited resistance to penicillin,
tetracycline, or ciprofloxacin or reduced susceptibility to cefixime, ceftriaxone, or azithromycin. Resistance or reduced
susceptibility to one antibiotic was identified in 20.8% of isolates, to two in 9.6%, to three in 7.2%, to four in 0.5%, and to
five in 0.1% (Kirkcaldy et al, 2016).
Mycoplasma genitalium has become a well-established cause for STIs and several studies have demonstrated the
association between M. genitalium and urethritis in men and urethritis, cervicitis, endometritis, and pelvic inflammatory
disease in women. Decreases in the treatment efficacy of azithromycin, and treatment failure after second line
moxifloxacin leaves no validated treatment options for the treatment of M. genitalium infections.
XENLETA is a highly potent novel antimicrobial of the pleuromutilin class. Initial in vitro studies demonstrated
high susceptibility of STI pathogens to lefamulin. Notably, susceptibility of Chlamydia trachomatis (MIC50/90, 0.02/0.04
mg/liter) and susceptible and resistant Neisseria gonorrhoeae (MIC50/90, 0.12/0.5 mg/liter) were good, and susceptibility
of Mycoplasma genitalium was excellent (MIC range, 0.002 to 0.063 mg/liter for multi-drug resistant strains). Given this
high degree of in vitro susceptibility and its favorable safety profile, lefamulin holds great promise for a first-line antibiotic
for the syndromic treatment of STIs, particularly in populations with high rates of resistance to standard-of-care antibiotics.
Acute Bacterial Skin and Skin Structure Infections (ABSSSI)
The effect of lefamulin in treating ABSSSI was demonstrated in a Phase 2 study with 207 subjects with ABSSSI
comparing two lefamulin doses (100 mg and 150 mg IV q12h) with vancomycin over 5-14 days. This study enrolled
patients with significant skin and skin structure infections with a median lesion size of 175.0 cm2 (greater than the
minimum surface area of 75 cm2 specified in the FDA draft guidance), excluding any patients with minor and
uncomplicated infections. In total, 90.8% of patients in the MITT population had S. aureus infection; 69.1% of subjects had
MRSA. Lefamulin 100 mg and 150 mg had consistently high efficacy rates across a wide range of clinical and
microbiological outcomes at several time points including the TOC, 7 to 14 days after the completion of therapy. These
response rates were comparable to vancomycin. The clinical success rate at TOC with lefamulin 100 mg and 150 mg q12h
treatment was high for all subgroups of subjects defined by primary infection type, bacteremia status, diabetic status,
baseline fever status, age group, antibiotic therapy category, prior treatment failure status, baseline area of erythema,
baseline body mass index, and gender. No important differences between or among the compared subgroups in the
response to lefamulin treatment were observed. The Day 3 clinical responder rate for lefamulin was also high and
comparable to vancomycin.
We may advance these programs into clinical development based on available funding.
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CONTEPO Clinical Development Program
Overview
CONTEPO is under development in the United States for the treatment of cUTI, including AP. The clinical
development plan for CONTEPO utilized a modernized dosing regimen to optimize coverage of the predominant
pathogens in hospital infections, including strains recognized by the CDC as an urgent or serious antibiotic resistant threat
to public health in the United States. The FDA has designated CONTEPO as a QIDP. We submitted an NDA for marketing
approval of CONTEPO for the treatment of cUTI in adults in the United States, to the FDA in October 2018. The NDA
submission utilized the 505(b)(2) regulatory pathway and is supported by a robust data package, including a pivotal Phase
2/3 clinical trial (known as ZEUS™), which met its primary endpoint of statistical non inferiority to
piperacillin/tazobactam in patients with cUTI, including acute pyelonephritis. In April 2019, the FDA issued a CRL in
connection with our NDA for CONTEPO for the treatment of cUTIs, including acute pyelonephritis, stating that it was
unable to approve our application in its current form. The CRL requested that issues related to facility inspections and
manufacturing deficiencies at our active pharmaceutical ingredient contract manufacturer be addressed prior to the FDA
approving the NDA. We 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 our contract manufacturers that were described in the CRL
and other matters pertaining to the steps required for the resubmission of the NDA for CONTEPO. We resubmitted our
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 our European contract manufacturing partners were prepared for
regulatory authority inspections, the 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 caused by the COVID-19 pandemic. 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 continue to interact with FDA to discuss its plans for conducting inspections at their sites. On
October 30, 2020, we participated in a Type A meeting with the FDA to obtain any new information related to the FDA’s
pending conduct of inspections of foreign manufacturers during the COVID-19 pandemic that has negatively impacted a
number of FDA product reviews, including the CONTEPO NDA. The FDA informed us that it has not yet determined how
it will conduct international inspections during the COVID-19 pandemic. As a result, next steps and specific timing of the
CONTEPO NDA resubmission cannot be finalized until the FDA issues industry guidance. We and others in the industry
that have been impacted await future communication from the FDA as it continues to assess the options available under
existing regulations and laws to conduct these foreign facility inspections. CONTEPO has been granted 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.
Phase 2/3 Clinical Trial
The ZEUS Study was a multicenter, randomized, parallel-group, double-blind, pivotal Phase 2/3 clinical trial
designed to evaluate safety, tolerability, efficacy and pharmacokinetics of CONTEPO compared to PIP-TAZ in the
treatment of hospitalized adults with cUTI or AP. PIP-TAZ is a combination antibiotic consisting of a broad-spectrum
antibiotic, piperacillin, plus a Beta-lactamase inhibitor, tazobactam, which extends the antibiotic spectrum of piperacillin to
include many Beta-lactamase-producing bacteria that have acquired resistance to piperacillin alone. PIP-TAZ is widely
used to treat serious Gram-negative infections. The primary objective of the ZEUS Study was to demonstrate that
CONTEPO was non-inferior to PIP-TAZ in overall success based on clinical cure and microbiologic eradication in the
microbiologic modified intent-to-treat, or m-MITT, population at the test-of-cure visit, or TOC, which occurred on the
19th to 21st 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. The m-MITT population consisted of 362 patients, each of whom met the study’s
inclusion criteria, was randomized, received any amount of study drug, and had one or more baseline Gram-negative
pathogens growing at greater than or equal to 10(5) CFU/mL from an appropriately collected, pre-treatment baseline urine
or blood sample. The primary endpoint was a composite of the investigator’s determination of clinical cure,
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meaning complete resolution or significant improvement of signs and symptoms that were present at baseline and no new
symptoms, such that no further antimicrobial therapy is warranted, plus microbiologic eradication, meaning that the
baseline bacterial pathogen was reduced to less than 10(4) CFU/mL on urine culture and, if applicable, negative on repeat
blood culture, both in the m-MITT population at TOC. Any missing or presumed eradications were classified as
indeterminates, and conservatively counted as failures in the overall success analysis.
All pathogens isolated from patients who had a baseline and TOC pathogen underwent blinded, post-hoc, pulsed-
field gel electrophoresis, or PFGE, typing analysis. Microbiologic outcome was also defined utilizing the PFGE results,
whereby microbiologic persistence required the same genus and species of baseline and post-baseline pathogens, as well as
PFGE-confirmed genetic identity.
Patients eligible for the trial were required to be 18 years of age or older and have cUTI or AP that was considered
by the clinical investigator to be serious enough to require hospitalization and IV antibiotic therapy. The diagnosis was
based on pyuria, or the presence of pus or white blood cells in the urine, and cUTI or AP with at least two additional
symptoms such as chills, rigors, or warmth associated with fever, nausea or vomiting, painful, difficult or frequent
urination, lower abdominal or pelvic pain, or acute flank pain. Patients with cUTI were also required to have at least one
risk factor, such as use of intermittent or indwelling bladder catheterization; functional or anatomical abnormality of the
urogenital tract; complete or partial hindrance of normal urine flow; blood urea nitrogen greater than 20 mg/dL, blood urea
greater than 42.8 mg/dL, or serum creatinine greater than 1.4 mg/dL, due to known prior renal disease; or, in male patients,
chronic urinary retention. A baseline urine culture specimen was obtained within 48 hours prior to randomization, and any
indwelling bladder catheters were required to be removed or replaced, unless such removal was considered unsafe or
contraindicated, before or within 24 hours after randomization.
Eligible patients were randomly assigned to receive either CONTEPO (6 grams IV fosfomycin) or PIP-TAZ (4
grams piperacillin/0.5 grams tazobactam) as one-hour infusions three times daily for seven days, except patients with
concurrent bacteremia, who could have received treatment for up to 14 days at the clinical investigator’s discretion. Oral
step down therapy was prohibited. Throughout the study, all patients were monitored for signs and symptoms of cUTI or
AP and the occurrence of adverse events. Laboratory data, including chemistry panels, complete blood counts,
electrocardiograms, and samples for urine and blood cultures were collected from all patients at specified times throughout
the study.
Of the total of 465 patients randomized across 92 sites in 16 countries, with studies conducted at 74 sites in 15
countries, 464 (99.8%) received at least one dose of the study drug. Of the 464 patients who received at least one dose of
study drug, 233 patients were in the CONTEPO treatment group, and 231 patients were in the PIP-TAZ treatment group.
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, or LFU, 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.
In the ZEUS Study, CONTEPO was non-inferior to PIP-TAZ for the primary efficacy outcome of overall success,
which was defined as clinical cure and microbiologic eradication at TOC. Overall success occurred in 64.7% of CONTEPO
patients and 54.5% of PIP-TAZ patients. The treatment difference between the CONTEPO and PIP-TAZ groups was
10.2%, with a 95% confidence interval (−0.4, 20.8). Additionally, the lower bound of the 95% confidence interval met the
pre-specified non-inferiority margin of −15%, demonstrating that CONTEPO was non-inferior to PIP-TAZ in the study. In
a post-hoc primary efficacy analysis using results of blinded PFGE molecular typing of urinary tract pathogens, this
difference was even greater (69.0% CONTEPO patients compared to 57.3% PIP-TAZ patients, with a treatment difference
of 11.7%, with a 95% confidence interval (1.3, 22.1). Overall success rates were driven by microbiologic eradication rates,
as clinical cure rates were greater than 90% and treatment differences were small at TOC. Using the PFGE molecular
typing, the microbiologic eradication rates in the m-MITT population at the TOC were 70.7% for patients receiving
CONTEPO compared to 60.1% for patients receiving PIP-TAZ. These rates were consistent with those observed in some
contemporary cUTI studies, and most patients with microbiologic persistence at TOC had identifiable reasons or risk
factors for persistence, such as functional or anatomical abnormalities of the urogenital tract, recent or indwelling urinary
tract catheterization, elevated minimum inhibitory concentration, or MIC, to the study drug
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received, abbreviated study drug therapy, or other underlying co-morbidities. Of note, a majority of patients with
microbiologic persistence at TOC were clinical cures at TOC, did not require rescue antimicrobial therapy, and remained
sustained cures at LFU.
The identity and frequency of pathogens recovered at baseline from patients in the ZEUS Study were similar in
both the CONTEPO and PIP-TAZ treatment groups. The most common pathogens identified were Enterobacteriaceae,
identified in 96.2% of the CONTEPO patients and 94.9% of the PIP-TAZ patients, including E. coli, identified in 72.3% of
the CONTEPO patients and 74.7% of the PIP-TAZ patients; K. pneumoniae, identified in 14.7% of the CONTEPO patients
and 14.0% of the PIP-TAZ patients; Enterobacter cloacae species complex, identified in 4.9% of the CONTEPO patients
and 1.7% of the PIP-TAZ patients; and Proteus mirabilis, identified in 4.9% of the CONTEPO patients and 2.8% of the
PIP-TAZ patients. Gram-negative aerobes other than Enterobacteriaceae included Pseudomonas aeruginosa, which was
identified in 4.3% of the CONTEPO patients and 5.1% of the PIP-TAZ patients, and Acinetobacter baumannii-
calcoaceticus species complex, identified in 1.1% of the CONTEPO patients and no PIP-TAZ patients. These pathogens
are representative of the pathogens that have been recovered in other studies of patients with cUTI or AP. For the
predominant pathogens E. coli and K. pneumoniae, the clinical cure rates at TOC for CONTEPO were greater than 90% for
both pathogens, and microbiologic eradication rates were 68.4%, or 72.9% with PFGE analysis, for E. coli, and 66.7% for
K. pneumoniae on both a non-PFGE analysis and PFGE analysis-basis.
A total of 42.1% of CONTEPO patients and 32.0% of PIP-TAZ patients experienced at least one TEAE. Most
TEAEs were mild or moderate in severity, and severe TEAEs were uncommon (2.1% of CONTEPO patients and 1.7% of
PIP-TAZ patients). The most common TEAEs in both treatment groups were transient, asymptomatic laboratory
abnormalities and gastrointestinal events. Treatment-emergent serious adverse events, or SAEs, 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
SAE in each treatment group was deemed related to the 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 TEAEs were infrequent and similar between treatment groups (3.0% of CONTEPO patients and
2.6% of PIP-TAZ patients).
The most common laboratory abnormality TEAEs were increases in the levels of alanine aminotransferase (8.6%
of CONTEPO patients and 2.6% of PIP-TAZ patients) and aspartate transaminase (7.3% of CONTEPO patients and 2.6%
of PIP-TAZ patients). None of the aminotransferase elevations were symptomatic or treatment-limiting, and none of the
patients met the criteria for Hy’s Law. Outside of the United States, elevated liver aminotransferases are listed among
undesirable effects in labeling for IV fosfomycin.
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 TEAE 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 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 appear to be associated with the hypokalemia associated with the salt load of the IV formulation.
Phase 1 Pediatric Clinical Trial
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. A total of 24 patients are expected to be enrolled at up to ten
clinical sites in the United States. As a result of COVID-19, research sites were temporarily closed in 2020 and only a
minority of sites are currently screening patients and allowing access to the institution. As a result, the timelines will be
modified to reflect a two-year delay due to COVID-19.
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Potential Additional Indications for CONTEPO
Fosfomycin has a long history of use outside the United States in a variety of indications beyond cUTI. The FDA
has granted both Fast Track and QIDP designations for the investigation of CONTEPO for the following indications in
addition to cUTI:
● Complicated intra-abdominal infections (cIAI)
● Hospital-acquired bacterial pneumonia (HABP)
● Ventilator-associated bacterial pneumonia (VABP)
● Acute bacterial skin and skin structure infections (ABSSSI)
Although we have no current plans to develop CONTEPO for indications other than cUTI, including AP, these
designations make CONTEPO eligible for Fast Track and GAIN incentives. We may advance these programs in the clinic
based on available funding.
In August 2017, Zavante entered into an agreement with the United States National Institute of Allergy and
Infectious Diseases, or NIAID, under which NIAID will conduct a clinical trial to assess CONTEPO’s intrapulmonary
penetration and pharmacokinetics in support of the product candidate’s potential future development as a treatment for
HABP and VABP. This bronchoalveolar lavage study, or the BAL study, will measure CONTEPO’s pulmonary penetration
by assessing drug concentrations in the lining of study subjects’ bronchial pathways. Diffusion and saturation of antibiotics
in patients’ airways are considered important factors in assessing a drug’s ability to effectively treat lower-respiratory tract
infections. Prior preclinical and clinical investigations of IV fosfomycin have demonstrated that the product candidate
penetrates rapidly into tissues and achieves clinically relevant concentrations in urine, soft tissues, lungs and other organs,
supporting CONTEPO’s potential versatility as an antibiotic treatment option. The Phase 1 BAL study is currently
enrolling study subjects.
License Agreement with Sinovant Sciences
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 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 XENLETA 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 by Sinovant to the Chinese Food and Drug
Administration that was received in February 2019. Additionally, in connection with the FDA approval for XENLETA we
received a $5.0 million milestone payment from Sinovant in the third quarter of 2019. The remaining milestone payments
of $86.5 million were 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. In December 2020, we
announced the restructuring of our license agreement with Sinovant Sciences for XENLETA in the greater China region.
The restructured agreement also accelerates a portion of the $5.0 million milestone payment to us that was previously
payable upon regulatory approval of XENLETA in China, including a non-refundable upfront payment of $1.0 million
which was received in the fourth quarter of 2020. We will recognize the $1.0
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million payment received as collaboration revenue in the consolidated statements of operations over the estimated period
the manufacturing collaboration and regulatory support will be provided to Sinovant. The future regulatory and commercial
milestone payments will be recorded during the period the milestones become probable of achievement.
Except for the manufacturing collaboration and regulatory support discussed above, 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 XENLETA 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. Despite the serious measures taken to control COVID-19, which significantly impacted the treatment of
bacterial pneumonia patients, enrollment in a pivotal trial in China was completed in early February 2021. The filing by
Sinovant for regulatory approval in China is expected to occur in the next 6 months.
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.
Under the terms of the Sunovion License Agreement, we are entitled to receive an upfront payment, potential
milestone payments upon the achievement of certain regulatory and sales milestone events and royalties on net sales, if
any, of Sunovian Licensed Products in Canada. Sunovion is responsible for all costs related to developing, obtaining
regulatory approval of, and commercializing the Sunovion Licensed Products in Canada.
On November 7, 2019, through Sunovion, we submitted a New Drug Submission, or NDS, for XENLETA. 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. Following the NDS approval that occurred
on July 10, 2020, we have received a regulatory milestone payment of $0.5 million from Sunovion. Any future regulatory
and commercial milestone payments under the Sunovion License Agreement will be recorded during the period the
milestone is probable of achievement.
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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 ABSSSIs, caused by certain susceptible Gram-
positive microorganisms in the United States and its territories, or the Territory.
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 were permitted to sell SIVEXTRO under the Distribution Agreement, we were required to secure a
sales force and the restrictions related to COVID-19 needed to 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. In September 2020, we began a small and
focused sales effort for SIVEXTRO and XENLETA, by utilizing 15 sales representatives. We expanded this effort to 60
sales representatives in November 2020 and we may expand it further in 2021. To date, we have satisfied our requirements
under the Distribution Agreement.
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.
Named Patient Program Agreement with WE Pharma Ltd.
On June 30, 2020, we announced that WE Pharma Ltd., or WEP Clinical, a specialist pharmaceutical services
company, had signed an exclusive agreement with us to supply XENLETA on a named patient or expanded access basis in
certain countries outside of the US, China and Canada. The Named Patient Program, or 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.
Commercialization Strategy
Other than in greater China and Canada where we have licensed development and commercialization rights to
XENLETA, we own exclusive, worldwide rights to XENLETA and U.S. rights to CONTEPO. Our initial target population
for XENLETA consisted of patients with moderate to severe CABP whose antibiotic treatment is hospital-initiated. We
received approval for XENLETA from the FDA in August 2019 and launched the product in September 2019. We
previously utilized our own targeted hospital sales force and marketing organization and in early 2020 began to target high
value primary care physicians in the community near our target hospitals. Based on our market research, we believe
XENLETA has an innovative profile supporting adoption in the United States for adult hospital-initiated CABP patients,
treated both as in-patients as well as outpatient-transition of care from the hospital to the community, which we believe
represents a significant commercial opportunity. Due to market factors in 2020, including the COVID-19 pandemic, we
transitioned to a community-based sales effort. In the third quarter of 2020 we secured a Contract Sales Organization
(CSO) and began promoting XENLETA and SIVEXTRO to community-based healthcare providers. We anticipate that we
will effectively be able to communicate XENLETA’s and SIVEXTRO´s differentiating characteristics and key attributes to
clinicians and payors with the goal of establishing favorable reimbursement for patients. Outside of 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.
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Along with additional market research, we believe that medical education will be a key component of our
commercialization efforts and, plan to invest in these activities to optimize the commercial potential of XENLETA. We
believe that XENLETA’s novel mechanism of action, status as the only member of a new class of systemically
administered pleuromutilins and anticipated clinical profile will support its potential favorable reimbursement, its potential
inclusion on formularies and in local and national treatment guidelines.
We plan 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 and concurrently advance a range of research and development programs for a variety of indications outside the
United States.
We own exclusive U.S. rights to CONTEPO. Our strategic intention, supported by CONTEPO’s differentiated
profile, is to establish CONTEPO, if approved, as the standard of care in the United States for hospitalized patients with
serious infections caused by suspected or confirmed MDR bacteria. We plan to seek a hospital based sales force to promote
CONTEPO, and potentially XENLETA, to hospital-based healthcare professionals in key locations within the United
States where MDR infections, including CRE, are concentrated. These include roughly 900 hospitals in high resistance
locations such as New York City, Los Angeles and Chicago, and other major population centers.
Manufacturing
We do not own or operate, and currently have no plans to establish, manufacturing facilities for the production of
clinical or commercial quantities of XENLETA, CONTEPO, or any of the other compounds that we are evaluating in our
discovery program. We currently rely, and expect to continue to rely, on third parties for the manufacture of XENLETA,
CONTEPO and any further products that we may develop. We have significant in-house knowledge and experience in the
relevant chemistry associated with XENLETA and CONTEPO; and the relevant manufacturing and supply chain processes
associated with the commercial supply of XENLETA and CONTEPO. In addition to these internal resources, we engage
third-party consultants, to assist in the management of our third-party manufacturers. We will be procuring supply of
SIVEXTRO from Merck & Co., Inc.
We have engaged a limited number of third-party manufacturers to provide all of our starting materials, drug
substance and finished product for use in clinical trials. The active pharmaceutical ingredients, or API, and drug products
have been produced under master service contracts and specific work orders from these manufacturers pursuant to
agreements that include specific supply timelines and volume and quality expectations. We choose the third-party
manufacturers of the drug substance based on the volume required and the regulatory requirements at the relevant stage of
development. All lots of drug substance and drug products used in clinical trials are manufactured under current good
manufacturing practices. Separate third-party manufacturers have been responsible for fill and finish services, and for
labeling and shipment of the final drug product to the clinical trial sites.
XENLETA
We have entered into a long-term commercial supply agreement with SEL Biochem Xinjiang Co., Ltd, or SEL,
and Fountain International Development Holding Limited for the supply of pleuromutilin, which is the key intermediate for
XENLETA API production. Under this agreement, SEL is required to manufacture and supply and we are required to
purchase from SEL a specified percentage of our commercial requirements of pleuromutilin. The agreement expires on
August 28, 2022, subject to automatic renewal for successive three-year periods. Either party may elect not to renew the
agreement by providing two-year prior written notice before the end of the initial term or the then-current renewal term.
Either party may terminate the agreement for the other party’s uncured material breach or upon the occurrence of specified
bankruptcy events.
The agreement includes customary supply terms, including product specifications, price, payment terms,
requirements forecasting, delivery mechanics and quality assurance. Under the agreement, we have also negotiated a
quality technical agreement pursuant to which SEL will conduct all quality control and release testing for the pleuromutilin
produced under the agreement.
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In November 2018 we 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. Under this
agreement Arran is required to manufacture and supply, and we are required to purchase from Arran the amount forecast
for the first six months of a twelve-month rolling forecast provided monthly by us. The agreement term expires on
November 12, 2023 and continues thereafter unless terminated by either party with not less than twelve months written
notice. Either party may terminate the agreement for the other party’s uncured material breach or upon the occurrence of
insolvency or bankruptcy events. The agreement includes customary supply terms including material specifications, price,
payment terms, demand forecasting, delivery mechanics, and quality assurance.
We have entered into a long-term commercial supply agreement with Hovione Limited, or Hovione, for the supply
of XENLETA API. Under this agreement, Hovione is required to manufacture and supply and we are required to purchase
from Hovione a specified percentage of our commercial requirements of XENLETA API. The agreement expires on
November 22, 2025, subject to automatic renewal for successive two-year periods. Either party may elect not to renew the
agreement by providing two-year prior written notice before the end of the initial term or the then-current renewal term.
Either party may terminate the agreement for the other party’s uncured material breach or upon the occurrence of specified
bankruptcy events.
The agreement includes customary supply terms, including product specifications, price, payment terms,
requirements forecasting, delivery mechanics and quality assurance. We are required to purchase a minimum of 750 kg to
1,500 kg per year of XENLETA API dependent on potential regulatory approval timing. Under the agreement, we have
also negotiated a quality technical agreement pursuant to which Hovione will conduct all quality control and release testing
for the pleuromutilin produced under the agreement.
We have also entered into a long-term commercial supply agreement with Patheon UK Limited, or Patheon, for
the supply of IV vials of XENLETA. Under this agreement, Patheon is required to supply and we are required to purchase a
specified percentage of our commercial requirements of IV vials of XENLETA. The agreement expires on December 31,
2023, subject to automatic renewal for successive two-year periods. Either party may elect not to renew the agreement by
providing two-year prior written notice before the end of the initial term, and after the initial term, either party may
terminate the agreement with 24-months prior written notice at any time. Either party may also terminate the agreement for
the other party’s uncured material breach or upon the occurrence of specified bankruptcy events. We may also terminate the
agreement if a governmental authority takes action that prevents us from importing, exporting, purchasing or selling the IV
vials of XENLETA. Finally, Patheon may terminate the agreement if we assign any of our rights under the agreement to an
assignee that it does not consider to be a creditworthy substitute or is a competitor of Patheon.
The agreement includes customary supply terms, including product specifications, batch size requirements, price,
payment terms, requirements forecasting, delivery mechanics and quality assurance. Under the agreement, we have also
negotiated a quality agreement pursuant to which Patheon will conduct all quality control testing for the IV vials of
XENLETA.
In addition, we have entered into a long-term commercial supply agreement with Almac Pharma Services Limited,
or Almac, for the commercial supply of XENLETA tablets. Under this agreement, Almac is required to supply and we are
required to purchase services relating to the manufactured tablets equaling a specified minimum annual spend. The initial
term of the agreement expires on August 7, 2022, but it will remain in force until it is terminated by either party with 24-
months prior written notice, expiring on or at any time after the expiry of the initial term. Either party may also terminate
the agreement for the other party’s uncured material breach or upon the occurrence of specified bankruptcy events. The
agreement includes customary supply terms, including payment terms, requirements forecasting, delivery mechanics and
quality assurance. Under the agreement, we have also negotiated a quality technical agreement pursuant to which Almac
will conduct all quality control testing for the tablets.
In August 2018, we entered into a commercial packaging and supply agreement, or the Packaging Agreement with
Sharp Corporation, or Sharp, for the commercial packaging of XENLETA acetate for oral and intravenous administration.
Under the Packaging Agreement, Sharp has agreed to provide certain packaging services to us, including labeling,
serialization and final packaging of the packaged products.
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The Packaging Agreement has an initial five-year term ending December 31, 2023 and will automatically renew
after the initial term for additional one-year terms unless either party gives notice of its intention to terminate the
Packaging Agreement at least 90 days prior to the end of the then-current term. In addition, either party may terminate the
Packaging Agreement for the other party’s uncured material breach, in addition to other specified events, including with
respect to bankruptcy proceedings and governmental actions, in each case subject to notice, cure periods and other
conditions set forth in the Packaging Agreement.
The Packaging Agreement includes customary supply terms, including product specifications, batch size
requirements, price, payment terms, requirements forecasting, delivery mechanics and quality assurance. Under the
agreement, we have also negotiated a quality agreement pursuant to which Sharp will conduct quality control testing for
the packaged products.
Other than these six agreements that are filed as exhibits to this Form 10-K, we do not have long-term agreements
with any other third parties for the manufacture of commercial supplies of XENLETA, but we intend to enter into
additional agreements with third-party contract manufacturers for additional commercial supplies of XENLETA pending
potential regulatory approval.
XENLETA is a semi-synthetic organic compound of low molecular weight. The pleuromutilin core of the
molecule is produced by fermentation and is manufactured on a significant scale by various manufacturers. The second part
of the molecule is established from a readily accessible chiral starting material. The development stage production of
XENLETA was carried out at a significant scale and we believe, if required, the synthetic route to XENLETA is amenable
to further scale-up. The synthetic route does not require unusual, or specialized, equipment in the manufacturing process.
Therefore, if any of our current or future drug substance manufacturers were to become unavailable for any reason, we
believe there are a number of potential replacements, although delays may be incurred in identifying and qualifying such
replacements.
SIVEXTRO
In July 2020, we entered into a Sales Promotion and Distribution Agreement, with subsidiaries of Merck pursuant
to which a subsidiary of Merck will sell, and we have agreed to purchase, SIVEXTRO at specified prices. We will rely on a
subsidiary of Merck to supply SIVEXTRO to us, who in turn, relies on third party manufacturers for the production,
packaging, and serialization of SIVEXTRO for our distribution.
CONTEPO
Effective July 28, 2016, Zavante, Laboratorios ERN, S.A., or ERN, and Ercros, S.A., or Ercros entered into an
amended and restated three-way agreement (the “Three-Way Agreement”), which established the basis for related supply
agreements with ERN and Ercros in anticipation of FDA approval of fosfomycin disodium and succinic acid injection for
intravenous use filled, finished and packaged into containers for use by end users, or Product, in the United States.
Pursuant to the Three-Way Agreement, Zavante has the direct responsibility for the manufacture and supply of the
commercial Product in the United States.
Under the Three-Way Agreement, (i) ERN has agreed to provide Zavante with certain technical documentation, or
Technical Documentation, and data required for submission of an NDA or Abbreviated New Drug Application, or ANDA,
as applicable, for the Product , and other assistance in connection with the submission of an NDA or ANDA, pursuant to
the ERN Supply Agreement (as defined below); (ii) Ercros has agreed to provide Zavante with certain Technical
Documentation and the manufacture and supply of a blend of fosfomycin disodium and succinic acid, or API Mixture, for
the manufacture of the Product, pursuant to the terms of the Ercros Supply Agreement (as defined below); and (iii) Zavante
has agreed to obtain the commercial supply of the Product, under one or more separate agreements with third party
manufacturers. The rights and obligations of each of the parties are set forth in each of the ERN Supply Agreement and the
Ercros Supply Agreement.
In addition, pursuant to the Three-Way Agreement, Zavante is required to (i) contract with one or more third party
manufacturers to provide quantities of the Product required by Zavante for commercial sale in the United States,
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perform validation activities as required by the FDA, and obtain FDA approval of such third party manufacturer’s facilities
and quality systems; (ii) use commercially reasonable efforts to file an NDA within one year of its receipt of all Technical
Documentation for the NDA from ERN and Ercros; (iii) obtain and own all trademarks to be used for the Product in the
United States and (iv) bear the cost and manage all clinical trials necessary for obtaining FDA approval of the Product and
keep ERN and Ercros updated regarding the progress of such clinical trials.
The Three-Way-Agreement will continue in force and effect until the Ercros Supply Agreement and the ERN
Supply Agreement have both been terminated or expired in accordance with the respective terms therein, or if the Three-
Way Agreement is terminated upon mutual written agreement of all of the parties. The Three-Way Agreement contains,
among other provisions, customary provisions relating to legal compliance and publicity.
Effective July 28, 2016, Zavante and Ercros entered into a manufacturing and supply agreement (the “Ercros
Supply Agreement”) pursuant to the Three-Way Agreement. Under the Ercros Supply Agreement, Ercros has agreed,
pursuant to purchase orders entered into under the Ercros Supply Agreement, to manufacture (i) the exclusive supply of the
API Mixture for Zavante in support of filing an NDA or an ANDA, as applicable, and (ii) the commercial supply of
fosfomycin disodium and succinic acid injection for intravenous use in the United States. In addition, Ercros has agreed to
provide access to certain technical documentation as may be requested by Zavante in connection with the filing of an NDA.
The Ercros Supply Agreement has an initial ten-year term ending July 28, 2026 and will automatically renew after
the initial term for additional two-year terms unless either party gives notice of its intention to terminate the Ercros Supply
Agreement at least 18 months prior to the end of the then-current term. Either party may terminate the Ercros Supply
Agreement for the other party’s uncured material breach, in addition to other specified events, including with respect to
bankruptcy proceedings, governmental actions and legal proceedings, in each case subject to notice, cure periods and other
conditions set forth in the Ercros Supply Agreement.
The Ercros Supply Agreement contains customary supply terms, including requirements forecasting, purchase
orders, product specifications, price, payment terms, delivery mechanics and quality insurance. In addition, the Ercros
Supply Agreement contains, among other provisions, customary representations and warranties by the parties, a grant by
Ercros to Zavante of certain limited license rights to Ercros’ intellectual property in connection with Zavante’s performance
under the Ercros Supply Agreement, certain indemnification rights in favor of both parties and customary confidentiality
provisions.
Under the Ercros Supply Agreement, Zavante and Ercros have also entered into a quality agreement, pursuant to
which Ercros will conduct all quality control and release testing for the API Mixture produced under the Ercros Supply
Agreement.
Effective July 28, 2016, Zavante and ERN entered into an amended and restated pharmaceutical manufacturing
and exclusive supply agreement, as amended on December 1, 2016, March 1, 2017, May 1, 2017 and December 20, 2017,
pursuant to the Three-Way Agreement (the ERN Supply Agreement). Under the ERN Supply Agreement, each party is
required to use commercially reasonable efforts to complete certain development activities required for submission of an
NDA or an ANDA for fosfomycin sodium and succinic acid (the bulk formulation of CONTEPO). In addition, ERN has
agreed to provide to Zavante (i) certain technical documentation and data as required by the International Council for
Harmonisation of Technical Requirements for Pharmaceuticals for Human Use’s guidelines and the FDA for submission of
an NDA or an ANDA for the bulk formulation of CONTEPO, and (ii) certain regulatory support in connection with the
bulk formulation of CONTEPO sold or intended for commercial sale and human use.
Upon the first commercial sale of the bulk formulation of CONTEPO, Zavante is obligated to make a one-time
cash payment to ERN and subsequent quarterly payments thereafter based on the number of vials of the bulk formulation
of CONTEPO sold during each calendar quarter.
The ERN Supply Agreement has an initial ten-year term ending July 28, 2026 and will automatically renew after
the initial term for additional two-year terms unless either party gives notice of its intention to terminate the ERN Supply
Agreement at least 18 months prior to the end of the then-current term. Either party may terminate the ERN
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Supply Agreement by mutual written agreement and for the other party’s uncured material breach, in addition to other
specified events, including with respect to bankruptcy proceedings and governmental actions, in each case subject to
notice, cure periods and other conditions set forth in the ERN Supply Agreement.
The ERN Supply Agreement contains, among other provisions, customary representations and warranties by the
parties, a grant to each party by the other party of certain limited license rights to such other party’s intellectual property in
connection with the parties’ performance of the services under the ERN Supply Agreement, certain indemnification rights
in favor of both parties and customary confidentiality provisions.
On April 25, 2017, Zavante and Fisiopharma, S.r.l., or Fisiopharma, entered into a manufacturing and supply
agreement, as amended on May 8, 2017, or the Fisiopharma Supply Agreement. Under the Fisiopharma Supply
Agreement, Fisiopharma has agreed, pursuant to purchase orders entered into under the Fisiopharma Supply Agreement, to
manufacture and supply fosfomycin disodium for intravenous injection in bulk drug vials, or the Bulk Drug Vials, to
Zavante in support of filing an NDA or an ANDA, as applicable, and a specified percentage of Zavante’s commercial
requirements of Bulk Drug Vials for the United States.
The Fisiopharma Supply Agreement has an initial ten-year term ending April 25, 2027 and will automatically
renew after the initial term for additional one-year terms unless Zavante gives notice of its intention to terminate the
Fisiopharma Supply Agreement at least six months prior to the end of the then-current term. Either party may terminate the
Fisiopharma Supply Agreement for the other party’s uncured material breach or upon the occurrence of specified
bankruptcy events, and Zavante may terminate the Fisiopharma Supply Agreement upon the occurrence of other specified
events, including with respect to governmental actions and legal proceedings instituted against Fisiopharma, in each case
subject to notice, cure periods and other conditions set forth in the Fisiopharma Supply Agreement.
The Fisiopharma Supply Agreement contains customary supply terms, including requirements forecasting,
purchase orders, product specifications, price, payment terms, delivery mechanics and quality insurance. In addition, it
contains, among other provisions, customary representations and warranties by the parties, a grant to Fisiopharma of
certain limited license rights of Zavante’s intellectual property in connection with Fisiopharma’s performance of services
under the Fisiopharma Supply Agreement, certain indemnification rights in favor of both parties, limitations of liability and
customary confidentiality provisions.
Under the Fisiopharma Supply Agreement, Zavante and Fisiopharma have also entered into a quality control
agreement, pursuant to which Fisiopharma will conduct all quality control and release testing for the bulk drug vials
produced under the Fisiopharma Supply Agreement. Any default under the quality control agreement constitutes a default
under the Ercros Supply Agreement.
On December 26, 2017, Zavante entered into a commercial packaging agreement, or the PCI Packaging
Agreement, with AndersonBrecon Inc., doing business as PCI of Illinois, or PCI for the commercial packaging of
fosfomycin disodium for intravenous injection in bulk drug vials, or the Packaged Product. Under the PCI Packaging
Agreement, PCI had agreed to provide certain packaging services to Zavante, including labeling, serialization and final
packaging of the PCI Packaged Product. The PCI Packaging Agreement has been extended until December 26, 2021.
These five commercial supply agreements relating to CONTEPO are filed as exhibits to this Form 10-K. Other
than these five agreements, we do not have long-term agreements with any other third parties for the manufacture of
commercial supplies of CONTEPO, but we may enter into additional agreements with third-party contract manufacturers
for additional commercial supplies of CONTEPO pending potential regulatory approval.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense
competition and a strong emphasis on proprietary products. While we believe that our technologies, knowledge, experience
and scientific resources provide us with competitive advantages, we face potential competition from many different
sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic
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institutions, government agencies and private and public research institutions. Our products compete, and any product
candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that
may become available in the future.
Many of our competitors may have significantly greater financial resources and expertise in research and
development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing
approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific and
management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring
technologies complementary to, or necessary for, our programs. Smaller or early stage companies may also prove to be
significant competitors, particularly through collaborative arrangements with large and established companies.
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 more convenient or are less expensive
than any products that we may develop. Our competitors also may obtain marketing approvals for their products more
rapidly than we 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. XENLETA and SIVEXTRO are priced at a significant premium over
competitive generic products. This may make it difficult for us to replace existing therapies with XENLETA and
SIVEXTRO.
The key competitive factors affecting the success of XENLETA, SIVEXTRO and CONTEPO are likely to be their
efficacy, safety, convenience, price and the availability of coverage and reimbursement from government and other third-
party payors.
There are a variety of available therapies marketed for the treatment of CABP and ABSSSI. Currently, the
treatment of CABP is dominated by generic products. For hospitalized patients, combination therapy is frequently used.
Many currently approved drugs are well-established therapies and are widely accepted by physicians, patients and third-
party payors. 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; sNDA under review by FDA for oral treatment of CABP with action date in the second
quarter of 2021), 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 (Phase 2 clinical development by Wockhardt Ltd. for
CABP).
If approved, we expect CONTEPO will face competition from older commercially available antibiotics such as
ceftazidime-avibactam, meropenem-vaborbactam, tigecycline, plazomicin, from other product candidates currently in
development for the treatment of cUTI, including AP, such as imipenem-relebactam (under Phase 3 clinical development
by Merck), cefiderocol (owned by Shionogi and approved in 2019), tebipenem (under development by Spero), suilopenem
(under development by Iterum Therapeutics) and LYS228 (under development by Boston Pharma), as well as generically
available agents including carbapenems, aminoglycosides, and polymyxins.
Intellectual Property
Our success depends in large part on our ability to obtain and maintain proprietary protection for our approved
product, product candidates, technology and know-how, to operate without infringing the proprietary rights of others and to
prevent others from infringing our proprietary rights. We strive to protect the proprietary technology that we believe is
important to our business by, among other methods, seeking and maintaining patents, where available, that are intended to
cover our approved product, product candidates, compositions and formulations, their methods of use and processes for
their manufacture and any other inventions that are commercially important to the development of our business. We also
rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and
maintain our proprietary and competitive position.
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As of January 31, 2021, we owned 28 different families of patents and patent applications, including 26 families
directed to the various pleuromutilin derivatives as compositions of matter, processes for their manufacture, and their use in
pharmaceutical compositions and methods of treating disease. The remaining two families are directed to ß-lactamase
inhibitors and siderophore cephalosporin conjugates. Our patent portfolio includes 22 issued U.S. patents, 25 granted
European patents and 18 granted Japanese patents, as well as patents in other jurisdictions. We also have pending patent
applications in the United States, Europe, Japan and other countries and regions, including Asia, Australia, Eastern Europe,
and South America, including notably Canada, Brazil, China, Israel, India and Taiwan among others.
All of these patents and patent applications are assigned solely to us and were either originally filed by us or
originally filed by Sandoz and subsequently assigned to us.
As of January 31, 2021, our lead product, XENLETA, was protected by the following seven patent families:
● The first patent family includes patents and applications with claims directed to generic classes of
compounds that include XENLETA and/or their use in the treatment of microbial infections. This family
includes issued patents in the United States, Europe and Japan, as well as issued patents in 11 other
jurisdictions. The standard term for patents in this family expires in 2021.
● The second patent family includes patents and applications with claims that specifically recite XENLETA
and/or its use in the treatment of microbial infections. This family includes two issued patents in each of the
United States, Europe and Japan, as well as issued patents in 22 other jurisdictions and 4 pending patent
applications in other jurisdictions, including one divisional application in the United States. The standard
term for patents in this family expires in 2028. A patent term adjustment of 303 days has already been
obtained in the United States for one patent. A patent term extension for this patent has been filed extending
the term to 2033. A patent term extension application for the second United States patent has also been filed
extending the term of this patent to 2032.
● The third patent family includes patents and applications with claims directed to the processes for the
manufacture of XENLETA, crystalline intermediates useful in the processes, and the resulting crystalline
salts. This family includes 21 granted patents including issued patents in the United States, Europe and Japan
and 10 pending patent applications (one in Europe and 9 in other jurisdictions). The standard term for patents
in this family expires in 2031. A patent term extension application for the United States patent has been filed
extending the term to 2033.
● The fourth patent family includes patents and applications with claims directed to processes for the synthetic
manufacture of crystalline intermediates useful in the manufacture of XENLETA. This family includes
granted patents in Europe, the United States and Japan and granted 5 patents in other jurisdictions. The
standard term for patents in this family expires in 2031.
● The fifth patent family includes patents and applications with claims directed to pharmaceuticals and
treatments for Helicobacter infection, including pleuromutilins, such as XENLETA. This family includes
issued patents in the United States, Europe and one other jurisdiction. The standard term for patents in this
family expires in 2023. A patent term adjustment of 921 days has already been obtained for the U.S. patent.
● A further patent family is directed to pharmaceutical compositions of XENLETA and covers 3 granted
patents including an issued patent in Europe and 14 pending patent applications in various jurisdictions such
as the United States, Europe and Japan.
● The seventh patent family is directed to methods for purification of pleuromutilins and covers 2 granted
patents including an issued patent in Europe and 9 pending patent applications in various jurisdictions such
as the United States and Japan.
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Our second most advanced product candidate, BC-7013, is covered specifically in one patent family with patents
granted in the United States, Europe and Japan. In other jurisdictions ten patents of this family are granted. The standard
term for patents in this family expires in 2027.
The remaining 18 pleuromutilin patent families are directed to either molecules in the intellectual property
landscape surrounding our approved product and product candidates in development including specific medical use or
molecules which can be potentially further developed by us but have not yet been pursued. All patent applications in these
families have been filed at least in the United States and/or Europe, and most have been filed in other countries. The
majority of these patent applications have already resulted in granted patents.
Finally, we own one patent family directed to ß-lactamase inhibitor compounds and one patent application
directed to siderophore cephalosporin conjugates. Patent applications in the ß-lactamase inhibitors family have been filed
and granted in the United States and Europe. The standard term for patents in this family expires in 2030. An unpublished
priority patent application for the siderophore cephalosporin conjugates has recently been filed in Europe.
Zavante holds two issued United States patents (U.S. 9,345,717 and U.S. 10,086,006) directed to methods for
identifying dosing regimens that decrease the potential for on-therapy drug resistance. Zavante filed patent applications
directed to dosing regimens of Fosfomycin in renally impaired patients. Additionally, Zavante has filed a patent application
based on results from the ZEUS Study that relates to methods for treating patients with resistant bacterial infections and,
specifically, Gram-negative bacterial infections. However, these patents may not ensure exclusivity through the patent
terms and we may not be able to secure any additional patent protection. We plan to rely on regulatory protection afforded
to CONTEPO TM through QIDP designation, data exclusivity, and market exclusivity where available.
The term of individual patents depends upon the legal term for patents in the countries in which they are obtained.
In most countries, including the United States, the patent term is 20 years from the filing date of a non-provisional patent
application. In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which
compensates a patentee for administrative delays by the U.S. Patent and Trademark Office, or the USPTO, in examining
and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a
U.S. patent that covers a drug, biological product or medical device approved pursuant to a pre-market approval, or PMA,
may also be eligible for patent term extension when FDA approval is granted, provided that certain statutory and regulatory
requirements are met. The length of the patent term extension is related to the length of time the drug is under regulatory
review while the patent is in force. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-
Waxman Act, permits a patent term extension of up to five years beyond the expiration date set for the patent. Patent
extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only
one patent applicable to each regulatory review period may be granted an extension and only those claims reading on the
approved drug may be extended. Similar provisions are available in Europe and certain other foreign jurisdictions to extend
the term of a patent that covers an approved drug, provided that statutory and regulatory requirements are met. Thus, in the
future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to
apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials
for each drug and other factors. The expiration dates of our patents and patent applications referred to above are without
regard to potential patent term extension or other market exclusivity that may be available to us unless otherwise indicated
that a patent term extension application has been filed.
In addition to patents, we may rely, in some circumstances, on trade secrets to protect our technology and maintain
our competitive position. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology
and processes, in part, by confidentiality agreements with our employees, corporate and scientific collaborators,
consultants, scientific advisors, contractors and other third parties. We also seek to preserve the integrity and confidentiality
of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our
information technology systems.
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Government Regulation
Government authorities in the United States, at the federal, state and local level, and in other countries and
jurisdictions, including the European Union, extensively regulate, among other things, the research, development, testing,
manufacture, quality control, approval, pricing, reimbursement, packaging, storage, recordkeeping, labeling, advertising,
promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceutical
products. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions,
along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the
expenditure of substantial time and financial resources.
Review and Approval of Drugs in the United States
In the United States, the FDA reviews, approves and regulates drugs under the federal Food, Drug, and Cosmetic
Act, or FDCA, and associated implementing regulations. The failure to comply with the applicable U.S. requirements at
any time during the product development process, approval process or post-approval may result in delays to the conduct of
study, regulatory review and subject an applicant and/or sponsor to a variety of administrative or judicial sanctions.
An applicant seeking approval to market and distribute a new drug product in the United States must typically
undertake the following before a product candidate will be approved by the FDA:
● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the
FDA’s good laboratory practice, or GLP, regulations;
● submission to the FDA of an investigational new drug application, or IND, which must take effect before
human clinical trials may begin;
● approval by an independent institutional review board, or IRB, representing each clinical site before each
clinical trial may be initiated;
● performance of adequate and well-controlled human clinical trials in accordance with good clinical practices,
or GCP, to establish the safety and efficacy of the proposed drug product for each indication;
● preparation and submission to the FDA of a new drug application, or NDA, summarizing available data to
support the proposed approval of the new drug product for the proposed use;
● review of the product application by an FDA advisory committee, where appropriate or if applicable and as
may be requested by the FDA;
● satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which
the product, or components thereof, are produced to assess compliance with current Good Manufacturing
Practices, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to
preserve the product’s identity, strength, quality and purity;
● satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity
of the clinical data;
● payment of PDUFA fees and securing FDA approval of the NDA; and
● compliance with any post-approval requirements, including the potential requirement to implement a Risk
Evaluation and Mitigation Strategy, or REMS, where applicable, and the potential to conduct post-approval
studies required by the FDA.
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Preclinical Studies
Before an applicant begins testing a compound with potential therapeutic value in humans, the drug candidate
enters the preclinical testing stage. Preclinical studies include laboratory evaluation of the purity and stability of the
manufactured drug substance or active pharmaceutical ingredient and the formulated drug or drug product, as well as in
vitro and animal studies to assess the safety and activity of the drug for initial testing in humans and to establish a rationale
for therapeutic use. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP
regulations. The results of the preclinical tests, together with manufacturing information, analytical data, any available
clinical data or literature and plans for clinical studies, among other things, are submitted to the FDA as part of an IND.
Additional long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may
continue after the IND is submitted.
Companies usually must complete some long-term preclinical testing, such as animal tests of long term exposure
and reproductive adverse events, and must also develop additional information about the chemistry and physical
characteristics of the investigational product and finalize a process for manufacturing the product in commercial quantities
in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality
batches of the candidate product and, among other things, the manufacturer must develop methods for testing the identity,
strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested and
stability studies must be conducted to demonstrate that the candidate product does not undergo unacceptable deterioration
over its shelf life.
The IND and IRB Processes
An IND is an exemption from the FDCA that allows an unapproved drug to be shipped in interstate commerce for
use in an investigational clinical trial and a request for FDA authorization to administer an investigational drug to humans.
Such authorization must be secured prior to interstate shipment and administration of any new drug that is not the subject
of an approved NDA. In support of a request for an IND, applicants must submit a protocol for each clinical trial and any
subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, the results of the
preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans
for clinical trials, among other things, are submitted to the FDA as part of an IND. The FDA requires a 30-day waiting
period after the filing of each IND before clinical trials may begin. This waiting period is designed to allow the FDA to
review the IND to determine whether human research subjects will be exposed to unreasonable health risks. At any time
during this 30-day period, the FDA may raise concerns or questions about the conduct of the trials as outlined in the IND
and impose a clinical hold or partial clinical hold. In this case, the IND sponsor and the FDA must resolve any outstanding
concerns before clinical trials can begin.
Following commencement of a clinical trial under an IND, the FDA may also place a clinical hold or partial
clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical
investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the
clinical work requested under the IND. For example, a specific protocol or part of a protocol is not allowed to proceed,
while other protocols may do so. No more than 30 days after imposition of a clinical hold or partial clinical hold, the FDA
will provide the sponsor a written explanation of the basis for the hold. Following issuance of a clinical hold or partial
clinical hold, an investigation may only resume after the FDA has notified the sponsor that the investigation may proceed.
The FDA will base that determination on information provided by the sponsor correcting the deficiencies previously cited
or otherwise satisfying the FDA that the investigation can proceed.
A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign
clinical study is conducted under an IND, all FDA IND requirements must be met unless waived. When the foreign clinical
study is not conducted under an IND, the sponsor must ensure that the study complies with FDA regulatory requirements,
including GCP requirements, in order to use the study as support for an IND or application for marketing approval. The
FDA’s regulations are intended to help ensure the protection of human subjects enrolled in non-IND foreign clinical
studies, as well as the quality and integrity of the resulting data. They further help ensure that non-IND foreign studies are
conducted in a manner comparable to that required for IND studies.
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In addition to the foregoing IND requirements, an IRB representing each institution participating in the clinical
trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must
conduct continuing review and reapprove the study at least annually. The IRB must review and approve, among other
things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in
compliance with FDA regulations. An IRB can suspend or terminate approval of a clinical trial at its institution, or an
institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the
product candidate has been associated with unexpected serious harm to patients.
Additionally, some trials are overseen by an independent group of qualified experts organized by the trial sponsor,
known as a data safety monitoring board or committee, or DSMB. This group provides authorization as to whether or not a
trial may move forward at designated check points based on unblinded safety data from the study to which only the DSMB
has access. Suspension or termination of development during any phase of clinical trials may occur if it is determined that
the participants or patients are being exposed to an unacceptable health risk. Other reasons for suspension or termination
may be made by us based on evolving business objectives and/or competitive climate.
Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of
Health, or NIH, for public dissemination on its ClinicalTrials.gov website.
Human Clinical Studies in Support of an NDA
Clinical trials involve the administration of the investigational product to human subjects under the supervision of
qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all
research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are
conducted under written study protocols detailing, among other things, the inclusion and exclusion criteria, the objectives
of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated.
Human clinical trials are typically conducted in the following four sequential phases, which may overlap or be
combined:
● Phase 1: The drug is initially introduced into healthy human subjects or, in certain indications such as cancer,
patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism,
distribution, excretion and, if possible, to gain an early indication of its effectiveness and to determine
optimal dosage.
● Phase 2: The drug is administered to a limited patient population to identify possible adverse effects and
safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to
determine dosage tolerance and optimal dosage.
● Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed
clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the
efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and
to provide adequate information for the labeling of the product.
● Phase 4: Post-approval studies, which are conducted following initial approval, are typically conducted to
gain additional experience and data from treatment of patients in the intended therapeutic indication.
Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more
frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the
following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that
suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious
suspected adverse reaction over that listed in the protocol or investigator brochure. Phase 1, Phase 2 and Phase 3 clinical
trials may not be completed successfully within any specified period, or at all. The FDA will typically inspect one or more
clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.
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Concurrent with clinical trials, companies often complete additional animal studies and must also develop
additional information about the chemistry and physical characteristics of the drug as well as finalize a process for
manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process
must be capable of consistently producing quality batches of the drug candidate and, among other things, must develop
methods for testing the identity, strength, quality, purity, and potency of the final drug. Additionally, appropriate packaging
must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo
unacceptable deterioration over its shelf life.
Expanded Access to an Investigational Drug for Treatment Use
Expanded access, sometimes called “compassionate use”, is the use of investigational new drug products outside
of clinical trials to treat patients with serious or immediately life-threatening diseases or conditions when there are no
comparable or satisfactory alternative treatment options. The rules and regulations related to expanded access are intended
to improve access to investigational drugs for patients who may benefit from investigational therapies. FDA regulations
allow access to investigational drugs under an IND by the company or the treating physician for treatment purposes on a
case-by-case basis for: individual patients (single-patient IND applications for treatment in emergency settings and non-
emergency settings); intermediate-size patient populations; and larger populations for use of the drug under a treatment
protocol or Treatment IND Application.
When considering an IND application for expanded access to an investigational product with the purpose of
treating a patient or a group of patients, the sponsor and treating physicians or investigators will determine suitability when
all of the following criteria apply: patient(s) have a serious or immediately life-threatening disease or condition, and there
is no comparable or satisfactory alternative therapy to diagnose, monitor, or treat the disease or condition; the potential
patient benefit justifies the potential risks of the treatment and the potential risks are not unreasonable in the context or
condition to be treated; and the expanded use of the investigational drug for the requested treatment will not interfere
initiation, conduct, or completion of clinical investigations that could support marketing approval of the product or
otherwise compromise the potential development of the product.
There is no obligation for a sponsor to make its drug products available for expanded access; however, as required
by the 21st Century Cures Act, or Cures Act, passed in 2016, sponsors are required to make policies for evaluating and
responding to requests for expanded access for patients publicly available upon the earlier of initiation of a Phase 2 or
Phase 3 clinical trial, or 15 days after the investigational drug or biologic receives designation as a breakthrough therapy,
fast track product, or regenerative medicine advanced therapy.
On December 13, 2016, the 21st Century Cures Act established (and the 2017 Food and Drug Administration
Reauthorization Act later amended) a requirement that sponsors of one or more investigational drugs for the treatment of a
serious disease(s) or condition(s) make publicly available their policy for evaluating and responding to requests for
expanded access for individual patients. Although these requirements were rolled out over time, they have now come into
full effect. This provision requires drug and biologic companies to make publicly available their policies for expanded
access for individual patient access to products intended for serious diseases. Sponsors are required to make such policies
publicly available upon the earlier of initiation of a Phase 2 or Phase 3 study; or 15 days after the drug or biologic receives
designation as a breakthrough therapy, fast track product, or regenerative medicine advanced therapy.
In addition, on May 30, 2018, the Right to Try Act, was signed into law. The law, among other things, provides a
federal framework for certain patients to access certain investigational new drug products that have completed a Phase I
clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can
seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access
program. There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result
of the Right to Try Act, but the manufacturer must develop an internal policy and respond to patient requests according to
that policy.
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Special Protocol Assessment Agreements
A Special Protocol Assessment, or SPA, agreement is an agreement between a drug manufacturer and the FDA on
the design and size of studies and clinical trials that can be used for approval of a drug or biological product. The FDA’s
guidance on such agreements states that an agreement may not be changed by the manufacturer or the agency unless
through a written agreement of the two entities or if FDA determines a substantial scientific issue essential to determining
the safety or effectiveness of the drug. The protocols that are eligible for SPA agreements are: animal carcinogenicity
protocols, final product stability protocols and clinical protocols for Phase 3 trials whose data will form the primary basis
for an efficacy claim.
Specifically, under the FDCA, the FDA may meet with sponsors, provided certain conditions are met, for the
purpose of reaching a SPA agreement on the design and size of clinical trials intended to form the primary basis of an
efficacy claim in a marketing application. If a sponsor makes a reasonable written request to meet with the FDA for the
purpose of reaching agreement on the design and size of a clinical trial, then the FDA will meet with the sponsor. If an
agreement is reached, the FDA will reduce the agreement to writing and make it part of the administrative record. An
agreement may not be changed by the sponsor or FDA after the trial begins, except with the written agreement of the
sponsor and FDA, or if the director of the FDA reviewing division determines that “a substantial scientific issue essential
to determining the safety or effectiveness of the drug” was identified after the testing began. If a sponsor and the FDA meet
regarding the design and size of a clinical trial and the parties cannot agree that the trial design is adequate to meet the
goals of the sponsor, the FDA will clearly state the reasons for the disagreement in a letter to the sponsor.
Pediatric Studies
Under the Pediatric Research Equity Act of 2003, or PREA, a marketing application or supplement thereto must
contain data that are adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant
pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product
is safe and effective. Sponsors must also submit pediatric study plans prior to the assessment data. Those plans must
contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and
design, any deferral or waiver requests, and other information required by regulation. The applicant, the FDA, and the
FDA’s internal review committee must then review the information submitted, consult with each other, and agree upon a
final plan. The FDA or the applicant may request an amendment to the plan at any time.
The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric
data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements.
Additional requirements and procedures relating to deferral requests and requests for extension of deferrals are contained in
the Food and Drug Administration Safety and Innovation Act, or FDASIA. The FDA maintains a list of diseases that are
exempt from PREA requirements due to low prevalence of disease in the pediatric population. In 2017, with passage of the
FDA Reauthorization Act of 2017, or FDARA, Congress further modified these provisions. Previously, drugs that had
been granted orphan drug designation were exempt from the requirements of the Pediatric Research Equity Act. Under the
amended section 505B, beginning on August 18, 2020, the submission of a pediatric assessment, waiver or deferral will be
required for certain molecularly targeted cancer indications with the submission of an application or supplement to an
application.
Submission of an NDA to the FDA
Assuming successful completion of required clinical testing and other requirements, the results of the preclinical
and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and
proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the drug
product for one or more indications. Under federal law, the submission of most NDAs is subject to an application user fee,
which for federal fiscal year 2021 is $2,875,842 for an application requiring clinical data. The sponsor of an approved
NDA is also subject to an annual program fee, which for fiscal year 2021 is $336,432. Exceptions or waivers for these fees
exist for a small company (fewer than 500 employees, including employees and affiliates) satisfying certain requirements
and products with orphan drug designation for a particular indication are not subject to a fee provided there are no other
intended uses in the NDA.
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Following submission of an NDA, the FDA conducts a preliminary review of an NDA generally within 60
calendar days of its receipt and strives to inform the sponsor by the 74th day after the FDA’s receipt of the submission
whether the application is sufficiently complete to permit substantive review. The FDA may request additional information
rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information.
The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted
for filing, the FDA begins an in-depth substantive review. The FDA has agreed to certain performance goals in the review
process of NDAs. Standard review, representing most such applications are meant to be reviewed within ten months from
the date of filing. Priority review applications are meant to be reviewed within six months of filing. The review process and
the Prescription Drug User Fee Act goal date may be extended by the FDA for three additional months to consider new
information or clarification provided by the applicant to address an outstanding deficiency identified by the FDA following
the original submission.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is or will be
manufactured. These pre-approval inspections may cover all facilities associated with an NDA submission, including drug
component manufacturing (such as active pharmaceutical ingredients), finished drug product manufacturing, and control
testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and
facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within
required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to
assure compliance with GCP.
In addition, as a condition of approval, the FDA may require an applicant to develop a REMS. REMS use risk
minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential
risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product,
seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or
potential adverse events, and whether the product is a new molecular entity. REMS can include medication guides,
physician communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU may
include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain
circumstances, special monitoring, and the use of patient registries. The FDA may require a REMS before approval or
post-approval if it becomes aware of a serious risk associated with use of the product. The requirement for a REMS can
materially affect the potential market and profitability of a product.
The FDA may refer an application for a novel drug to an advisory committee or explain why such referral was not
made. Typically, an advisory committee is a panel of independent experts, including clinicians and other scientific experts,
that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what
conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such
recommendations carefully when making decisions relating to approval of a new drug product.
Expedited Review Programs
The FDA is authorized to expedite the review of NDAs in several ways. Under the Fast Track program, the
sponsor of a product candidate may request the FDA to designate the product for a specific indication as a Fast Track
product concurrent with or after the filing of the IND. Candidate products are eligible for Fast Track designation if they are
intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for
the condition. Fast Track designation applies to the combination of the product candidate and the specific indication for
which it is being studied. In addition to other benefits, such as the ability to have greater interactions with the FDA, the
FDA may initiate review of sections of a Fast Track application before the application is complete, a process known as
rolling review.
Any product candidate submitted to the FDA for marketing, including under a Fast Track program, may be
eligible for other types of FDA programs intended to expedite development and review, such as breakthrough therapy
designation, priority review and accelerated approval.
● Breakthrough therapy designation. To qualify for the breakthrough therapy program, product candidates
must be intended to treat a serious or life-threatening disease or condition and preliminary clinical evidence
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must indicate that such product candidates may demonstrate substantial improvement on one or more
clinically significant endpoints over existing therapies. The FDA will seek to ensure the sponsor of a
breakthrough therapy product candidate receives intensive guidance on an efficient drug development
program, intensive involvement of senior managers and experienced staff on a proactive, collaborative and
cross-disciplinary review and rolling review.
● Priority review. A product candidate is eligible for priority review if it treats a serious condition and, if
approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or
prevention compared to marketed products. FDA aims to complete its review of priority review applications
within six months as opposed to 10 months for standard review.
● Accelerated approval. Drug or biologic products studied for their safety and effectiveness in treating serious
or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may
receive accelerated approval. Accelerated approval means that a product candidate may be approved on the
basis of adequate and well controlled clinical trials establishing that the product candidate has an effect on a
surrogate endpoint that is reasonably likely to predict a clinical benefit, or on the basis of an effect on a
clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking
into account the severity, rarity and prevalence of the condition and the availability or lack of alternative
treatments. As a condition of approval, the FDA may require that a sponsor of a drug or biologic product
candidate receiving accelerated approval perform adequate and well controlled post-marketing clinical trials.
In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional
materials.
● Regenerative advanced therapy. With passage of the 21st Century Cures Act, or the Cures Act, in December
2016, Congress authorized the FDA to accelerate review and approval of products designated as regenerative
advanced therapies. A product is eligible for this designation if it is a regenerative medicine therapy that is
intended to treat, modify, reverse or cure a serious or life-threatening disease or condition and preliminary
clinical evidence indicates that the product candidate has the potential to address unmet medical needs for
such disease or condition. The benefits of a regenerative advanced therapy designation include early
interactions with the FDA to expedite development and review, benefits available to breakthrough therapies,
potential eligibility for priority review and accelerated approval based on surrogate or intermediate
endpoints.
None of these expedited programs change the standards for approval but they may help expedite the development or
approval process of product candidates.
Limited Population Antibacterial Drug Pathway
With passage of the CURES Act, Congress authorized FDA to approve an antibacterial or antifungal drug, alone
or in combination with one or more other drugs, as a “limited population drug”. To qualify for this approval pathway, the
drug must be intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs;
the standards for approval of drugs and biologics under the FDCA and PHSA must be satisfied; and FDA must receive a
written request from the sponsor to approve the drug as a limited population drug pursuant to this provision. The FDA’s
determination of safety and effectiveness for such a product must reflect the benefit-risk profile of such drug in the
intended limited population, taking into account the severity, rarity, or prevalence of the infection the drug is intended to
treat and the availability or lack of alternative treatment in such a limited population.
Any drug or biologic approved under this pathway must be labeled with the statement “Limited Population” in a
prominent manner and adjacent to the proprietary name of the drug or biological product. The prescribing information must
also state that the drug is indicated for use in a limited and specific population of patients and copies of all promotional
materials relating to the drug must be submitted to FDA at least 30 days prior to dissemination of the materials. If FDA
subsequently approves the drug for a broader indication, the agency may remove any post-marketing conditions, including
requirements with respect to labeling and review of promotional materials applicable to the
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product. Nothing in this pathway to approval of a limited population drug prevents sponsors of such products from seeking
designation or approval under other provisions of the FDCA, such as accelerated approval.
The FDA’s Decision on an NDA
On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the
inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter, or CRL. An
approval letter authorizes commercial marketing of the product with specific prescribing information for specific
indications. A CRL generally outlines the deficiencies in the submission and may require additional, sometimes substantial,
testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been
addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has
committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with
submission of this additional information, the FDA ultimately may decide that the application does not satisfy the
regulatory criteria for approval.
If the FDA approves a new product, it may limit the approved indications for use for the product, require that
contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including
Phase 4 clinical trials, be conducted to further assess the drug’s safety after approval, require testing and surveillance
programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or
other risk management mechanisms, including REMS, which can materially affect the potential market and profitability of
the product. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or
surveillance programs. After approval, many types of changes to the approved product, such as adding new indications,
manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and
approval.
Post-Approval Regulation
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation
by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling
and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most
changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review
and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at
which such products are manufactured, as well as new application fees for supplemental applications with or without
clinical data.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs
are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced
inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing
process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also
require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements
upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must
continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and
standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously
unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing
processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new
safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of
distribution or other restrictions under a REMS program. Other potential consequences include, among other things:
● restrictions on the marketing or manufacturing of the product, suspension of the approval, or complete
withdrawal of the product from the market or product recalls;
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● fines, warning letters or holds on post-approval clinical trials;
● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or
revocation of product license approvals;
● product seizure or detention, or refusal to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates the marketing, labeling, advertising and promotion of prescription drug products
placed on the market. This regulation includes, among other things, standards and regulations for direct-to-consumer
advertising, communications regarding unapproved uses, industry-sponsored scientific and educational activities, and
promotional activities involving the Internet and social media. Promotional claims about a drug’s safety or effectiveness are
prohibited before the drug is approved. After approval, a drug product generally may not be promoted for uses that are not
approved by the FDA, as reflected in the product’s prescribing information. In the United States, health care professionals
are generally permitted to prescribe drugs for such uses not described in the drug’s labeling, known as off-label uses,
because the FDA does not regulate the practice of medicine. However, FDA regulations impose rigorous restrictions on
manufacturers’ communications and prohibit the promotion of off-label uses. It may be permissible, under very specific,
narrow conditions, for a manufacturer to engage in non-promotional, non-misleading communication regarding off-label
information, such as distributing scientific or medical journal information.
If a company is found to have promoted off-label uses, it may become subject to adverse public relations and
administrative and judicial enforcement by the FDA, the Department of Justice, or the Office of the Inspector General of
the Department of Health and Human Services, as well as state authorities. This could subject a company to a range of
penalties that could have a significant commercial impact, including civil and criminal fines and agreements that materially
restrict the manner in which a company promotes or distributes drug products. The federal government has levied large
civil and criminal fines against companies for alleged improper promotion, and has also requested that companies enter
into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed.
In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing
Act, or PDMA, and its implementing regulations, as well as the Drug Supply Chain Security Act, or DSCA, which regulate
the distribution and tracing of prescription drug samples at the federal level, and set minimum standards for the regulation
of drug distributors by the states. The PDMA, its implementing regulations and state laws limit the distribution of
prescription pharmaceutical product samples and the DSCA imposes requirements to ensure accountability in distribution
and to identify and remove counterfeit and other illegitimate products from the market.
Section 505(b)(2) NDAs
NDAs for most new drug products are based on two full clinical studies which must contain substantial evidence
of the safety and efficacy of the proposed new product for the proposed use. These applications are submitted under
Section 505(b)(1) of the FDCA. The FDA is, however, authorized to approve an alternative type of NDA under
Section 505(b)(2) of the FDCA. This type of application allows the applicant to rely, in part, on the FDA’s previous
findings of safety and efficacy for a similar product, or published literature. Specifically, Section 505(b)(2) applies to
NDAs for a drug for which the investigations made to show whether or not the drug is safe for use and effective in use and
relied upon by the applicant for approval of the application “were not conducted by or for the applicant and for which the
applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted”.
Thus, Section 505(b)(2) authorizes the FDA to approve an NDA based on safety and effectiveness data that were
not developed by the applicant. NDAs filed under Section 505(b)(2) may provide an alternate and potentially more
expeditious pathway to FDA approval for new or improved formulations or new uses of previously approved products. If
the Section 505(b)(2) applicant can establish that reliance on the FDA’s previous approval is scientifically appropriate, the
applicant may eliminate the need to conduct certain preclinical or clinical studies of the new product. The FDA may
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also require companies to perform additional studies or measurements to support the change from the approved product.
The FDA may then approve the new drug candidate for all or some of the label indications for which the referenced
product has been approved, as well as for any new indication sought by the Section 505(b)(2) applicant.
Abbreviated New Drug Applications for Generic Drugs
In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress authorized the FDA to approve
generic drugs that are the same as drugs previously approved by the FDA under the NDA provisions of the statute. To
obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency.
In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously
conducted for a drug product previously approved under an NDA, known as the reference listed drug, or RLD.
Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the
RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug. At
the same time, the FDA must also determine that the generic drug is “bioequivalent” to the innovator drug. Under the
statute, a generic drug is bioequivalent to a RLD if “the rate and extent of absorption of the drug do not show a significant
difference from the rate and extent of absorption of the listed drug”.
Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the
RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations”, also referred to as the
“Orange Book”. Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the
RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of
therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the
prescribing physician or patient.
Under the Hatch-Waxman Amendments, the FDA may not approve an ANDA until any applicable period of non-
patent exclusivity for the RLD has expired. The FDCA provides a period of five years of non-patent data exclusivity for a
new drug containing a new chemical entity. For the purposes of this provision, a new chemical entity, or NCE, is a drug
that contains no active moiety that has previously been approved by the FDA in any other NDA. An active moiety is the
molecule or ion responsible for the physiological or pharmacological action of the drug substance. In cases where such
exclusivity has been granted, an ANDA may not be filed with the FDA until the expiration of five years unless the
submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four
years following the original product approval.
The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new
clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant and
are essential to the approval of the application. This three-year exclusivity period often protects changes to a previously
approved drug product, such as a new dosage form, route of administration, combination or indication. Three-year
exclusivity would be available for a drug product that contains a previously approved active moiety, provided the statutory
requirement for a new clinical investigation is satisfied. Unlike five-year NCE exclusivity, an award of three-year
exclusivity does not block the FDA from accepting ANDAs seeking approval for generic versions of the drug as of the date
of approval of the original drug product. The FDA typically makes decisions about awards of data exclusivity shortly
before a product is approved.
Hatch-Waxman Patent Certification and the 30-Month Stay
Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent
with claims that cover the applicant’s product or an approved method of using the product. Each of the patents listed by the
NDA sponsor is published in the Orange Book. When an ANDA applicant files its application with the FDA, the applicant
is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for
patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the
Section 505(b)(2) applicant is relying on studies conducted for an already approved product, the applicant is required to
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certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an
ANDA applicant would.
Specifically, the applicant must certify with respect to each patent that:
● the required patent information has not been filed;
● the listed patent has expired;
● the listed patent has not expired, but will expire on a particular date and approval is sought after patent
expiration; or
● the listed patent is invalid, unenforceable or will not be infringed by the new product.
A certification that the new product will not infringe the already approved product’s listed patents or that such
patents are invalid or unenforceable is called a Paragraph IV certification. If the applicant does not challenge the listed
patents or indicates that it is not seeking approval of a patented method of use, the ANDA application will not be approved
until all the listed patents claiming the referenced product have expired (other than method of use patents involving
indications for which the ANDA applicant is not seeking approval).
If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice
of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA.
The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV
certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification
automatically prevents the FDA from approving the ANDA until the earlier of 30 months after the receipt of the
Paragraph IV notice, expiration of the patent, or a decision in the infringement case that is favorable to the ANDA
applicant.
To the extent that the Section 505(b)(2) applicant is relying on studies conducted for an already approved product,
the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to
the same extent that an ANDA applicant would. As a result, approval of a Section 505(b)(2) NDA can be stalled until all
the listed patents claiming the referenced product have expired, 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, and, in the
case of a Paragraph IV certification and subsequent patent infringement suit, until the earlier of 30 months, settlement of
the lawsuit or a decision in the infringement case that is favorable to the Section 505(b)(2) applicant.
Pediatric Exclusivity
Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States and, if granted, provides for
the attachment of an additional six months of marketing protection to the term of any existing patent or non-patent
regulatory exclusivity, including orphan exclusivity. This six-month exclusivity may be granted if an NDA sponsor submits
pediatric data that fairly respond to a written request from the FDA for such data. The data does not need to show the
product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the
FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted
by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection
cover the product are extended by six months. This is not a patent term extension, but it effectively extends the regulatory
period during which the FDA cannot approve another application.
GAIN Exclusivity for Antibiotics
In 2012, Congress passed legislation known as the Generating Antibiotic Incentives Now Act, or GAIN Act. This
legislation is designed to encourage the development of antibacterial and antifungal drug products that treat
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pathogens that cause serious and life-threatening infections. To that end, the law grants an additional five years of
exclusivity upon the approval of an NDA for a drug product designated by FDA as a QIDP. Thus, for a QIDP, the periods
of five-year new chemical entity exclusivity, three-year new clinical investigation exclusivity, and seven-year orphan drug
exclusivity, would become ten years, eight years, and twelve years, respectively.
A QIDP is defined in the GAIN Act to mean “an antibacterial or antifungal drug for human use intended to treat
serious or life-threatening infections, including those caused by (1) an antibacterial or antifungal resistant pathogen,
including novel or emerging infectious pathogens” or (2) certain “qualifying pathogens”. A “qualifying pathogen” is a
pathogen that has the potential to pose a serious threat to public health (such as resistant Gram-positive pathogens, multi-
drug resistant Gram-negative bacteria, multi-drug resistant tuberculosis, and C. difficile) and that is included in a list
established and maintained by FDA. A drug sponsor may request the FDA to designate its product as a QIDP any time
before the submission of an NDA. The FDA must make a QIDP determination within 60 days of the designation request. A
product designated as a QIDP will be granted priority review by the FDA and can qualify for “fast track” status.
The additional five years of exclusivity under the GAIN Act for drug products designated by the FDA as QIDPs
applies only to a drug that is first approved on or after July 9, 2012. Additionally, the five year exclusivity extension does
not apply to: a supplement to an application under FDCA Section 505(b) for any QIDP for which an extension is in effect
or has expired; a subsequent application filed with respect to a product approved by the FDA for a change that results in a
new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength; or a
product that does not meet the definition of a QIDP under Section 505(g) based upon its approved uses. The FDA has
designated IV fosfomycin, and each of the IV and oral formulations of XENLETA as a QIDP and also granted fast track
designations.
Patent Term Restoration and Extension
A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-
Waxman Act, which permits a patent restoration of up to five years for patent term lost during product development and the
FDA regulatory review. The restoration period granted on a patent covering a product is typically one-half the time
between the effective date of the IND and the submission date of an application, plus the time between the submission date
of an application and the ultimate approval date. Patent term restoration cannot be used to extend the remaining term of a
patent past a total of 14 years from the product’s approval date. Only one patent applicable to an approved drug product is
eligible for the extension, and the application for the extension must be submitted prior to the expiration of the patent in
question. A patent that covers multiple products for which approval is sought can only be extended in connection with one
of the approvals. The United States Patent and Trademark Offices reviews and approves the application for any patent term
extension or restoration in consultation with the FDA.
Regulation Outside the United States
In order to market any product outside of the United States, a company must also comply with numerous and
varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing,
among other things, clinical trials, marketing authorization, commercial sales and distribution of drug products. Although
FDA approval for XENLETA has been obtained, we are required to obtain the necessary approvals by the comparable
foreign regulatory authorities before we can commence clinical trials or marketing of the product in those countries or
jurisdictions. The approval process ultimately varies between countries and jurisdictions and can involve additional product
testing and additional administrative review periods. The time required to obtain approval in other countries and
jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one
country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory
approval in one country or jurisdiction may negatively impact the regulatory process in others.
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Regulation and Marketing Authorization in the European Union
The process governing approval of medicinal products in the European Union follows essentially the same lines as
in the United States and, likewise, generally involves satisfactorily completing each of the following:
● preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the
applicable E.U. Good Laboratory Practice regulations;
● submission to the relevant national authorities of a clinical trial application, or CTA, which must be approved
before human clinical trials may begin;
● performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product
for each proposed indication;
● submission to the relevant competent authorities of a marketing authorization application, or MAA, which
includes the data supporting safety and efficacy as well as detailed information on the manufacture and
composition of the product in clinical development and proposed labelling;
● satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or
facilities, including those of third parties, at which the product is produced to assess compliance with strictly
enforced cGMP;
● potential audits of the non-clinical and clinical trial sites that generated the data in support of the MAA; and
● review and approval by the relevant competent authority of the MAA before any commercial marketing, sale
or shipment of the product.
Preclinical Studies
Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies
to evaluate toxicity in animal studies, in order to assess the potential safety and efficacy of the product. The conduct of the
preclinical tests and formulation of the compounds for testing must comply with the relevant E.U. regulations and
requirements. The results of the preclinical tests, together with relevant manufacturing information and analytical data, are
submitted as part of the CTA.
Clinical Trial Approval
Requirements for the conduct of clinical trials in the European Union including Good Clinical Practice, or GCP,
are set forth in the Clinical Trials Directive 2001/20/EC and the GCP Directive 2005/28/EC. Pursuant to
Directive 2001/20/EC and Directive 2005/28/EC, as amended, a system for the approval of clinical trials in the European
Union has been implemented through national legislation of the E.U. member states. Under this system, approval must be
obtained from the competent national authority of each E.U. member state in which a study is planned to be conducted. To
this end, a CTA is submitted, which must be supported by an investigational medicinal product dossier, or IMPD, and
further supporting information prescribed by Directive 2001/20/EC and Directive 2005/28/EC and other applicable
guidance documents. Furthermore, a clinical trial may only be started after a competent ethics committee has issued a
favorable opinion on the clinical trial application in that country.
In April 2014, the E.U. passed the new Clinical Trials Regulation, (EU) No 536/2014, which will replace the
current Clinical Trials Directive 2001/20/EC. To ensure that the rules for clinical trials are identical throughout the
European Union, the new E.U. clinical trials legislation was passed as a regulation that is directly applicable in all E.U.
member states. All clinical trials performed in the European Union are required to be conducted in accordance with the
Clinical Trials Directive 2001/20/EC until the new Clinical Trials Regulation (EU) No 536/2014 becomes applicable.
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The new Clinical Trials Regulation aims to simplify and streamline the approval of clinical trial in the European
Union. The main characteristics of the regulation include:
● a streamlined application procedure via a single entry point, the E.U. portal;
● a single set of documents to be prepared and submitted for the application as well as simplified reporting
procedures that will spare sponsors from submitting broadly identical information separately to various
bodies and different member states;
● a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts.
Part I is assessed jointly by all member states concerned. Part II is assessed separately by each member state
concerned;
● strictly defined deadlines for the assessment of clinical trial applications; and
● the involvement of the ethics committees in the assessment procedure in accordance with the national law of
the member state concerned but within the overall timelines defined by the Clinical Trials Regulation.
The conduct of all clinical trials performed in the E.U. will continue to be bound by currently applicable
provisions until the new Clinical Trials Regulation becomes applicable. The extent to which on-going clinical trials will be
governed by the Clinical Trials Regulation will depend on when the Clinical Trials Regulation becomes applicable and on
the duration of the individual clinical trial. If a clinical trial continues for more than three years from the day on which the
Clinical Trials Regulation becomes applicable the Clinical Trials Regulation will at that time begin to apply to the clinical
trial. In January 2020, the website of the European Commission reported that the implementation of the new Clinical Trials
Regulation was dependent on the development of a fully functional clinical trials portal and database, which would be
confirmed by an independent audit which was conducted in December 2020, and that the new legislation would come into
effect six months after the European Commission publishes a notice of this confirmation. The Clinical Trials Regulation
becomes applicable six months after the European Commission publishes notice of this confirmation and has published an
expected system “go live” in December 2021.
As in the United States, similar requirements for posting clinical trial information are present in the European
Union (EudraCT) website: https://eudract.ema.europa.eu/ and other countries.
Marketing Authorization
Authorization to market a product in the member states of the European Union proceeds under one of four
procedures: a centralized authorization procedure, a mutual recognition procedure, a decentralized procedure or a national
procedure.
Centralized Authorization Procedure
The centralized procedure enables applicants to obtain a marketing authorization that is valid in all E.U. member
states based on a single application. Certain medicinal products, including products developed by means of
biotechnological processes must undergo the centralized authorization procedure for marketing authorization, which, if
granted by the European Commission, is automatically valid in all 28 E.U. member states. The EMA and the European
Commission administer this centralized authorization procedure pursuant to Regulation (EC) No 726/2004.
Pursuant to Regulation (EC) No 726/2004, this procedure is mandatory for:
● medicinal products developed by means of one of the following biotechnological processes:
● recombinant DNA technology;
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● controlled expression of genes coding for biologically active proteins in prokaryotes and eukaryotes
including transformed mammalian cells; and
● hybridoma and monoclonal antibody methods;
● advanced therapy medicinal products as defined in Article 2 of Regulation (EC) No 1394/2007 on advanced
therapy medicinal products;
● medicinal products for human use containing a new active substance that, on the date of effectiveness of this
regulation, was not authorized in the European Union, and for which the therapeutic indication is the
treatment of any of the following diseases:
● acquired immune deficiency syndrome;
● cancer;
● neurodegenerative disorder;
● diabetes;
● auto-immune diseases and other immune dysfunctions; and
● viral diseases; and
● medicinal products that are designated as orphan medicinal products pursuant to Regulation (EC)
No 141/2000.
The centralized authorization procedure is optional for other medicinal products if they contain a new active
substance or if the applicant shows that the medicinal product concerned constitutes a significant therapeutic, scientific or
technical innovation or that the granting of authorization is in the interest of patients in the European Union.
Administrative Procedure
Under the centralized authorization procedure, the EMA’s Committee for Medicinal Products for Human Use, or
CHMP serves as the scientific committee that renders opinions about the safety, efficacy and quality of medicinal products
for human use on behalf of the EMA. The CHMP is composed of experts nominated by each member state’s national
authority for medicinal products, with one of them appointed to act as Rapporteur for the co-ordination of the evaluation
with the possible assistance of a further member of the Committee acting as a Co-Rapporteur. After approval, the
Rapporteur(s) continue to monitor the product throughout its life cycle. The CHMP has 210 days, to adopt an opinion as to
whether a marketing authorization should be granted. The process usually takes longer in case additional information is
requested, which triggers clock-stops in the procedural timelines. The process is complex and involves extensive
consultation with the regulatory authorities of member states and a number of experts. When an application is submitted
for a marketing authorization in respect of a drug that is of major interest from the point of view of public health and in
particular from the viewpoint of therapeutic innovation, the applicant may pursuant to Article 14(9) Regulation (EC)
No 726/2004 request an accelerated assessment procedure. If the CHMP accepts such request, the time-limit of 210 days
will be reduced to 150 days but it is possible that the CHMP can revert to the standard time-limit for the centralized
procedure if it considers that it is no longer appropriate to conduct an accelerated assessment. Once the procedure is
completed, a European Public Assessment Report, or EPAR, is produced. If the opinion is negative, information is given as
to the grounds on which this conclusion was reached. After the adoption of the CHMP opinion, a decision on the MAA
must be adopted by the European Commission, after consulting the E.U. member states, which in total can take more than
60 days.
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Conditional Approval
In specific circumstances, E.U. legislation (Regulation (EC) No 726/2004 and Regulation (EC) No 507/2006 on
Conditional Marketing Authorizations for Medicinal Products for Human Use) enables applicants to obtain a conditional
marketing authorization prior to obtaining the comprehensive clinical data required for an application for a full marketing
authorization. Such conditional approvals may be granted for product candidates (including medicines designated as
orphan medicinal products), if (1) the risk-benefit balance of the product candidate is positive, (2) it is likely that the
applicant will be in a position to provide the required comprehensive clinical trial data, (3) the product fulfills unmet
medical needs and (4) the benefit to public health of the immediate availability on the market of the medicinal product
concerned outweighs the risk inherent in the fact that additional data are still required. A conditional marketing
authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations
with respect to the completion of ongoing or new studies, and with respect to the collection of pharmacovigilance data.
Conditional marketing authorizations are valid for one year, and may be renewed annually, if the risk-benefit balance
remains positive, and after an assessment of the need for additional or modified conditions and/or specific obligations. The
timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications
for a conditional marketing authorization.
Marketing Authorization Under Exceptional Circumstances
Under Regulation (EC) No 726/2004, products for which the applicant can demonstrate that comprehensive data
(in line with the requirements laid down in Annex I of Directive 2001/83/EC, as amended) cannot be provided (due to
specific reasons foreseen in the legislation) might be eligible for marketing authorization under exceptional circumstances.
This type of authorization is reviewed annually to reassess the risk-benefit balance. The fulfillment of any specific
procedures/obligations imposed as part of the marketing authorization under exceptional circumstances is aimed at the
provision of information on the safe and effective use of the product and will normally not lead to the completion of a full
dossier/approval.
Market Authorizations Granted by Authorities of E.U. Member States
In general, if the centralized procedure is not followed, there are three alternative procedures to obtain a marketing
authorization in (one or several) E.U. member states as prescribed in Directive 2001/83/EC:
● The decentralized procedure allows applicants to file identical applications to several E.U. member states and
receive simultaneous national approvals based on the recognition by E.U. member states of an assessment by
a reference member state.
● The national procedure is only available for products intended to be authorized in a single E.U. member state.
● A mutual recognition procedure similar to the decentralized procedure is available when a marketing
authorization has already been obtained in at least one E.U. member state.
A marketing authorization may be granted only to an applicant established in the European Union.
Pediatric Studies
Prior to obtaining a marketing authorization in the E.U., applicants have to demonstrate compliance with all
measures included in an EMA-approved Pediatric Investigation Plan, or PIP, covering all subsets of the pediatric
population, unless the EMA has granted a product-specific waiver, a class waiver, or a deferral for one or more of the
measures included in the PIP. The respective requirements for all marketing authorization procedures are set forth in
Regulation (EC) No 1901/2006, which is referred to as the Pediatric Regulation. This requirement also applies when a
company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already
authorized. The Pediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company
to delay development of the medicine in children until there is enough information to demonstrate its
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effectiveness and safety in adults. The PDCO may also grant waivers when development of a medicine in children is not
needed or is not appropriate, such as for diseases that only affect the elderly population.
Before a marketing authorization application can be filed, or an existing marketing authorization can be amended,
the EMA determines that companies actually comply with the agreed studies and measures listed in each relevant PIP.
Period of Authorization and Renewals
A marketing authorization, other than a conditional marketing authorization, is initially valid for five years and the
marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the
EMA or by the competent authority of the authorizing member state. To this end, the marketing authorization holder must
provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and
efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the
marketing authorization ceases to be valid. Once renewed, the marketing authorization is valid for an unlimited period,
unless the European Commission or the competent authority decides, on justified grounds relating to pharmacovigilance, to
proceed with one additional five-year renewal. Any authorization which is not followed by the actual placing of the drug
on the E.U. market (in case of centralized procedure) or on the market of the authorizing member state within three years
after authorization ceases to be valid (the so-called sunset clause).
Regulatory Data Protection
European Union legislation also provides for a system of regulatory data and market exclusivity. According to
Article 14(11) of Regulation (EC) No 726/2004, as amended, and Article 10(1) of Directive 2001/83/EC, as amended, upon
receiving marketing authorization, new chemical entities approved on the basis of complete independent data package
benefit from eight years of data exclusivity and an additional two years of market exclusivity. Data exclusivity prevents
regulatory authorities in the European Union from referencing the innovator’s data to assess a generic (abbreviated)
application. During the additional two-year period of market exclusivity, a generic marketing authorization application can
be submitted, and the innovator’s data may be referenced, but no generic medicinal product can be marketed until the
expiration of the market exclusivity. The overall ten-year period will be extended to a maximum of eleven years if, during
the first eight years of those ten years, the marketing authorization holder, or MAH, obtains an authorization for one or
more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a
significant clinical benefit in comparison with existing therapies. Even if a compound is considered to be a new chemical
entity and the innovator is able to gain the period of data exclusivity, another company nevertheless could also market
another version of the drug if such company obtained marketing authorization based on an MAA with a complete
independent data package of pharmaceutical test, preclinical tests and clinical trials.
Transparency
There is an increasing trend in the E.U. towards greater transparency and, while the manufacturing or quality
information in marketing authorization dossiers is currently generally protected as confidential information, the EMA and
national regulatory authorities are now liable to disclose much of the non-clinical and clinical information, including the
full clinical study reports, in response to freedom of information requests after the marketing authorization has been
granted. In October 2014, the EMA adopted a policy under which clinical study reports would be posted on the agency’s
website following the grant, denial or withdrawal of a marketing authorization application, subject to procedures for
limited redactions and protection against unfair commercial use. Additional transparency provisions are contained in the
new Clinical Trials Regulation (EU) No 536/2014 that will take effect in May 2016 at the earliest.
Regulatory Requirements After a Marketing Authorization has been Obtained
If we obtain authorization for a medicinal product in the European Union, we will be required to comply with a
range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products:
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Pharmacovigilance and Other Requirements
We will, for example, have to comply with the E.U.’s stringent pharmacovigilance or safety reporting rules,
pursuant to which post-authorization studies and additional monitoring obligations can be imposed. E.U. regulators may
conduct inspections to verify our compliance with applicable requirements, and we will have to continue to expend time,
money and effort to remain compliant. Non-compliance with E.U. 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 in the European Union. Similarly, failure to comply with the European Union’s
requirements regarding the protection of individual personal data can also lead to significant penalties and sanctions.
Individual E.U. member states may also impose various sanctions and penalties in case we do not comply with locally
applicable requirements.
Manufacturing
The manufacturing of authorized drugs, for which a separate manufacturer’s license is mandatory, must be
conducted in strict compliance with the EMA’s GMP requirements and comparable requirements of other regulatory bodies
in the European Union, which mandate the methods, facilities and controls used in manufacturing, processing and packing
of drugs to assure their safety and identity. The EMA enforces its GMP requirements through mandatory registration of
facilities and inspections of those facilities. The EMA may have a coordinating role for these inspections while the
responsibility for carrying them out rests with the member states competent authority under whose responsibility the
manufacturer falls. Failure to comply with these requirements could interrupt supply and result in delays, unanticipated
costs and lost revenues, and could subject the applicant to potential legal or regulatory action, including but not limited to
warning letters, suspension of manufacturing, seizure of product, injunctive action or possible civil and criminal penalties.
Marketing and Promotion
The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education
and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European
Union under Directive 2001/83EC, as amended. The applicable regulations aim to ensure that information provided by
holders of marketing authorizations regarding their products is truthful, balanced and accurately reflects the safety and
efficacy claims authorized by the EMA or by the competent authority of the authorizing member state. Failure to comply
with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and
criminal penalties.
Patent Term Extension
To compensate the patentee for delays in obtaining a marketing authorization for a patented product, a
supplementary certificate, or SPC, may be granted extending the exclusivity period for that specific product by up to five
years. Applications for SPCs must be made to the relevant patent office in each E.U. member state and the granted
certificates are valid only in the member state of grant. An application has to be made by the patent owner within six
months of the first marketing authorization being granted in the European Union (assuming the patent in question has not
expired, lapsed or been revoked) or within six months of the grant of the patent (if the marketing authorization is granted
first). In the context of SPCs, the term “product” means the active ingredient or combination of active ingredients for a
medicinal product and the term “patent” means a patent protecting such a product or a new manufacturing process or
application for it. The duration of an SPC is calculated as the difference between the patent’s filing date and the date of the
first marketing authorization, minus five years, subject to a maximum term of five years.
A six-month pediatric extension of an SPC may be obtained where the patentee has carried out an agreed pediatric
investigation plan, the authorized product information includes information on the results of the studies and the product is
authorized in all member states of the European Union.
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Brexit and the Regulatory Framework in the United Kingdom
On June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the E.U., commonly referred to
as Brexit. Following protracted negotiations, the United Kingdom left the E.U. on January 31, 2020. Under the withdrawal
agreement, there is a transitional period until December 31, 2020 (extendable by up to two years). On December 24, 2020,
the United Kingdom and the European Union entered into a Trade and Cooperation Agreement. The agreement sets out
certain procedures for approval and recognition of medical products in each jurisdiction. 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 E.U.
directives and regulations, Brexit could materially impact the future regulatory regime which applies to products and the
approval of product candidates in the U.K., as the U.K. legislation now has the potential to diverge from E.U. legislation. It
remains to be seen how Brexit will impact regulatory requirements for product candidates and products in the U.K. in the
long-term. The MHRA has recently published detailed guidance for industry and organizations to follow from January 1,
2021 now the transition period is over, which will be updated as the U.K.’s regulatory position on medicinal products
evolves over time.
Furthermore, while the Data Protection Act of 2018 in the United Kingdom that “implements” and complements
the E.U. General Data Protection Regulation, or GDPR, is now effective in the United Kingdom, it is still unclear whether
transfer of data from the EEA to the United Kingdom will remain lawful under GDPR. The Trade and Cooperation
Agreement provides for a transitional period during which the United Kingdom will be treated like an E.U. Member State
in relation to processing and transfers of personal data for four months from January 1, 2021. This may be extended by two
further months. After such period, the United Kingdom will be a “third country” under the GDPR unless the European
Commission adopts an adequacy decision in respect of transfers of personal data to the United Kingdom. The United
Kingdom has already determined that it considers all of the European Union and EEA member states to be adequate for the
purposes of data protection, ensuring that data flows from the United Kingdom to the European Union and EEA remain
unaffected. We may, however, incur liabilities, expenses, costs, and other operational losses under GDPR and applicable
E.U. Member States and the United Kingdom privacy laws in connection with any measures we take to comply with them.
General Data Protection Regulation
The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the E.U.,
including personal health data, is subject to the E.U. General Data Protection Regulation, or the GDPR, which became
effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that
process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of
the individuals to whom the personal data relates, providing information to individuals regarding data processing activities,
implementing safeguards to protect the security and confidentiality of personal data, providing notification of data
breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the
transfer of personal data to countries outside the E.U., including the U.S., and permits data protection authorities to impose
large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues,
whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge
complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from
violations of the GDPR. Compliance with the GDPR will be a rigorous and time-intensive process that may increase the
cost of doing business or require companies to change their business practices to ensure full compliance.
Pharmaceutical Coverage, Pricing and Reimbursement
In the United States and markets in other countries, patients who are prescribed treatments for their conditions and
providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated
healthcare costs. Significant uncertainty exists as to the coverage and reimbursement status of products approved by the
FDA and other government authorities. Thus, even if a product candidate is approved, sales of the product will depend, in
part, on the extent to which third-party payors, including government health programs in the United States such as
Medicare and Medicaid, commercial health insurers and managed care organizations, provide
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coverage, and establish adequate reimbursement levels for, the product. The process for determining whether a payor will
provide coverage for a product may be separate from the process for setting the price or reimbursement rate that the payor
will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices charged,
examining the medical necessity, and reviewing the cost-effectiveness of medical products and services and imposing
controls to manage costs. Third-party payors may limit coverage to specific products on an approved list, also known as a
formulary, which might not include all of the approved products for a particular indication.
To secure coverage and reimbursement for any product that might be approved for sale, a company may need to
conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the
product, in addition to the costs required to obtain FDA or other comparable marketing approvals. Nonetheless, product
candidates may not be considered medically necessary or cost effective. A decision by a third-party payor not to cover a
product candidate could reduce physician utilization once the product is approved and have a material adverse effect on
sales, results of operations and financial condition. Additionally, a payor’s decision to provide coverage for a product does
not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage
for a drug product does not assure that other payors will also provide coverage and reimbursement for the product, and the
level of coverage and reimbursement can differ significantly from payor to payor.
The containment of healthcare costs also has become a priority of federal, state and foreign governments and the
prices of drugs have been a focus in this effort. Governments have shown significant interest in implementing cost-
containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic
products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in
jurisdictions with existing controls and measures, could further limit a company’s revenue generated from the sale of any
approved products. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable
coverage and reimbursement status is attained for one or more products for which a company or its collaborators receive
marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Outside the United States, ensuring adequate coverage and payment for a product also involves challenges.
Pricing of prescription pharmaceuticals is subject to governmental control in many countries. Pricing negotiations with
governmental authorities can extend well beyond the receipt of regulatory marketing approval for a product and may
require a clinical trial that compares the cost effectiveness of a product to other available therapies. The conduct of such a
clinical trial could be expensive and result in delays in commercialization.
In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries
provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the
completion of additional studies that compare the cost-effectiveness of a particular drug candidate to currently available
therapies or so called health technology assessments, in order to obtain reimbursement or pricing approval. For example,
the European Union provides options for its member states to restrict the range of products for which their national health
insurance systems provide reimbursement and to control the prices of medicinal products for human use. E.U. European
Union member states may approve a specific price for a product or it may instead adopt a system of direct or indirect
controls on the profitability of the company placing the product on the market. Other member states allow companies to fix
their own prices for products, but monitor and control prescription volumes and issue guidance to physicians to limit
prescriptions. Recently, many countries in the European Union have increased the amount of discounts required on
pharmaceuticals and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light
of the severe fiscal and debt crises experienced by many countries in the European Union. The downward pressure on
health care costs in general, particularly prescription drugs, has become intense. As a result, increasingly high barriers are
being erected to the entry of new products. 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 trade, i.e., arbitrage between low-priced and high-priced member
states, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement
limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if
approved in those countries.
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Healthcare Law and Regulation
Healthcare providers and third-party payors play a primary role in the recommendation and prescription of drug
products that are granted marketing approval. Arrangements with providers, consultants, third party payors and customers
are subject to broadly applicable fraud and abuse, anti-kickback, false claims laws, reporting of payments to physicians and
teaching physicians and patient privacy laws and regulations and other healthcare laws and regulations that may constrain
business and/or financial arrangements. Restrictions under applicable federal and state healthcare laws and regulations,
include the following:
● the federal Anti-Kickback Statute prohibits, among other things, persons and entities from knowingly and
willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash or in
kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of,
any good or service, for which payment may be made, in whole or in part, under a federal healthcare program
such as Medicare and Medicaid;
● the federal civil and criminal false claims laws, including the civil False Claims Act and civil monetary
penalty laws, which prohibit individuals or entities from, among other things, knowingly presenting, or
causing to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent
or knowingly making, using or causing to be made or used a false record or statement to avoid, decrease or
conceal an obligation to pay money to the federal government;
● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional
federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to
execute, a scheme to defraud any healthcare benefit program or making false statements relating to
healthcare matters;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their
regulations, including the Final Omnibus Rule published in January 2013, which impose obligations,
including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of
individually identifiable health information;
● the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or
covering up a material fact or making any materially false statement in connection with the delivery of or
payment for healthcare benefits, items or services;
● the Foreign Corrupt Practices Act, or FCPA, which prohibits companies and their intermediaries from
making, or offering or promising to make improper payments to non-U.S. officials for the purpose of
obtaining or retaining business or otherwise seeking favorable treatment;
● the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the
Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or
the Affordable Care Act, which requires certain manufacturers of drugs, devices, biologics and medical
supplies to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the United
States Department of Health and Human Services, information related to payments and other transfers of
value made by that entity to physicians and teaching hospitals, as well as ownership and investment interests
held by physicians and their immediate family members; and
● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which
may apply to healthcare items or services that are 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 in addition to
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requiring drug manufacturers to report information related to payments to physicians and other health care 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 preempted by HIPAA, thus
complicating compliance efforts.
Healthcare Reform
A primary trend in the United States healthcare industry and elsewhere is cost containment. There have been a
number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and
biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government
control and other changes to the healthcare system in the United States.
In March 2010, the United States Congress enacted the Affordable Care Act, or the ACA, which, among other
things, includes changes to the coverage and payment for products under government health care programs. Among the
provisions of the Affordable Care Act of importance to potential drug candidates are:
● an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs
and biologic agents, apportioned among these entities according to their market share in certain government
healthcare programs, although this fee would not apply to sales of certain products approved exclusively for
orphan indications;
● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer
Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby
potentially increasing a manufacturer’s Medicaid rebate liability;
● expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the
minimum rebate for both branded and generic drugs and revising the definition of “average manufacturer
price”, or AMP, for calculating and reporting Medicaid drug rebates on outpatient prescription drug prices
and extending rebate liability to prescriptions for individuals enrolled in Medicare Advantage plans;
● addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate
Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
● expanded the types of entities eligible for the 340B drug discount program;
● established the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50%
point-of-sale-discount off the negotiated price of applicable brand drugs to eligible beneficiaries during their
coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare
Part D;
● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct
comparative clinical effectiveness research, along with funding for such research;
● the Independent Payment Advisory Board, or IPAB, which has authority to recommend certain changes to
the Medicare program to reduce expenditures by the program that could result in reduced payments for
prescription drugs. However, the IPAB implementation has been not been clearly defined. PPACA provided
that under certain circumstances, IPAB recommendations will become law unless Congress enacts legislation
that will achieve the same or greater Medicare cost savings; and
● established the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and
service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug
spending. Funding has been allocated to support the mission of the Center for Medicare and Medicaid
Innovation from 2011 to 2019.
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Other legislative changes have been proposed and adopted since the ACA was enacted. In August 2011, the
Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select
Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the
years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to
several government programs. These changes included aggregate reductions to Medicare payments to providers of up to
2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2030 under the Coronavirus Aid,
Relief, and Economic Security Act, or the CARES Act. The American Taxpayer Relief Act of 2012, among other things,
reduced Medicare payments to several providers and increased the statute of limitations period for the government to
recover overpayments to providers from three to five years. These 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.
Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional
actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017,
which was signed by President Trump on December 22, 2017, Congress repealed the “individual mandate.” The repeal of
this provision, which requires most Americans to carry a minimal level of health insurance, became effective in 2019.
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. On December 18,
2019, the Court of Appeals for the Fifth Circuit 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. Thereafter, the U.S. Supreme Court agreed to hear this case. Oral
argument in the case took place on November 10, 2020. On February 10, 2021, the Biden Administration withdrew DOJ’s
support for this lawsuit. A ruling by the Court is expected sometime in 2021. Litigation and legislation over the ACA are
likely to continue, with unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the ACA,
including directing 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. On January 28,
2021, however, President Biden rescinded those orders and issued a new Executive Order which directs federal agencies to
reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and
strengthen that access. Under this order, federal agencies are directed to re-examine: policies that undermine protections for
people with pre-existing conditions, including complications related to COVID-19; demonstrations and waivers under
Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements; policies that
undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it more difficult to
enroll in Medicaid and the ACA; and policies that reduce affordability of coverage or financial assistance, including for
dependents.
The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted 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. To those ends, President Trump issued five executive orders
intended to lower the costs of prescription drug products but it is unclear whether, and to what extent, these orders will
remain in force under the Biden Administration. Further, on September 24, 2020, the Trump Administration finalized a
rulemaking allowing states or certain other non-federal government entities to submit importation program proposals to the
FDA for review and approval. Applicants are required to demonstrate that their importation plans pose no additional risk to
public health and safety and will result in significant cost savings for consumers. The FDA has 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).
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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
organizations 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 or put pressure on our product pricing. We expect that additional state
and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and
state governments will pay for healthcare products and services, which could result in reduced demand for our product
candidates or additional pricing pressures.
Employees
As of January 31, 2021, we had 72 employees, 2 employees are located in Dublin, Ireland, 27 of our employees
are located in Vienna, Austria and 43 of our employees are located in the U.S., with 32 located in King of Prussia,
Pennsylvania, two located in San Diego, California and the remaining nine employees in the field.
Our employees in Austria are subject to the collective bargaining agreement of the chemical industry. This is an
annual agreement between the employer representatives and the trade union of an industry. It defines conditions of
employment, such as minimum wages, working hours and conditions, overtime payments, vacations and other matters.
We consider our relations with our employees to be good.
Our Corporate Information
On March 1, 2017, Nabriva Therapeutics plc, or Nabriva Ireland was incorporated in Ireland under the name
Hyacintho 2 plc, and was renamed to Nabriva Therapeutics plc on April 10, 2017, in order to effectuate the change of the
jurisdiction of incorporation of the ultimate parent company of the Nabriva Group from Austria to Ireland. Nabriva Ireland
replaced Nabriva Therapeutics AG, or Nabriva Austria as the ultimate parent company on June 23, 2017, following the
conclusion of a tender offer in which holders of the outstanding share capital of Nabriva Austria exchanged their holdings
for ordinary shares, $0.01 nominal value per share, of Nabriva Ireland. The ordinary shares of Nabriva Ireland were issued
on a one-for-ten basis to the holders of the Nabriva Austria common shares and on a one-for-one basis to the holders of the
Nabriva Austria American Depositary Shares, or Nabriva Austria ADSs. On June 26, 2017, the ordinary shares of Nabriva
Ireland began trading on the Nasdaq Global Select Market under the symbol “NBRV”, the same symbol under which the
Nabriva Austria ADSs were previously traded. This transaction was accounted for as a merger between entities under
common control; accordingly, the historical financial statements of Nabriva Austria for periods prior to this transaction are
considered to be the historical financial statements of Nabriva Ireland. Our executive offices are located at 25-28 North
Wall Quay IFSC, Dublin 1, Ireland, and our telephone number is +353 1 649 2000.
The predecessor of Nabriva Ireland, Nabriva Austria, was incorporated in Austria as a spin-off from
Sandoz GmbH in October 2005 under the name Nabriva Therapeutics Forschungs GmbH, a limited liability company
organized under Austrian law and commenced operations in February 2006. In 2007, Nabriva Austria transformed into a
stock corporation (Aktiengesellschaft) under the name Nabriva Therapeutics AG. On October 19, 2017, Nabriva Austria
was converted into a private limited liability company under Austrian law and renamed Nabriva Therapeutics GmbH.
Our U.S. operations are conducted by our wholly-owned subsidiary Nabriva Therapeutics US, Inc., a Delaware
corporation established in August 2014 and located at 1000 Continental Drive, Suite 600, King of Prussia, PA 19406. On
February 8, 2021, Nabriva Therapeutics US, Inc. entered into a sublease agreement pursuant to which it will sublease
approximately 8,097 square feet of office space located at 414 Commerce Drive, Fort Washington, Pennsylvania 19034.
Nabriva Therapeutics US, Inc. will vacate its King of Prussia location no later than April 30, 2021.
Our website address is www.nabriva.com. The information contained on, or that can be accessed from, our
website does not form part of this Annual Report.
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Available Information
We make available free of charge through our website our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and
15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We make these reports available through
our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the
SEC. Previously, as a foreign private issuer, we filed our Annual Report on Form 20-F and furnished information on
Form 6-K. You can review our electronically filed reports and other information that we file with the SEC on the SEC’s
web site at http://www.sec.gov. We also make available, free of charge on our website, the reports filed with the SEC by
our executive officers, directors and 10% shareholders pursuant to Section 16 under the Exchange Act as soon as
reasonably practicable after copies of those filings are provided to us by those persons. The information contained on, or
that can be accessed through, our website is not a part of or incorporated by reference in this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS.
You should consider carefully the risks and uncertainties described below, together with all of the other information in
this Annual Report on Form 10-K. 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. On December 2, 2020, our board of directors effected a one-for-ten reverse stock split of our ordinary shares,
or the Reverse Stock Split. As a result of the Reverse Stock Split, every ten ordinary shares of $0.01 each (nominal
value) in the authorized and unissued and authorized and issued share capital of the company were consolidated into
one ordinary Share of $0.10 each (nominal value), and the nominal value of each ordinary share was subsequently
immediately reduced from $0.10 to $0.01 nominal value per share. All outstanding stock options, restricted stock units
and warrants entitling their holders to purchase or acquire ordinary shares were adjusted as a result of the Reverse
Stock Split. Accordingly, all ordinary share, common share, equity award, warrant and per share amounts have been
adjusted to reflect the Reverse Stock Split for all prior periods presented.
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 $69.5 million for the year
ended December 31, 2020, $82.8 million for the year ended December 31, 2019 and $114.8 million for the year ended
December 31, 2018. As of December 31, 2020, we had an accumulated deficit of $546.2 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 the commercial sale of our products.
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 ABSSSIs, caused by certain susceptible Gram-positive microorganisms in the United
States and its territories, or the Territory. In September 2020, we began a small and focused sales effort for SIVEXTRO and
XENLETA, by utilizing 15 sales representatives in a virtual and in-person community-based sales effort with Amplity
Health. We expanded this effort to 60 sales representatives in November 2020 and we may expand it further in 2021. 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, the commercialization of
CONTEPO. The net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year.
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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 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 continue to interact with FDA to discuss its plans for conducting inspections at
their sites. On October 30, 2020, we participated in a Type A meeting with the FDA to obtain any new information related
to the FDA’s pending conduct of inspections of foreign manufacturers during the COVID-19 pandemic that has negatively
impacted a number of FDA product reviews, including the CONTEPO NDA. The FDA informed us that it has not yet
determined how it will conduct international inspections during the COVID-19 pandemic. As a result, next steps and
specific timing of the CONTEPO NDA resubmission cannot be finalized until the FDA issues industry guidance. We and
others impacted in the industry await future communication from the FDA as it continues to assess the options available
under existing regulations and laws to conduct these foreign facility inspections. We cannot predict the outcome of any
further interactions with the FDA or when CONTEPO will receive marketing approval, if at all. Our contract
manufacturers continue 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. The upfront consideration in
connection with the Acquisition was 815,209 of our ordinary shares, including the 81,518 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;
● 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;
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● 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 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 actively promote SIVEXTRO. 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
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. Additional
reductions in headcount occurred in the third quarter of 2020 including the restructuring of the commercial organization,
which led to the elimination of the role of the Chief Commercial Officer. Our commercial operations now report directly to
our Chief Executive Officer. In September 2020, we began a small and focused sales effort for SIVEXTRO and
XENLETA, by utilizing 15 sales representatives in a virtual and in-person community-based sales effort with Amplity
Health. We expanded this effort to 60 sales representatives in November 2020 and we may expand it further in 2021. Our
ability to generate significant revenue will require us to be successful in a range of challenging activities, including:
● maintaining and expanding 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;
● 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.
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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. These activities include
the commercialization of XENLETA and SIVEXTRO, the process of obtaining marketing approval for CONTEPO and,
possibly, other product candidates, and our ongoing 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. 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 full direct physician promotion, future sales are uncertain. Based on our current
operating plans, we expect that our existing cash resources as of the date of this filing will be sufficient to enable us to fund
our operations, debt service obligations and capital expenditure requirements into the fourth 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.
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 and SIVEXTRO and the potential launch of CONTEPO. We expect
to seek additional funding in future periods to support these activities.
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
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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;
● 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 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 costs of our physical presence in the United States, Ireland and Austria;
● interest expense on our debt and the eventual repayment of our debt obligations which is scheduled to begin
in the second half of 2021;
● 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;
● the costs of operating as a company with a commercial rather than a research and development focus; and
● 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, SIVEXTRO or, if
approved, CONTEPO or any other product candidate that we develop, in-license or acquire may not achieve commercial
success. Additionally, the reliance on a commercial sales organization may adversely impact our sales of XENLETA and
SIVEXTRO. 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.
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.
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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 AgreementSM, 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 5,925,699 ordinary shares under the
Jefferies ATM Agreement, for gross proceeds of $33.7 million, and net proceeds of $32.9 million, after deducting
commissions and offering costs. 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 December 20, 2019, we sold to certain institutional investors in a registered direct offering an aggregate of
1,379,310 ordinary shares, and accompanying warrants to purchase up to an aggregate of 1,379,310 ordinary shares. Each
share was issued and sold together with an accompanying warrant at a combined price of $14.50 per security. The proceeds
to us from the offering were $20.0 million gross and $18.3 million net, after deducting the placement agent’s fees and other
offering expenses. As of December 31, 2020, there were 1,379,310 warrants outstanding from the offering, where each
warrant has an exercise price of $19.00 per share and will expire on the date that is three years and six months after the
initial issuance date.
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 4,144,537 ordinary shares and accompanying warrants to purchase up to an aggregate of 4,144,537 ordinary
shares. Each share we issued and sold together with an accompanying warrant at a combined price of $9.1686. The
proceeds to us from the offering were $38.0 million gross and $35.2 million net, after deducting the placement agent’s fees
and other offering expenses. Each warrant was immediately exercisable and will expire on the two-year anniversary of the
issuance date. As of December 31, 2020, there were 4,059,532 warrants outstanding at an exercise price of $7.92 per share.
On March 1, 2021, we entered into a securities purchase agreement with certain institutional investors pursuant to
which we issued and sold in a registered direct offering (1) an aggregate of 9,761,010 ordinary shares, $0.01 nominal value
per share, and accompanying warrants to purchase up to an aggregate of 4,880,505 ordinary shares and (2) pre-funded
warrants to purchase up to an aggregate of 600,000 ordinary shares and accompanying ordinary share warrants to purchase
up to an aggregate of 300,000 ordinary shares. Each share was issued and sold together with an accompanying ordinary
share warrant at a combined price of $2.4525, and each pre-funded warrant was issued and sold together with an
accompanying ordinary share warrant at a combined price of $2.4425. The proceeds to us from the offering were $25.4
million gross and $23.4 million net after deducting the placement agent’s fees and estimated offering expenses. Each pre-
funded warrant had an exercise price per ordinary share equal to $0.01 and each pre-funded warrant was exercised in full
on the issuance date. Each ordinary share warrant has an exercise price per ordinary share equal to $2.39, is exercisable on
the date of issuance and will expire on the five-year anniversary of the date of issuance.
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In addition, in connection with the closing of the Acquisition, we issued 733,690 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 81,518 ordinary shares to the former Zavante stockholders that 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, the commercial launch of XENLETA and the direct selling of SIVEXTRO. 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.
On March 11, 2020, we entered into the Amendment to the Loan Agreement pursuant to which we agreed to repay to
Hercules $30.0 million of the $35.0 million in aggregate principal amount of debt outstanding under the Loan Agreement.
Following the Prepayment, there remains outstanding $5.0 million in principal amount under the Loan Agreement, and we
are eligible to request to borrow an additional $5.0 million subject to the lender’s sole discretion. We plan to begin to repay
the outstanding principal amount under the Loan Agreement in July 2021.
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:
● 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;
● 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 permit the lender to enforce its
security interest in the assets securing such indebtedness, including the cash accounts pledged to it; and
● 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:
● declare dividends or redeem or repurchase equity interests;
● incur additional indebtedness and liens;
● make loans and investments;
● engage in mergers, acquisitions and asset sales;
● undertake certain transactions with affiliates
● undergo a change in control;
● add or change business locations; and
● 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. 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, or if a material adverse effect as defined
under the Loan Agreement occurs, 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.
On October 21, 2020, the parties mediated this case and reached a settlement. On January 28, 2021, the court
preliminarily approved the settlement, subject to further consideration at the final approval hearing, which is scheduled to
be held on May 14, 2021. The settlement will be covered in full by our directors’ and officers’ insurance.
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-
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party expenses with additional limitations. We received research premiums of $1.3 million for the year ended December
31, 2019 and $2.4 million for the year ended December 31, 2018. We have not received any research premium for our
qualified 2020 expenditures as of December 31, 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 spread to
countries across the world, including Ireland, Austria and the United States, where our offices and laboratory space are
located. COVID-19 caused 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.
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.
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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 hospital-based sales force in April 2020. Furthermore, 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.
In September 2020, we began a small and focused sales effort for SIVEXTRO and XENLETA, by utilizing 15 sales
representatives in a virtual and in-person community-based sales effort with Amplity Health. We expanded this effort to 60
sales representatives in November 2020 and we may expand it further in 2021.
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 the
termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales force
leadership team. Additional reductions in headcount occurred in the third quarter of 2020 including the restructuring of the
commercial organization, which led to the elimination of the role of the Chief Commercial Officer. Our commercial
operations now report directly to our Chief Executive Officer. In September 2020, we began a small and focused sales
effort for SIVEXTRO and XENLETA, by utilizing 15 sales representatives in a virtual and in-person community-based
sales effort with Amplity Health. We expanded this effort to 60 sales representatives in November 2020 and we may
expand it further in 2021.
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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 and SIVEXTRO
for ABSSSI.
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, sites were closed to enrollment in the first quarter
of 2020; starting in July 2020, some sites re-opened for screening of potential subjects if allowed by their institution.
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. On October 30, 2020, we participated in a Type A meeting
with the FDA to obtain any new information related to the FDA´s pending conduct of inspections of foreign manufacturers
during the COVID-19 pandemic that has negatively impacted a number of FDA product reviews, including the CONTEPO
NDA. The FDA informed us that it has not yet determined how it will conduct international inspections during the
COVID-19 pandemic. As a result, next steps and specific timing of the CONTEPO NDA resubmission cannot be finalized
until the FDA issues industry guidance. We and others impacted in the industry await future communication from the FDA
as it continues to assess the options available under existing regulations and laws to conduct these foreign facility
inspections. We cannot predict the outcome of any further interactions with the FDA or when CONTEPO will receive
marketing approval, if at all.
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.
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 ABSSSIs, caused by certain susceptible Gram-
positive microorganisms in the United States and its territories, or the Territory.
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
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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 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. Additional
reductions in headcount occurred in the third quarter of 2020 including the restructuring of the commercial organization,
which led to the elimination of the role of the Chief Commercial Officer. Our commercial operations now report directly to
our Chief Executive Officer. In September 2020, we began a small and focused sales effort for SIVEXTRO and
XENLETA, by utilizing 15 sales representatives in a virtual and in-person community-based sales effort with Amplity
Health. We expanded this effort to 60 sales representatives in November 2020 and we may expand it further in 2021. The
success of XENLETA, SIVEXTRO and, if approved, CONTEPO will depend on a number of factors, including the
following:
● 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;
● the resubmission of the CONTEPO NDA and potential receipt of marketing approval from the FDA for
CONTEPO for the treatment of cUTI, including AP;
● re-establishing an effective sales and marketing organization to successfully generate recurring sales of
XENLETA, SIVEXTRO and, if and when approved, CONTEPO;
● acceptance of XENLETA, SIVEXTRO and, if and when approved, CONTEPO by patients, the medical
community and third-party payors, including hospital formularies;
● achieving approval of favorable prescribing information;
● effectively competing with other therapies;
● the continued acceptable safety profile of XENLETA, SIVEXTRO and, if approved, CONTEPO;
● securing contracts to allow XENLETA, SIVEXTRO and, if approved, CONTEPO to be paid for by private
and public health insurance plans;
● obtaining and maintaining patent and trade secret protection and regulatory exclusivity;
● protecting our rights in our intellectual property portfolio;
● obtaining and maintaining adequate distribution levels of XENLETA, SIVEXTRO and, if approved,
CONTEPO at all appropriate trade channels; and
● 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.
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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:
● be delayed in obtaining marketing approval for our product candidates;
● not obtain marketing approval at all;
● obtain approval for indications or patient populations that are not as broad as intended or desired;
● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings,
including boxed warnings;
● be subject to additional post-marketing testing requirements or restrictions;
● have the product removed from the market after obtaining marketing approval;
● be unable to obtain reimbursement for use of the product; or
● 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.
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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:
● 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;
● 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;
● 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;
● 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;
● we may experience delays in reaching or fail to reach agreement on acceptable clinical trial contracts or
clinical trial protocols with prospective trial sites;
● 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;
● the cost of clinical trials of our product candidates may be greater than we anticipate;
● 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;
● 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
● 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.
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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:
● severity of the disease under investigation;
● eligibility criteria for the clinical trial in question;
● perceived risks and benefits of the product candidate under study;
● approval of other therapies to treat the disease under investigation;
● efforts to facilitate timely enrollment in clinical trials;
● patient referral practices of physicians;
● the time of year in which the trial is initiated or conducted;
● the geographic distribution of global trial sites;
● the ability to monitor patients adequately during and after treatment;
● proximity and availability of clinical trial sites for prospective patients;
● 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;
● restrictions resulting from the COVID-19 pandemic and its collateral consequences;
● willingness of potential patients to participate in our trials; and
● 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.
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.
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If serious adverse or undesirable side effects are identified in XENLETA, SIVEXTRO, 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 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.
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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.
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 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:
● the efficacy and potential advantages compared to alternative treatments;
● 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;
● the prevalence and severity of any side effects;
● the ability to offer our product candidates for sale at competitive prices, including in comparison to generic
competition;
● convenience and ease of administration compared to alternative treatments;
● 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;
● our investment in and the strength of sales, marketing, patient access and distribution capabilities;
● the availability of third-party coverage and adequate reimbursement;
● the timing of any marketing approval in relation to other approvals of competitive products; and
● 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.
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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:
● safe, effective and medically necessary;
● appropriate for the specific patient population;
● cost-effective; and
● 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. Additional reductions in headcount occurred in the third quarter of 2020
including the restructuring of the commercial organization, which led to the elimination of the role of the Chief
Commercial Officer. Our commercial operations now report directly to our Chief Executive Officer. In September 2020,
we began a small and focused sales effort for SIVEXTRO and XENLETA, by utilizing 15 sales representatives in a virtual
and in-person community-based sales effort with Amplity Health. We expanded this effort to 60 sales representatives in
November 2020 and we may expand it further in 2021.
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. In September 2020, we began a small and focused sales effort for
SIVEXTRO and XENLETA, by utilizing 15 sales representatives in a virtual and in-person community-based sales effort
with Amplity Health. We expanded this effort to 60 sales representatives in November 2020 and we may expand it further
in 2021. In addition, we expect to utilize a variety of types of collaboration, distribution and other
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marketing arrangements with one or more third parties to commercialize XENLETA in markets outside the United States.
We plan to commercialize CONTEPO, if approved, 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:
● our inability to recruit, train and retain adequate numbers of effective sales, patient access, commercial
operations and marketing personnel;
● our inability to recruit, train and retain adequate numbers of effective headquarter and field personnel;
● the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe
XENLETA, SIVEXTRO or any future products;
● 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;
● the COVID-19 pandemic;
● unforeseen costs and expenses associated with creating an independent sales, marketing, commercial
operations, patient access and distribution organization; and
● 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.
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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 both hospitalized and community 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; sNDA under review by FDA for oral treatment of CABP with
action date in the second quarter of 2021), 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 (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, plazomicin and ceftolozane-tazobactam
(Zerbaxa) 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.
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, 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
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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
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:
● reduced resources of our management to pursue our business strategy;
● decreased demand for XENLETA or any other product candidates that we may develop;
● injury to our reputation and significant negative media attention;
● withdrawal of clinical trial participants;
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● significant costs to defend the related litigation;
● substantial monetary awards to trial participants or patients;
● loss of revenue; and
● 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 maintain $10.0 million in product liability insurance coverage for our
marketed products. 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.
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.
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 plan to procure 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.
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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 have initiated
engagement with a potential secondary supplier to synthesize XENLETA, with a preliminary technology transfer and pilot
scale manufacture. However, our current operating plans do not include completing technology transfer, scale-up and
validation of this potential secondary supplier until they have demonstrated that they can successful manufacture the API at
pilot scale and until 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 have engaged Sharp Corporation for the
secondary packaging and 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:
● reliance on the third party for regulatory compliance and quality assurance;
● an event at one of our manufacturers or suppliers causing an unforeseen disruption of the manufacture or
supply of our product candidates;
● the possible breach of the manufacturing agreement by the third party;
● the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or results in
an interruption to the supply chain for our products.
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.
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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. On October 30, 2020, we
participated in a Type A meeting with the FDA to obtain any new information related to the FDA´s pending conduct of
inspections of foreign manufacturers during the COVID-19 pandemic that has negatively impacted a number of FDA
product reviews, including the CONTEPO NDA. The FDA informed us that it has not yet determined how it will conduct
international inspections during the COVID-19 pandemic. As a result, next steps and specific timing of the CONTEPO
NDA resubmission cannot be finalized until the FDA issues industry guidance. We and the industry await future
communication from the FDA as it continues to assess the options available under existing regulations and laws to conduct
these foreign facility inspections. Our contract manufacturers continue 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 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, or delayed introduction of our product 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 or minimum revenue 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 adequate value from the agreement.
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 ABSSSIs, caused by certain susceptible Gram-
positive microorganisms in the United States and its territories, or the Territory.
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
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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.
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, who in turn, relies on third party manufacturers for the production,
packaging, and serialization of SIVEXTRO for our distribution. 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 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.
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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 pose, and any future collaborations likely will pose, numerous risks to us, including the
following:
● 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;
● 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;
● collaborators may need to conduct clinical trials, and these clinical trials may not be successful;
● 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;
● 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;
● 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;
● 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;
● 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;
● we may grant exclusive rights to our collaborators, which would prevent us from collaborating with others;
● 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;
● 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
● 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;
● collaborators may elect to delay commercialization in an effort to gain more commercially favorable product
pricing and reimbursement in their territory.
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.
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.
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
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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.
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
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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 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
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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.
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 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.
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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.
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.
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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. 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 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 jurisdiction other than those mentioned above 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.
Additionally, we could face heightened risks with respect to seeking marketing approval in the United Kingdom as
a result of the recent withdrawal of the United Kingdom from the European Union, commonly referred to as Brexit.
Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United
Kingdom withdrew from the European Union, effective December 31, 2020. On December 24, 2020, the United Kingdom
and European Union entered into a Trade and Cooperation Agreement. The agreement sets out certain
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procedures for approval and recognition of medical products in each jurisdiction. Since the regulatory framework for
pharmaceutical products in the United Kingdom covering the 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, would prevent us from commercializing any product candidates
in the United Kingdom and/or the European Union and restrict our ability to generate revenue and achieve and sustain
profitability. If any of these outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the
United Kingdom and/or European Union for any product candidates, which could significantly and materially harm our
business.
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.
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, Canada 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, Canada 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, Canada 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, Canada 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.
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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.
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 subject to 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.
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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:
● litigation involving patients taking our products;
● restrictions on such products, manufacturers or manufacturing processes;
● restrictions on the labeling or marketing of a product;
● restrictions on product distribution or use;
● requirements to conduct post-marketing studies or clinical trials;
● warning or untitled letters;
● withdrawal of the products from the market;
● refusal to approve pending applications or supplements to approved applications that we submit;
● recall of products;
● fines, restitution or disgorgement of profits or revenues;
● suspension or withdrawal of marketing approvals;
● damage to relationships with any potential collaborators;
● unfavorable press coverage and damage to our reputation;
● refusal to permit the import or export of our products;
● product seizure;
● exclusion from participation in federal healthcare reimbursement programs or debarment or the imposition of
Corporate Integrity Agreements; or
● 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.
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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.
A Fast Track or Priority Review designation by the FDA may not lead to a faster development or regulatory review or
approval process and does not assure FDA approval of our product candidates.
If a product candidate is intended for the treatment of a serious or life threatening condition and the product
candidate demonstrates the potential to address unmet medical need for this condition, the sponsor may apply to the FDA
for fast track designation. For fast track products, sponsors may have greater interactions with the FDA, and the FDA may
initiate review of sections of a fast track product’s application before the application is complete. This rolling review may
be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast track
product may be effective. 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.
Further, if 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. Significant
improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or
substantial reduction of a treatment-limiting product reaction, documented enhancement of patient compliance that may
lead to improvement in serious outcomes, and evidence of safety and effectiveness in a new subpopulation. A priority
review designation means that the goal for the FDA to review an application is six months, rather than the standard review
period of ten months. CONTEPO has been granted priority review by the FDA.
We may seek these and other expedited review designations for our product candidates. The FDA has broad
discretion with respect to whether or not to grant these designations 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 fast
track or breakthrough therapy designation does not necessarily mean a faster regulatory review process or necessarily
confer any advantage with respect to approval compared to conventional FDA procedures. As a result, while we may seek
and receive these designations for our product candidates, we may not experience a faster development process, review or
approval compared to conventional FDA procedures. In addition, the FDA may withdraw these designations if it believes
that the designation is no longer supported by data from our clinical development program.
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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 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
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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.
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, SIVEXTRO, 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, SIVEXTRO,
and any other products for which we obtain marketing approval. Restrictions under applicable federal, state, and foreign
healthcare laws and regulations, include the following:
● 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;
● 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;
● 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;
● 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;
● 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
● 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.
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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, SIVEXTRO, 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.
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:
● an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription
products and biologic agents;
● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate
Program;
● 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;
● a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70%
point-of-sale discounts off negotiated prices;
● extension of manufacturers’ Medicaid rebate liability;
● 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;
● new requirements to report certain financial arrangements with physicians and teaching hospitals;
● a new requirement to annually report product samples that manufacturers and distributors provide to
physicians; and
● 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. In August
2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint
Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for
the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to
several government programs. These changes included aggregate reductions to Medicare payments to providers of up to
2% per fiscal year, which went into effect in April 2013 and will remain in effect through 2029 unless additional
Congressional action is taken. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, suspended the
2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the sequester by one year, through
2030. The American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several 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.
Since enactment of the ACA, there have been, and continue to be, numerous legal challenges and Congressional
actions to repeal and replace provisions of the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017,
Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a
minimal level of health insurance, became effective in 2019. 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. On December 18, 2019, the Court of Appeals for the Fifth Circuit 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.
Thereafter, the U.S. Supreme Court agreed to hear this case. Oral argument in the case took place on November 10, 2020.
On February 10, 2021, the Biden Administration withdrew the federal government’s support for overturning the ACA. A
ruling by the Court is expected sometime this year. Litigation and legislation over the ACA are likely to continue, with
unpredictable and uncertain results.
The Trump Administration also took executive actions to undermine or delay implementation of the ACA,
including directing 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. On January 28,
2021, however, President Biden rescinded those orders and issued a new Executive Order which directs federal agencies to
reconsider rules and other policies that limit Americans’ access to health care, and consider actions that will protect and
strengthen that access. Under this Order, federal agencies are directed to re-examine: policies that undermine protections
for people with pre-existing conditions, including complications related to COVID-19; demonstrations and waivers under
Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements; policies that
undermine the Health Insurance Marketplace or other markets for health insurance; policies that make it more difficult to
enroll in Medicaid and the ACA; and policies that reduce affordability of coverage or financial assistance, including for
dependents. This Executive Order also directs the U.S. Department of Health and Human Services to create a special
enrollment period for the Health Insurance Marketplace in response to the COVID-19 pandemic.
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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.
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.
The prices of prescription pharmaceuticals in the United States and foreign jurisdictions are subject to considerable
legislative and executive actions and could impact the prices we obtain for our products.
The prices of prescription pharmaceuticals have also been the subject of considerable discussion in the United
States. To date, there have been several recent U.S. congressional inquiries, as well as proposed and enacted 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 products. To those ends, President Trump issued several executive orders
intended to lower the costs of prescription drug products. Certain of these orders are reflected in recently promulgated
regulations, including an interim final rule implementing President Trump’s most favored nation model, but such final rule
is currently subject to a nationwide preliminary injunction. It remains to be seen whether these orders and resulting
regulations will remain in force during the Biden Administration. Further, on September 24, 2020, the Trump
Administration finalized a rulemaking allowing states or certain other non-federal government entities to submit
importation program proposals to the FDA for review and approval. Applicants are required to demonstrate that their
importation plans pose no additional risk to public health and safety and will result in significant cost savings for
consumers. The FDA has 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
organizations 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. We expect that
additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that federal and state governments will pay for healthcare products and services, which could result in reduced demand for
our product candidates or additional pricing pressures.
In other 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 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
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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.
Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or
inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us
to significant fines and penalties, which may have a material adverse effect on our business, financial condition or
results of operations.
The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information
worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally, virtually every
jurisdiction in which we operate has established its own data security and privacy frameworks with which we must comply.
For example, the collection, use, disclosure, transfer or other processing of personal data regarding individuals in the
European Union, including personal health data, is subject to the GDPR, which took effect across all member states of the
European Economic Area, or EEA, in May 2018. The GDPR is wide-ranging in scope and imposes numerous requirements
on companies that process personal data, including requirements relating to processing health and other sensitive data,
obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data
processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing
notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR increases our
obligations with respect to clinical trials conducted in the EEA by expanding the definition of personal data to include
coded data and requiring changes to informed consent practices and more detailed notices for clinical trial subjects and
investigators. In addition, the GDPR also imposes strict rules on the transfer of personal data to countries outside the
European Union, including the United States and, as a result, increases the scrutiny that clinical trial sites located in the
EEA should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of
data protection, such as the United States. The GDPR also permits data protection authorities to require destruction of
improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR, which can be
up to 4% of global revenues or 20 million Euros, whichever is greater, and it also confers a private right of action on data
subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies and obtain
compensation for damages resulting from violations of the GDPR. In addition, the GDPR provides that European Union
member states may make their own further laws and regulations limiting the processing of personal data, including genetic,
biometric or health data.
Similar actions are either in place or under way in the United States. There are a broad variety of data protection laws
that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can
review companies for privacy and data security concerns based on general consumer protection laws. The Federal Trade
Commission and state Attorneys General are aggressive in reviewing privacy and data security protections for consumers.
New laws also are being considered at both the state and federal levels. For example, the California Consumer Privacy Act,
which went into effect on January 1, 2020, is creating similar risks and obligations as those created by the GDPR, though
the act does exempt certain information collected as part of a clinical trial subject to the Federal Policy for the Protection of
Human Subjects (i.e. “the Common Rule”). Many other states are considering similar legislation. A broad range of
legislative measures also have been introduced at the federal level. Accordingly, failure to comply with federal and state
laws (both those currently in effect and future legislation) regarding privacy and security of personal information could
expose us to fines and penalties under such laws. There also is the threat of consumer class actions related to these laws
and the overall protection of personal data. Even if we are not determined to have violated these laws, government
investigations into these issues typically require the expenditure of significant resources and generate negative publicity,
which could harm our reputation and our business.
Given the breadth and depth of changes in data protection obligations, preparing for and complying with these
requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems
and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process
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or transfer personal data collected in the European Union. The GDPR and other changes in laws or regulations associated
with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from
our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms,
may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing
business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us
and could have a material adverse effect on our business, financial condition or results of operations.
We cannot assure stockholders that our third-party service providers with access to our or our customers’,
suppliers’, trial patients’ and employees’ personally identifiable and other sensitive or confidential information in relation
to which we are responsible will not breach contractual obligations imposed by us, or that they will not experience data
security breaches or attempts thereof, which could have a corresponding effect on our business, including putting us in
breach of our obligations under privacy laws and regulations and/or which could in turn adversely affect our business,
results of operations and financial condition. We cannot assure shareholders that our contractual measures and our own
privacy and security-related safeguards will protect us from the risks associated with the third-party processing, storage and
transmission of such information.
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. For example, the provision of benefits or advantages to
physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order, or use of
medicinal products is prohibited in the European Union. The provision of benefits or advantages to physicians is also
governed by the national anti-bribery laws of European Union Member States, such as the UK Bribery Act 2010.
Infringement of these laws could result in substantial fines and imprisonment. Payments made to physicians in certain
European Union Member States must be publicly disclosed. Moreover, agreements with physicians often must be the
subject of prior notification and approval by the physician’s employer, his or her competent professional organization,
and/or the regulatory authorities of the individual European Union Member States. These requirements are provided in the
national laws, industry codes or professional codes of conduct applicable in the European Union Member States. Failure to
comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines, or
imprisonment.
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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.
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.
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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.
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:
● any delay or failure in obtaining marketing approvals for CONTEPO, or any delay or failure to
commercialize CONTEPO in the United States thereafter;
● increased scrutiny from third parties, including regulators, legislative bodies and enforcement agencies,
including with respect to product pricing and commercialization matters;
● 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;
● 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;
● difficulties in managing the expanded operations of a larger and more complex company following the
Acquisition;
● difficulties in achieving the anticipated business opportunities and growth prospects from the Acquisition;
● the size of the treatable patient population for CONTEPO may be smaller than we believe it is;
● difficulties in attracting and retaining key personnel; and
● 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.
The upfront consideration for the Acquisition was comprised of 815,209 of our ordinary shares, including the
81,518 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-
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single-digit percentage of transaction revenue in connection with the consummation of the grant, sale, license or transfer 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.
In 2020, we 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. Additional reductions in headcount occurred in the third quarter including the restructuring
of the commercial organization, which led to the elimination of the role of the Chief Commercial Officer.
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Our commercial operations now report directly to our Chief Executive Officer. The 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, as well as our business development strategy to in-license additional community
products, such as SIVEXTRO and additional 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 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:
● 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;
● our ability to promote and distribute SIVEXTRO;
● our ability to obtain FDA approval of CONTEPO;
● our ability to successfully implement our proposed business strategy;
● the success of competitive products or technologies;
● 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;
● regulatory or legal developments in the United States, the European Union and other countries or regions;
● developments or disputes concerning patent applications, issued patents or other proprietary rights;
● the recruitment or departure of key personnel;
● the level of expenses related to any of our product candidates or clinical development programs;
● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products,
including additional community products;
● 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;
● 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;
● actual or anticipated changes in estimates as to financial results, development timelines or recommendations
by securities analysts;
● variations in our financial results or those of companies that are perceived to be similar to us;
● perception and market performance of companies that are perceived to be similar to us:
● changes in the structure of healthcare payment systems;
● market conditions in the pharmaceutical and biotechnology sectors;
● activism by any single large shareholder or combination of shareholders;
● our need to raise additional funds;
● the societal and economic impact of public health epidemics, such as the ongoing COVID-19 pandemic;
● general economic, industry and market conditions; and
● 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, SIVEXTRO 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.”.
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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.
As part of our March 2021 registered direct offering we issued warrants to purchase up to an aggregate of
5,180,505 ordinary shares at an exercise price of $2.39 per share. As part of our May 2020 registered direct offering, we
issued warrants to purchase an aggregate of up to 4,144,537 ordinary shares at an exercise price of $7.92 per share. As part
of our December 2019 registered direct offering, we issued warrants to purchase an aggregate of up to 1,379,310 ordinary
shares at an exercise price of $19.00 per share. As of the date of this Annual Report on Form 10-K, there were 10,619,347
warrants outstanding from the three offerings 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 was initially
exercisable six months following the date of issuance, which was June 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 was
immediately exercisable and will expire on the two-year anniversary of the date of issuance. Each of the March 2021
warrants was immediately exercisable and will expire on the five-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. On December 2, 2020, our board of directors effected a one-for-ten reverse stock split of our ordinary
shares for the purpose of regaining compliance with the Bid Price Rule. On December 17, 2020, we received notification
from Nasdaq that for 10 consecutive business days, the closing bid price of our ordinary shares had been at $1.00 per share
or greater, confirming that we had regained compliance with the Bid Price Rule.
If in the future we fail to satisfy the Nasdaq Global Select Market’s 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
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investor and/or employee confidence, and the loss of business development opportunities, some or all of which may
contribute to a further decline in our share price.
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 in the long term. 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 21,078,781 ordinary shares outstanding as of December 31,
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 December 31, 2020, an aggregate of 483,054 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 5,925,699 shares under the Jefferies ATM Agreement, for gross proceeds of $33.7 million, and net proceeds of
$32.9 million, after deducting commissions and offering costs.
As part of our March 2021 registered direct offering we issued warrants to purchase up to an aggregate of
5,180,505 ordinary shares at an exercise price of $2.39 per share. As part of our May 2020 registered direct offering, we
issued warrants to purchase an aggregate of up to 4,144,537 ordinary shares at an exercise price of $7.92 per share. As part
of our December 2019 registered direct offering, we issued warrants to purchase an aggregate of up to 1,379,310 shares of
ordinary shares at an exercise price of $19.00 per share. As of the date of this Annual Report on Form 10-K, there were
10,619,347 warrants outstanding from the three offerings 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 was 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 was immediately exercisable and will expire on the two-year anniversary of the date of issuance. Each of the
March 2021 warrants was immediately exercisable and will expire on the five-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
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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.
The upfront consideration for the Acquisition was comprised of 815,209 of our ordinary shares, including 81,518
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 a “smaller reporting company”, and the reduced disclosure requirements applicable to smaller reporting
companies may make our ordinary shares less attractive to investors.
We are 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. For so long as we remain smaller reporting 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:
● 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;
● 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; and
● reduced disclosure about our executive compensation arrangements.
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.
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
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reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of 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 a smaller reporting 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
a smaller reporting 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:
● the judgment must be for a definite sum;
● the judgment must be final and conclusive, and the decree must be final and enforceable in the court which
pronounces it;
● 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;
● the U.S. court must have had jurisdiction in relation to the particular defendant according to Irish conflict of
law rules; and
● 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:
● weakening of the U.S. dollar may increase the U.S. dollar cost of overseas research and development
expenses;
● strengthening of the U.S. dollar may decrease the value of our revenues denominated in other currencies; and
● 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 PFIC for any such taxable year from our initial public offering
through the year ended December 31, 2020. 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 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.
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If we were to be treated as a PFIC for the taxable year ending December 31, 2021, 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.
General Risk Factors
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.
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 a smaller reporting 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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Facilities
Our facilities consist of approximately 2,900 square meters of leased laboratory and office space in Vienna,
Austria. In October 2020, we provided a notice of termination of our lease of approximately 15,000 square feet of office
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space in King of Prussia, Pennsylvania. We are obligated to pay the rent in King of Prussia through April 2021. In February
2021, we signed a sublease for approximately 8,000 square feet of office space in Fort Washington, Pennsylvania which
became effective on March 1, 2021 and continues through July 2023, subject to certain early termination terms. We also
lease office space in Dublin, Ireland and San Diego, California. We believe that suitable additional or alternative space will
be available in the future on commercially reasonable terms.
ITEM 3. 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.
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.
On October 21, 2020, the parties mediated this case and reached a settlement. On January 28, 2021, the court
preliminarily approved the settlement, subject to further consideration at the final approval hearing, which is scheduled to
be held on May 14, 2021. The settlement will be covered in full by our directors’ and officers’ insurance.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our ordinary shares have been listed on the Nasdaq Global Select Market since June 26, 2017 following the
Redomiciliation and trade on the Nasdaq Global Select Market under the symbol “NBRV”. Prior to the Redomiciliation,
the ADSs, representing the common shares of our predecessor, Nabriva Therapeutics AG, or Nabriva Austria, had traded
on the Nasdaq Global Select Market under the same symbol since September 18, 2015. Each ADS represented one tenth
(1/10) of a common share of Nabriva Austria.
Stockholders
As of January 31, 2021, there were 6 holders of record of our ordinary shares. The number of record holders may
not be representative of the number of beneficial owners because many of our ordinary shares are held by depositories,
brokers or other nominees.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding securities authorized for issuance under our equity compensation plans is contained in
Part III, Item 12 of this Annual Report on Form 10-K.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available
funds and any future earnings to support our operations and finance the growth and development of our business. In
addition, the terms of the Loan Agreement with Hercules preclude us from paying dividends. We do not intend to pay cash
dividends on our ordinary shares for the foreseeable future.
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 year ended December 31, 2020 that were not registered under the Securities Act of 1933, as amended, or the
Securities Act, and that have not otherwise been described in a Current Report on Form 8-K or a Quarterly Report on Form
10-Q.
Purchase of Equity Securities
We did not purchase any of our registered equity securities during the period covered by this Annual Report on
Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA
Information required by Item 6 of Form 10-K is omitted pursuant to the SEC’s adoption of amendments to
Regulation S-K effective February 10, 2021.
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ITEM 7. 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 historical consolidated financial statements and the related notes thereto appearing elsewhere in this Annual
Report. The objective of the following discussion and analysis is to provide material information relevant to your
assessment of the financial condition and results of operations of our company, including an evaluation of the amounts and
certainty of cash flows from operations and from outside sources, and to better allow you to view our company from
management’s perspective. Some of the information contained in this discussion and analysis or set forth elsewhere in this
Annual Report, including information with respect to our plans and strategy for our business and related financing,
includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those
factors set forth in the “Risk Factors” section of this Annual 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.
On December 2, 2020, our board of directors effected a one-for-ten reverse stock split of our ordinary shares, or
the Reverse Stock Split. As a result of the Reverse Stock Split, every ten ordinary shares of $0.01 each (nominal value) in
the authorized and unissued and authorized and issued share capital of the company were consolidated into one ordinary
Share of $0.10 each (nominal value), and the nominal value of each ordinary share was subsequently immediately reduced
from $0.10 to $0.01 nominal value per share. All outstanding stock options, restricted stock units and warrants entitling
their holders to purchase or acquire ordinary shares were adjusted as a result of the Reverse Stock Split. Accordingly, all
ordinary share, common share, equity award, warrant and per share amounts have been adjusted to reflect the Reverse
Stock Split for all prior periods presented.
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 rights 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 the European Economic Area, or EEA, and United Kingdom, or U.K. The EC approved XENLETA for all countries
of the EEA and U.K. We intend to work with a commercial partner to make XENLETA available to patients in the EEA
and U.K.
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
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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 continue to interact with FDA to discuss its plans for
conducting inspections at their sites. On October 30, 2020, we participated in a Type A meeting with the FDA to obtain any
new information related to the FDA’s pending conduct of inspections of foreign manufacturers during the COVID-19
pandemic that has negatively impacted a number of FDA product reviews, including the CONTEPO NDA. The FDA
informed us that it has not yet determined how it will conduct international inspections during the COVID-19 pandemic.
As a result, next steps and specific timing of the CONTEPO NDA resubmission cannot be finalized until the FDA issues
industry guidance. We and others impacted in the industry await future communication from the FDA as it continues to
assess the options available under existing regulations and laws to conduct these 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 December 31, 2020 we had an accumulated
deficit of $546.2 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 full direct physician promotion, the timing and amount of sales of XENLETA,
SIVEXTRO or any product candidates are uncertain. Under the Distribution Agreement (defined below), we were 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 1,379,310 ordinary shares and accompanying
warrants to purchase up to an aggregate of 1,379,310 ordinary shares. Each share was issued and sold together with an
accompanying warrant at a combined price of $14.50 per security, that generated gross proceeds of $20.0 million and $18.3
million net, after deducting the placement agent’s fees and offering expenses. On May 29, 2020, we issued in a registered
direct offering an aggregate of 4,144,537 ordinary shares with 4,144,537 warrants at a combined price of $9.1686 per
security. The proceeds to us from the offering were $38.0 million gross and $35.2 million net, after deducting the
placement agent’s fees and offering expenses. Each warrant was immediately exercisable and will expire on the two-year
anniversary of the exercise date. On December 10, 2020, we completed a registered public offering in which we sold
6,000,000 ordinary shares. Each share was issued and sold at a public offering price of $2.50. The proceeds to us from the
offering were $15.0 million gross and $13.3 million net, after deducting the placement agent’s
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fees and offering expenses. On March 1, 2021, 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 (1) an aggregate of 9,761,010
ordinary shares, $0.01 nominal value per share, and accompanying warrants to purchase up to an aggregate of 4,880,505
ordinary shares and (2) pre-funded warrants to purchase up to an aggregate of 600,000 ordinary shares and accompanying
ordinary share warrants to purchase up to an aggregate of 300,000 ordinary shares. Each share was issued and sold together
with an accompanying ordinary share warrant at a combined price of $2.4525, and each pre-funded warrant was issued and
sold together with an accompanying ordinary share warrant at a combined price of $2.4425. The proceeds to us from the
offering were $25.4 million gross and $23.4 million net after deducting the placement agent’s fees and estimated offering
expenses. Each pre-funded warrant had an exercise price per ordinary share equal to $0.01 and each pre-funded warrant
was exercised in full on the issuance date. Each ordinary share warrant has an exercise price per ordinary share equal to
$2.39, was exercisable on the date of issuance and will expire on the five-year anniversary of the date of issuance.
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,
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 full 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 were restricted to conducting educational and promotional activities virtually. 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 2021. 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.
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SIVEXTRO is approved for the treatment of acute bacterial skin and skin structure infections, or ABSSSIs,
caused by certain susceptible Gram-positive microorganisms. Before we were permitted to sell SIVEXTRO under the
Distribution Agreement, we were required to secure a sales force of a certain size 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 of a
certain size 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. In September 2020, we began a small and focused sales effort for SIVEXTRO
and XENLETA, by utilizing 15 sales representatives and expanded this effort to a total of 60 sales representatives in
November 2020 and we may expand it further in 2021.
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 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 preparedness.
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 started to re-open, where allowed by the institution, and initiated 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. In
preclinical studies, 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
Sciences, Ltd. or 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
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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 lefamulin, or the Sinovant Licensed Products, in
the People’s Republic of China, Hong Kong, Macau, and Taiwan, which we refer to 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. In December 2020, we announced the restructuring of our license agreement with
Sinovant Sciences for XENLETA in the greater China region. The restructured agreement also accelerates a portion of the
$5.0 million milestone payment to us that was previously payable upon regulatory approval of XENLETA in China,
including a non-refundable upfront payment of $1.0 million which was received in the fourth quarter of 2020. We will
recognize the $1.0 million payment received as collaboration revenue in the consolidated statements of operations over the
estimated period the manufacturing collaboration and regulatory support will be provided to Sinovant. The future
regulatory and commercial milestone payments will be recorded during the period the milestones become probable of
achievement.
Except for the manufacturing collaboration and regulatory support discussed above, 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. Despite the serious measures taken to control COVID-19, which significantly impacted the treatment of
bacterial pneumonia patients, enrollment in a pivotal trial in China was completed in early February 2021. The filing by
Sinovant for regulatory approval in China is expected to occur in the next 6 months.
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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 lefamulin 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 community-acquired
bacterial pneumonia 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, or 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. Following the NDS approval that occurred
on July 10, 2020, we have received a regulatory milestone payment of $0.5 million from Sunovion. 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.
On July 15, 2020, we entered into a Sales Promotion and Distribution Agreement, the Distribution Agreement,
with MSD International GmbH, or MSD, and Merck Sharp & Dohme Corp., or Supplier, each a subsidiary of Merck &
Co., Inc., Kenilworth, NJ, USA. Under the Distribution Agreement, upon satisfaction of certain specified conditions, MSD
appointed us 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 our National
Drug Code numbers in the United States and its territories, the Territory. We expect to begin selling and reporting product
revenue of our own brand of SIVEXTRO early in the second quarter of 2021. SIVEXTRO is an oxazolidinone-class
antibacterial indicated in adults and 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 us 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, we were 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, we are entitled to
determine the final selling prices of the Products charged by us 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. We are responsible for all costs related to the promotion, sale and
distribution of the Products by us, as well as all costs required to meet our staffing obligations under the Distribution
Agreement. We are obligated to use commercially reasonable efforts to promote and distribute the Products and to
maximize the sales of the Products throughout the Territory. We have agreed to employ a sales force or retain the services
of a contract sales organization to fulfill its obligations under the Distribution Agreement. In September 2020, we began a
small and focused sales effort, by utilizing 15 sales representatives in a virtual and in-person community-based sales effort
with Amplity Health. We expanded this effort to 60 sales representatives in November 2020 and we may expand it further
in 2021.
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Named Patient Program Agreement with WE Pharma Ltd.
On June 30, 2020, we announced that WE Pharma Ltd., or WEP Clinical, a specialist pharmaceutical services
company, had signed an exclusive agreement with us to supply XENLETA on a named patient or expanded access basis in
certain countries outside of the US, China and Canada. The Named Patient Program, or 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.
Financial Operations Overview
Revenue
In September 2019 we had our commercial launch of XENLETA. For the year ended December 31, 2020, we
recorded $0.5 million of product revenue, gross and $108 thousand of product revenues, net of gross-to-net accruals and
adjustments for returns. Our adjustments for returns include a $0.4 million returns reserve adjustments for slow moving
inventory, representing 50% of XENLETA IV inventory held at our Specialty Distributors, as well as an adjustment for
returns from a single mail order specialty pharmacy, partly offset by a $0.2 million reversal of gross-to-net accruals.
Collaboration revenues include a $0.5 million regulatory milestone payment from Sunovion, a $1.0 million milestone
payment from Sinovant, as well as $1.8 million of our share of revenues associated with the SIVEXTRO distribution
agreement with Merck & Co., Inc. which commenced at the end of September 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 and SIVEXTRO. Our distribution partners continue to primarily utilize their
existing inventory to satisfy product demand for XENLETA which in turn impacted sales in 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 were restricted to
conducting educational and promotional activities virtually. In addition, 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 resulted in
the termination of 66 employees, consisting of our entire hospital-based sales personnel and certain members of our sales
force leadership team. Additional reductions in headcount occurred in the third quarter of 2020 including the restructuring
of the commercial organization, which led to the elimination of the role of the Chief Commercial Officer. Our commercial
operations now report directly to our Chief Executive Officer. In September 2020, we began a small and focused sales
effort for SIVEXTRO and XENLETA, by utilizing 15 sales representatives. We expanded this effort to 60 sales
representatives in November 2020 and we may expand it further in 2021.
Our revenues for the year ended December 31, 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 below under “Critical Accounting Policies”.
Research and Development Expenses
Research and development expenses represented 66.3%, 29.7% and 21.2% of our total operating expenses for the
years ended December 31, 2018, 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
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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.
(in thousands)
Direct Costs
XENLETA
CONTEPO
FDA filing fee refund
Other programs and initiatives
Indirect Costs
In-process research and development
Total
2018
Year Ended December 31,
2019
2020
$
$
20,685
3,423
—
53
26,079
32,048
82,288
$
$
7,765
2,977
(2,589)
1,412
16,850
—
26,415
$
$
2,119
450
—
1,347
11,186
—
15,102
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 including the treatment of resistant bacterial infections in patients with cystic fibrosis
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;
● the scope, progress, costs and results of clinical trials and other research and development activities; and
● 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.
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.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses represented 33.7%, 70.3%, and 77.7% of our total operating
expenses for the years ended December 31, 2018, 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, as well as costs related to our contract commercial organization,
to provide community-based commercial and sales services. 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 general administrative expenses to increase in 2021 compared to 2020 related to
incurring a full year of expense for a commercial sales force for the commercialization of XENLETA and SIVEXTRO.
Critical Accounting Policies
Our management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in
the United States, or U.S. GAAP. The preparation of our consolidated financial statements requires us to make estimates
and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the end of the reporting period, as well as the reported revenues and expenses during the reporting periods. We
base our estimates on our limited historical experience, known trends and events and various other factors that we believe
are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.
Our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing at the end of this filing. However, we believe that the following accounting policies are the most
critical to aid you in fully understanding and evaluating our financial condition and results of operations.
Revenue Recognition
Under Accounting Standards Codification, or ASC, 606, an entity recognizes revenue when its customer obtains
control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in
exchange for those goods or services. We then recognize as revenue the amount of the transaction price that is allocated to
the respective performance obligation when (or as) the performance obligation is satisfied as services are rendered.
The transaction price that we recognize as revenue reflects the amount we expect with the sale and transfer of
control of the product to our customers. Once the customer takes control of the product, our performance obligation under
the sale contract is complete and revenue is recorded net of applicable reserves for various types of variable consideration.
The types of variable consideration are as follows and are further described in Note 2 in our Consolidated Financial
Statements.
● Fees-for-service
● Product returns
● Chargebacks and rebates
● Government rebates
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● Commercial payer and other rebates
● Group Purchasing Organizations, or GPO, administration fees
● Voluntary patient assistance programs
In determining the amounts of variable consideration, we must make significant judgments and estimates. In
assessing the amount of net revenue to record, we consider both the likelihood and the magnitude of the revenue reversal.
Actual amounts of consideration ultimately received may differ significantly from our estimates. If actual results in the
future vary from our estimates, we adjust our estimates which would affect net product revenue and earnings in the period
such variances become known.
Inventory
Our inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out
basis, and consists primarily of material costs, third-party manufacturing costs, and related transportation costs in our
supply chain. Our inventory is subject to expiration dating, which can be extended in certain circumstances. We continually
review our inventory on hand and record provisions for estimated excess, slow-moving and obsolete inventory which takes
into consideration our estimate forecasts of product sales. For the year ended December 31, 2020, we recorded a $0.7
million non-cash reserve for excess and obsolete inventory due to the uncertainty of commercial activities underlying
XENLETA product sales.
Results of Operations
Comparison of Years Ended December 31, 2019 and 2020
(in thousands)
Consolidated Operations Data:
Revenues
Costs and Expenses:
Cost of product sales
Research and development expenses
Selling, general and administrative expenses
Total operating expenses
Loss from operations
Other income (expense):
Other income (expense), net
Interest income (expense), net
Loss on extinguishment of debt
Loss before income taxes
Income tax expense
Net loss
Year Ended December 31,
2020
2019
Change
$
9,481
$
5,027
$
(4,454)
(70)
(26,415)
(62,485)
(88,970)
(79,489)
215
(3,389)
—
(82,663)
(101)
(82,764)
$
(766)
(15,102)
(55,285)
(71,153)
(66,126)
1,187
(1,649)
(2,757)
(69,345)
(139)
(69,484)
$
(696)
11,313
7,200
17,817
13,363
972
1,740
(2,757)
13,318
(38)
13,280
$
Revenues
Revenues decreased by $4.5 million from $9.5 million for the year ended December 30, 2019 to $5.0 million for
the year ended December 31, 2020, primarily due to a $3.5 million decrease in collaboration revenue and a $1.4 million
decrease in product revenue, net, partially offset by a $0.4 million increase in research premiums and government grants
provided to us by the Austrian government. The decrease in collaboration revenues was primarily due
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to the $5.0 million recognized in 2019 under our Sinovant license agreement, partially offset by $1.8 million recognized in
2020 under our SIVEXTRO distribution agreement with Merck & Co., Inc.
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. For the year
ended December 31, 2020, cost of product sales included a $0.7 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 $11.3 million from $26.4 million for the year ended
December 31, 2019 to $15.1 million for the year ended December 31, 2020. The decrease was primarily due to a
$7.2 million decrease in research materials and purchased services related to the development of lefamulin, a $2.9 million
decrease in staff costs due to the reduction of employees, a $2.0 million decrease in research consulting fees, a $0.9 million
decrease in stock-based compensation expense and $0.4 million decrease in travel expenses, partly offset by a $2.0 million
increase in other fees due to a $2.6 million NDA filing fee refund for CONTEPO in 2019.
Selling, General and Administrative Expenses
Selling, general and administrative expense decreased by $7.2 million from $62.5 million for the year ended
December 31, 2019 to $55.3 million for the year ended December 31, 2020. The decrease was primarily due to a $4.2
million decrease in staffing expense related to the termination of our sales force in early 2020, $3.7 million decrease in
stock-based compensation expense, a $1.6 million decrease in travel expenses, a $0.7 million decrease in advisory and
external consultancy expenses primarily related to commercialization activities and professional service fees, and a
$0.1 million decrease in other corporate costs, partly offset by a $1.2 million increase in insurance costs, a $1.5 million
increase in professional fees.
Other Income (Expense), net
Other income (expense), net increased by $1.0 million from $0.2 million of income for the year ended
December 31, 2019, to $1.2 million income for the year ended December 31, 2020 primarily from $0.6 million income
from the sublease of our laboratory and office space in Vienna, Austria.
Interest Income (Expense), net
Interest income (expense), net decreased by $1.7 million due the repayment of $30.0 million of indebtedness
under our Loan Agreement with Hercules in March 2020. See Note 8 to our consolidated financial statements included
elsewhere in this Form 10-K for further information.
Loss on Extinguishment of Debt
In connection with the repayment of our Loan Agreement with Hercules, we recognized a non-cash $2.8 million
loss on the extinguishment of debt during the year ended December 31, 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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Income Tax Expense
Our income tax expense was $101 thousand for the year ended December 31, 2019 compared to $139 thousand
for the year ended December 31, 2020.
Comparison of Years Ended December 31, 2018 and 2019
(in thousands)
Consolidated Operations Data:
Revenues
Costs and Expenses:
Cost of product sales
Research and development expenses
Selling, general and administrative
expenses
Total operating expenses
Loss from operations
Other income (expense):
Other income (expense), net
Interest income (expense), net
Loss before income taxes
Income tax expense
Net loss
Year Ended December 31,
2019
2018
Change
$
9,656
$
9,481
$
(175)
—
(82,288)
(41,743)
(124,031)
(114,375)
(272)
(84)
(114,731)
(49)
(114,780)
$
$
(70)
(26,415)
(62,485)
(88,970)
(79,489)
215
(3,389)
(82,663)
(101)
(82,764)
$
(70)
55,873
(20,742)
35,061
34,886
487
(3,305)
32,068
(52)
32,016
Revenues
Revenues decreased by $0.2 million from $9.7 million for the year ended December 30, 2018 to $9.5 million for
the year ended December 31, 2019, primarily due to a $1.4 million decrease in research premiums and government grants
provided to us by the Austrian government as a result of a decrease in our research and development expenses for which
we can receive grant revenue and a $0.3 million decrease in collaboration revenue, partially offset by a $1.5 million
increase in product revenue, net.
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 is sold by our customers based on end user consumption demand.
Research and Development Expenses
Research and development expenses decreased by $55.9 million from $82.3 million for the year ended December
31, 2018 to $26.4 million for the year ended December 31, 2019. The decrease was primarily due to a charge of $32.0
million for in process research and development expenses associated with the acquisition of Zavante assets during the year
ended December 31, 2018, a $4.6 million decrease in research consulting fees, a $8.1 million decrease of filing and other
fees inclusive of a $2.6 million NDA filing fee refund for CONTEPO in 2019, a $10.6 million decrease in research
materials and purchased services related to the development of lefamulin, a $1.2 million decrease in staff costs due to the
reduction of employees and $0.1 million decrease in infrastructure and other expenses, partly offset by a $0.7 million
increase in stock based compensation expense.
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Selling, General and Administrative Expenses
Selling, general and administrative expense increased by $20.7 million from $41.7 million for the year ended
December 31, 2018 to $62.5 million for the year ended December 31, 2019. The increase was due to a $8.6 million
increase in staffing expense, primarily for our commercial sales force in connection with the product launch of XENLETA
in September 2019, a $5.9 million increase in advisory and external consultancy expenses primarily related to pre
commercialization activities and professional service fees, a $3.9 million increase in stock based compensation expense, a
$1.1 million increase in legal fees, a $1.0 million increase in travel expenses, and a $0.6 million increase in infrastructure
costs, partly offset by a $0.3 million decrease in other corporate costs.
Other Income (Expense), net
Other income (expense), net decreased by $0.5 million from $0.3 million of expense for the year ended December
31, 2018, to $0.2 million income for the year ended December 31, 2019 primarily due to re measurements of our foreign
currency cash balances.
Interest Income (Expense), net
During the year ended December 31, 2019, net interest expense increased over the prior year due to interest
expense on our loan with Hercules that was entered into in December 2018.
Income Tax Expense
Our income tax expense was $49,000 for the year ended December 31, 2018 compared to $101,000 for the year
ended December 31, 2019.
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. As of December 31,
2020, we had cash and cash equivalents, restricted cash and short-term investments of $41.6 million.
On March 1, 2021, 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 (1) an aggregate of 9,761,010 ordinary shares, $0.01
nominal value per share, and accompanying warrants to purchase up to an aggregate of 4,880,505 ordinary shares and (2)
pre-funded warrants to purchase up to an aggregate of 600,000 ordinary shares and accompanying ordinary share warrants
to purchase up to an aggregate of 300,000 ordinary shares. Each share was issued and sold together with an accompanying
ordinary share warrant at a combined price of $2.4525, and each pre-funded warrant was issued and sold together with an
accompanying ordinary share warrant at a combined price of $2.4425. The proceeds to us from the offering were $25.4
million gross and $23.4 million net after deducting the placement agent’s fees and estimated offering expenses. Each pre-
funded warrant had an exercise price per ordinary share equal to $0.01 and each pre-funded warrant was exercised in full
on the issuance date. Each ordinary share warrant has an exercise price per ordinary share equal to $2.39, was exercisable
on the date of issuance and will expire on the five-year anniversary of the date of issuance.
In December 2020, we completed a registered public offering in which we sold 6,000,000 ordinary shares at a
public offering price of $2.50. The proceeds to us from the offering were $15.0 million gross and $13.3 million net, after
deducting the placement agent’s fees and offering expenses.
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 4,144,537 ordinary shares and accompanying warrants to purchase up to an aggregate of 4,144,537 ordinary
shares. Each share was issued and sold together with an accompanying warrant at a combined price of $9.1686
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per security. The proceeds to us from the offering were $38.0 million gross and $35.2 million net, after deducting the
placement agent’s fees and offering expenses.
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 1,379,310 ordinary shares and
accompanying warrants to purchase up to an aggregate of 1,379,310 ordinary shares. Each share in the offering was issued
and sold together with an accompanying warrant at a combined price of $14.50. The proceeds to us from the offering were
$20.0 million gross and $18.3 million net, after deducting the placement agent’s fees and offering expenses.
In June 2019, we entered into an Open Market Sale AgreementSM, 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 December 31, 2020, we sold
and issued an aggregate of 1,992,390 ordinary shares pursuant to the Jefferies ATM Agreement and received gross
proceeds of $21.9 million and net proceeds of $20.4 million, after deducting commissions to Jefferies and other offering
expenses. From January 1, 2021 and through the date of this filing we sold and issued an aggregate of 3,933,350 ordinary
shares pursuant to the Jefferies ATM Agreement and received gross proceeds of $11.8 million and net proceeds of $11.5
million, after deducting commissions to Jefferies and other offering expenses.
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 8 to the consolidated financial statements included elsewhere in
this Form 10-K 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.
In July 2018, we completed an underwritten public offering and issued 1,818,181 ordinary shares at a public
offering price of $27.50 per share, resulting in gross proceeds of $50.0 million and net proceeds to us of $46.3 million,
after deducting underwriting discounts and commissions and offering expenses.
In March 2018, we entered into a Controlled Equity OfferingSM Sales Agreement, or the Cantor ATM Agreement,
with Cantor Fitzgerald & Co., or Cantor, pursuant to which, from time to time, we could previously offer and sell our
ordinary shares having aggregate gross proceeds of up to $50.0 million through Cantor. We terminated the Cantor ATM
Agreement effective as of June 24, 2019. We did not incur any penalties as a result of the termination of the Cantor ATM
Agreement. As of the effective date of the termination of the Cantor ATM Agreement, we had issued and sold an aggregate
of 1,031,619 of our ordinary shares pursuant to the Cantor ATM Agreement for aggregate gross proceeds of $37.8 million
and net proceeds of $36.3 million, after deducting commissions and offering expenses. The $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.
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Cash Flows
Comparison of Years Ended December 31, 2019 and 2020
The following table summarizes our cash flows for the years ended December 31, 2019 and 2020:
(in thousands)
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Effects of foreign currency translation on cash
Net decrease in cash, cash equivalents and restricted cash
Year Ended December 31,
2019
2020
$ (71,892)
331
56,075
(106)
$ (15,592)
$
$
(71,331)
(274)
26,924
(140)
(44,821)
Operating Activities
Cash flow used in operating activities decreased by $0.6 million from $71.9 million for the year ended
December 31, 2019 to $71.3 million for the year ended December 31, 2020 primarily due to a $11.8 million decrease in net
loss, after adjustments for non-cash amounts included in net loss and higher working capital of $11.2 million primarily due
to a decrease in accrued expenses and other current liabilities and an increase in inventory.
Investing Activities
Cash flow provided by investing activities decreased by $0.6 million from $0.3 million cash provided for the year
ended December 31, 2019 to $0.3 million cash used for the year ended December 31, 2020 primarily due to changes in
restricted cash.
Financing Activities
Cash flow provided by financing activities decreased by $29.2 million from $56.1 million for the year ended
December 31, 2019 to $26.9 million for the year ended December 31, 2020 primarily due to the repayment of $30.0 million
of long-term borrowings on our debt facility and lower net proceeds of $20.4 million related to sales of our ordinary shares
under our ATM Agreements , partly offset by higher net proceeds of $33.3 million from our May 2020 and December 2020
equity offerings of ordinary shares, as well as the exercise of warrants.
Comparison of Years Ended December 31, 2018 and 2019
The following table summarizes our cash flows for the years ended December 31, 2018 and 2019:
(in thousands)
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Effect of foreign currency translation on cash
Net increase (decrease) in cash, cash equivalents and restricted
cash
Year Ended December 31,
2018
2019
$ (72,723)
(4,604)
92,923
(362)
$
(71,892)
331
56,075
(106)
$
15,234
$
(15,592)
Operating Activities
Cash flow used in operating activities decreased by $0.8 million from $72.7 million for the year ended December
31, 2018 to $71.9 million for the year ended December 31, 2019 primarily due to a $5.0 million decrease in
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net loss, after adjustments for non cash amounts included in net loss and higher working capital of $4.2 million primarily
due to changes in accrued expenses and other current liabilities.
Investing Activities
Cash flow provided by investing activities decreased by $4.9 million from $4.6 million of cash used for the year
ended December 31, 2018 to $0.3 million cash provided for the year ended December 31, 2019 primarily due to transaction
costs related to the acquisition of Zavante assets in 2018.
Financing Activities
Cash flow provided by financing activities decreased by $36.8 million from $92.9 million for the year ended
December 31, 2018 to $56.1 million for the year ended December 31, 2019 primarily due to net proceeds of $26.9 million
related to sales of our ordinary shares under our ATM Agreements, net proceeds of $18.8 million from our December 2019
registered direct offering of ordinary shares a $10.0 million advance under our December 2019 Loan Agreement with
Hercules and $0.4 million proceeds from our employee stock purchase plan.
Operating and Capital Expenditure Requirements
We anticipate that our expenses will increase as we expect to incur significant additional 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:
● initiate or continue the research and development of XENLETA and CONTEPO for additional indications
and of our other product candidates;
● 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 and our operations as a public company in addition to our
commercialization efforts.
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As described above, on March 11, 2020, we entered into an Amendment to our Loan Agreement with Hercules.
Pursuant to the Amendment, we repaid to 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 $2.3
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. Based on our current operating plans, we expect that our existing cash resources as of the date of this filing
will be sufficient to enable us to fund our operations, debt service obligations and capital expenditure requirements into the
fourth 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.
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 CONTEPO , if approved. We expect to seek additional funding in future periods to support these activities.
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 or product
returns by our wholesale customers;
● subject to the resubmission of the CONTEPO NDA and potential receipt of marketing approval, revenue
received from commercial sales of CONTEPO;
● 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;
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● 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, and if approved,
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.
Capital Expenditures
We made no significant capital investments during the year ended December 31, 2019 and capital expenditures
were $0.1 million for the year ended December 31, 2020. Currently, there are no material capital projects planned in 2021.
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, Ireland and the
United States.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
Since our inception, we have incurred net losses and generated negative cash flows from our operations. We
anticipate based on our current operating plans, that our existing cash, cash equivalents, restricted cash 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 fourth 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.
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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements, together with the report of our independent registered public accounting
firm, appear on pages F-1 through F-36 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. 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 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 Securities Exchange Act of 1934, 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 Securities Exchange
Act of 1934 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 Securities Exchange Act
of 1934 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
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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 December 31, 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.
Management’s Annual Report on Internal Control Over Financial Reporting
Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief
Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, 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, and includes those policies and procedures
that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of our management and board of directors; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting
objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human
diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or improper management override. Because of such
limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known features of the financial reporting process.
Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management is responsible for establishing and maintaining adequate internal control over our financial reporting,
as such term is defined in Rules 13a-15(f) and 15d-15(e) under the Exchange Act. Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of our internal control over financial reporting. Management has used the framework set
forth in the report entitled “Internal Control—Integrated Framework (2013)” published by the Committee of Sponsoring
Organizations of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting.
Based on its evaluation, management has concluded that our internal control over financial reporting was effective as of
December 31, 2020, the end of our most recent fiscal year.
Our independent registered public accounting firm has not performed an evaluation of our internal control over
financial reporting during any period in accordance with the provisions of the Sarbanes-Oxley Act. For as long as we
remain a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act, we intend to take advantage of
the exemption permitting us not to comply with the requirement that our independent registered public accounting firm
provide an attestation on the effectiveness of our internal control over financial reporting.
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 December 31, 2020 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Consulting Agreement with Sender Consulting LLC
On March 9, 2021, Sender Consulting LLC, a single-member limited liability company of which Gary Sender is
the principal, entered into a two-year consulting agreement with us, effective March 15, 2021, to provide financially
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related advice and actively manage projects as requested. In addition to an hourly service fee, Mr. Sender is entitled to
receive an award of 7,000 RSUs as of the effective date of the consulting agreement, which vests as to 50% of the shares
underlying the RSUs each year over the term of the consulting agreement.
Appointment of Director
On March 10, 2021, our board of directors elected Steven Gelone as a member of our board of directors, effective
immediately. Dr. Gelone will serve with a term expiring at the 2021 annual general meeting of shareholders and thereafter
until his successor has been duly elected and qualified or until his earlier death, resignation or removal. Dr. Gelone is not
expected to serve on any committees of our board of directors.
Dr. Gelone, age 53, has served as our president and chief operating officer since July 24, 2018. Dr. Gelone
previously served as Nabriva Austria’s chief development officer and head of business development from 2014 until the
Redomiciliation, our chief development officer from the Redomiciliation until June 30, 2017 and our chief scientific officer
from June 30, 2017 until July 24, 2018. Prior to joining Nabriva Austria, he served as head of clinical research and
development at Spark Therapeutics, Inc. in 2014 and vice president of clinical and preclinical development at ViroPharma
Incorporated from 2005 to 2014. Dr. Gelone also served as director of medical affairs at Vicuron Pharmaceuticals from
2002 to 2003 and director of clinical pharmacology and experimental medicine at GlaxoSmithKline Pharmaceuticals from
2000 to 2002. Dr. Gelone received his B.S. Pharm. and Pharm.D. from Temple University.
There are no arrangements or understandings between Dr. Gelone and any other persons pursuant to which he was
elected as a director. There are no transactions in which Dr. Gelone has an interest requiring disclosure under Item 404(a)
of Regulation S-K of the Securities Act of 1933, as amended.
Dr. Gelone will not receive any additional compensation in connection with his service on our board of directors.
He will continue to be compensated as one of our executive officers. See “Executive Compensation” for additional
information regarding Dr. Gelone’s compensation arrangements.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board of Directors
PART III
Set forth below are the names and certain biographical information about each member of our board of directors,
including their ages as of March 1, 2021. The information presented includes each director’s principal occupation and
business experience for at least the past five years and the names of other public companies of which he or she has served
as a director during the past five years.
Name
Daniel Burgess(1)(3)
Theodore Schroeder
Colin Broom, MD
Carrie Bourdow(2)
Charles Rowland, Jr.(1)(2)
George Talbot, MD(3)
Stephen Webster(1)(2)(3)
Steven Gelone
Age
59
65
65
58
62
72
59
53
Position
Director, Chairman of the Board
Director, Chief Executive Officer
Director
Director
Director
Director
Director
Director, President and Chief Operating Officer
(1) Member of the audit committee.
(2) Member of the compensation committee.
(3) Member of the nominating and corporate governance committee.
Daniel Burgess has served on our board of directors since June 23, 2017. Mr. Burgess was a member of the
supervisory board of Nabriva Austria and served as its chairman from October 2016 until the Redomiciliation. Mr. Burgess
has been a venture partner at SV Health Investors (SV) since 2014. Mr. Burgess has also served as the president and the
part-time chief executive officer of Therini Bio, Inc., a private therapeutics company, since May 2019. He was previously
president and chief executive officer of Rempex Pharmaceuticals, an antibiotics company he co-founded in 2011 and that
was subsequently sold to The Medicines Company (now Novartis AG) in 2013. Prior to this, Mr. Burgess was president
and chief executive officer of Mpex Pharmaceuticals from 2007 until its acquisition by Aptalis Inc. (now AbbVie Inc.) in
2011. Prior to his time at Mpex, Mr. Burgess served in various senior operating roles for other biotechnology companies. In
addition, he serves as a member of the boards of directors of Cidara Therapeutics, Inc., a public biotechnology company;
Arbutus Biopharma Corp., a public biotechnology company; and several private healthcare companies. Mr. Burgess was a
member of the board of directors of Santarus, Inc., from 2004 until its acquisition in 2014 by Salix Pharmaceuticals Inc., a
publicly traded pharmaceutical company. He received his B.A. in economics from Stanford University and an M.B.A. from
Harvard University. We believe Mr. Burgess is qualified to serve as a director because of his expertise and experience as an
executive in the pharmaceutical industry, his service on other boards of directors and his educational background.
Theodore Schroeder has served on our board of directors and as chief executive officer since July 24, 2018.
During the last 30 years, Mr. Schroeder has been focused on drug development and commercialization in both large and
small pharmaceutical companies. Most recently, he served as president, chief executive officer and director of Zavante
Therapeutics from June 2015 until its acquisition by Nabriva Therapeutics in July 2018. Mr. Schroeder co-founded
Cadence Pharmaceuticals in 2004 and previously held leadership roles at Elan Pharmaceuticals, Dura Pharmaceuticals and
earlier in his career, Bristol-Myers Squibb. He currently serves on the board of Cidara Therapeutics, Otonomy and
Collegium Pharmaceutical. He is a former chair of BIOCOM, the California life sciences trade association and in 2014, he
was named the EY Entrepreneur of the Year for the San Diego region and was listed as a national finalist. He received a
bachelor’s degree in management from Rutgers University. We believe Mr. Schroeder is qualified to serve as a director
because of his expertise and experience as an executive in the pharmaceutical industry, his service on other boards of
directors and his educational background.
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Colin Broom has served on our board of directors since June 23, 2017. Dr. Broom has served as the chief
executive officer of Pulmotect, Inc., a private biotechnology company, since September 2019. Dr. Broom was previously
our chief executive officer from April 12, 2017 until July 24, 2018, and the chief executive officer of Nabriva Austria from
August 2014 until the Redomiciliation. Prior to joining Nabriva Austria, he served as chief scientific officer at ViroPharma
Incorporated from 2004 until it was acquired by Shire plc in 2014. Dr. Broom served as vice president of clinical
development and medical affairs in Europe for Amgen Inc. from 2000 to 2003 and previously held several leadership
positions with Hoechst Marion Roussel (now Sanofi), SmithKline Beecham and Glaxo (now GlaxoSmithKline). Dr. Broom
served as a member of the board of directors of NPS Pharmaceuticals, Inc. from 2009 until its acquisition by Shire in 2015.
He is a member of the U.K. Royal College of Physicians and a fellow of the Faculty of Pharmaceutical Medicine.
Dr. Broom received his B.Sc. from University College, London and M.B.B.S. from St. George's Hospital Medical School,
London. We believe that Dr. Broom is qualified to serve as a director due to his extensive experience in all stages of drug
development and commercialization.
Carrie Bourdow has served on our board of directors since June 23, 2017. Ms. Bourdow has been the president,
the chief executive officer, and member of the board of directors of Trevena, Inc., a publicly-traded biopharmaceutical
company, since October 2018. She has served in various senior positions at Trevena since May 2015. She joined Trevena
as chief commercial officer and was appointed executive vice president and chief operating officer in January 2018. Prior
to joining Trevena, Ms. Bourdow was vice president of marketing at Cubist Pharmaceuticals, Inc., from 2013 until its
acquisition by Merck & Co., Inc. in January 2015. At Cubist, Ms. Bourdow led launch strategy, marketing, reimbursement,
and operations for acute care hospital pharmaceuticals. Prior to Cubist, Ms. Bourdow served for more than 20 years at
Merck & Co., Inc., where she held positions of increasing responsibility across multiple therapeutic areas. Ms. Bourdow
also serves as a director of Sesen Bio, Inc., a publicly traded pharmaceutical company. Ms. Bourdow holds a B.A. degree
from Hendrix College and an M.B.A. from Southern Illinois University. We believe Ms. Bourdow is qualified to serve as a
director due to her extensive experience in the biopharmaceutical industry, including her experience with anti-infectives
and with the commercialization of new drugs.
Charles A. Rowland, Jr. has served on our board of directors since June 23, 2017. Mr. Rowland previously
served on the supervisory board of Nabriva Austria from January 2015 until the Redomiciliation. Mr. Rowland served as
chief executive officer of Aurinia Pharmaceuticals Inc. from April 2016 to January 2017. Mr. Rowland previously served
as vice president and chief financial officer of ViroPharma Incorporated from 2008 until it was acquired by Shire plc in
2014. Prior to joining ViroPharma, Mr. Rowland served as executive vice president and chief financial officer, as well as
interim co-chief executive officer, for Endo Pharmaceuticals Inc. from 2006 to 2008 and chief financial officer at Biovail
Corporation from 2004 to 2006. He previously held finance and operational positions of increasing responsibility at
Breakaway Technologies, Inc., Pharmacia, Novartis International AG and Bristol-Myers Squibb Company. Mr. Rowland
currently serves as a member of the board of directors for Blueprint Medicines Corporation, a public biopharmaceutical
company, Viking Therapeutics, a public, clinical-stage biopharmaceutical company, and Orchard Therapeutics, a public,
clinical-stage biopharmaceutical company. In addition, Mr. Rowland serves as a member of the board of directors for
Generation Bio, a privately held biopharmaceutical company. Previously, he served on the board of directors at Idenix
Pharmaceuticals, Inc., Vitae Pharmaceuticals, Inc., Bind Therapeutics Inc. and Aurinia Pharmaceuticals Inc. Mr. Rowland
received his B.S. from Saint Joseph's University and M.B.A. from Rutgers University. We believe that Mr. Rowland is
qualified to serve as a director due to his extensive experience in pharmaceutical operations and all areas of finance and
accounting.
George H. Talbot has served on our board of directors since June 23, 2017. Dr. Talbot previously served on the
supervisory board of Nabriva Austria from 2009 until the Redomiciliation. Dr. Talbot has been the principal at Talbot
Advisors LLC, a biopharmaceutical company consultancy, since 2007 and prior to that, from 2000 to 2006. From 2006 to
2007, he served as chief medical officer and executive vice president of Cerexa, Inc. prior to its acquisition by Forest
Laboratories, Inc. Dr. Talbot also worked closely with Calixa Therapeutics, Inc. and Durata Therapeutics, Inc., prior to
their acquisitions by Cubist Pharmaceuticals, Inc. and Actavis plc, respectively. He was an initial member of the Infectious
Diseases Society of America's Antimicrobial Availability Task Force ("Bad Bugs, No Drugs") and recently completed a
seven-year tenure as co-chair of the Foundation for the National Institutes of Health (FNIH) Biomarkers Consortium
Projects for Endpoint Development in Acute Bacterial Skin and Skin Structure Infections, Community-acquired Bacterial
Pneumonia, and Hospital-acquired Bacterial Pneumonia/Ventilator-associated Bacterial Pneumonia, which made evidence-
based recommendations to the Food and Drug Administration for its Guidance development in
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these indications. Dr. Talbot received his B.A. from Wesleyan University, his M.D. from the Yale University School of
Medicine, and his Infectious Diseases fellowship training at the University of Pennsylvania. After serving as a faculty
member of the Infectious Diseases Section at the University of Pennsylvania, he joined the anti-infectives group at Rhone-
Poulenc-Rorer in 1990. We believe that Dr. Talbot is qualified to serve as a director due to his education, training and
extensive experience in the biopharmaceutical industry.
Stephen Webster has served on our board of directors since June 23, 2017. Mr. Webster previously served on the
supervisory board of Nabriva Austria from October 2016 until the Redomiciliation. Mr. Webster served as the chief
financial officer of Spark Therapeutics from July 2014 until its acquisition by Roche Holdings, Inc. in December 2019. He
was previously senior vice president and chief financial officer of Optimer Pharmaceuticals, Inc. from June 2012 until its
acquisition by Cubist Pharmaceuticals in November 2013. Prior to this, Mr. Webster served as senior vice president and
chief financial officer of Adolor Corporation, also acquired by Cubist, from 2008 to 2011. Previously, Mr. Webster served
as managing director, Investment Banking Division, Health Care Group for Broadpoint Capital Inc. (formerly First Albany
Capital). He also was a co-founder and served as president and chief executive officer of Neuronyx, Inc. Prior to this,
Mr. Webster held positions of increasing responsibility, including as director, Investment Banking Division, Health Care
Group, for PaineWebber Incorporated. Mr. Webster is currently a member of the board of directors of NextCure, Inc, TCR2
Therapeutics, Inc, Cullinan Management , Inc and Triplet Therapeutics, Inc. He holds an A.B. in economics from
Dartmouth College and an M.B.A. from the University of Pennsylvania. We believe that Mr. Webster is qualified to serve
as a director due to his extensive experience in the biopharmaceutical industry, particularly his service as a chief financial
officer and in other executive management roles.
Steven Gelone has served on our board of directors since March 10, 2021. Dr. Gelone has also served as our
president and chief operating officer since July 24, 2018. Dr. Gelone previously served as Nabriva Austria’s chief
development officer and head of business development from 2014 until the Redomiciliation, our chief development officer
from the Redomiciliation until June 30, 2017 and our chief scientific officer from June 30, 2017 until July 24, 2018. Prior
to joining Nabriva Austria, he served as head of clinical research and development at Spark Therapeutics, Inc. in 2014 and
vice president of clinical and preclinical development at ViroPharma Incorporated from 2005 to 2014. Dr. Gelone also
served as director of medical affairs at Vicuron Pharmaceuticals from 2002 to 2003 and director of clinical pharmacology
and experimental medicine at GlaxoSmithKline Pharmaceuticals from 2000 to 2002. Dr. Gelone received his B.S. Pharm.
and Pharm.D. from Temple University. We believe that Dr. Gelone is qualified to serve as a director due to his experience
in the biopharmaceutical industry and his experience with our company.
Board Committees
Our board of directors has established an audit committee, a compensation committee and a nominating and
corporate governance committee, each of which operates under a charter that has been approved by our board. Copies of
the committee charters are posted under the heading “Corporate Governance” on the Investor section of our website, which
is located at http://investors.nabriva.com.
Audit Committee
Our audit committee consists of Charles A. Rowland, Jr., Daniel Burgess and Stephen Webster. Stephen Webster
is the chair of the audit committee. The audit committee oversees our accounting and financial reporting processes and the
audits of our consolidated financial statements. The audit committee is responsible for, among other things:
● making recommendations to our board regarding the ratification by the annual general meeting of
shareholders of our independent auditors;
● overseeing the work of the independent auditors, including resolving disagreements between management
and the independent auditors relating to financial reporting;
● pre-approving all audit and non-audit services permitted to be performed by the independent auditors;
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● reviewing the independence and quality control procedures of the independent auditors;
● reviewing and approving all proposed related-party transactions;
● discussing the annual audited consolidated and statutory financial statements with management;
● annually reviewing and reassessing the adequacy of our audit committee charter;
● meeting separately with the independent auditors to discuss critical accounting policies, recommendations on
internal controls, the auditor’s engagement letter and independence letter and other material written
communications between the independent auditors and the management; and
● attending to such other matters as are specifically delegated to our audit committee by our board from time to
time.
Our Board has determined that Charles A. Rowland, Jr. and Stephen Webster are “audit committee financial
experts” as defined in the applicable SEC rules.
Compensation Committee
Our compensation committee consists of Charles A. Rowland, Jr., Stephen Webster and Carrie Bourdow. Charles
A. Rowland, Jr. is the chair of the compensation committee. The compensation committee assists the board in reviewing
and approving or recommending our compensation structure, including all forms of compensation relating to our directors
and management. The compensation committee is responsible for, among other things:
● reviewing and making recommendations to the board with respect to compensation of our board of directors
and management;
● reviewing and approving the compensation, including equity compensation, change-of-control benefits and
severance arrangements, of our chief executive officer, chief financial officer and such other members of our
management as it deems appropriate;
● overseeing the evaluation of our management;
● reviewing periodically and making recommendations to our board with respect to any incentive
compensation and equity plans, programs or similar arrangements;
● exercising the rights of our board under any equity plans, except for the right to amend any such plans unless
otherwise expressly authorized to do so; and
● attending to such other matters as are specifically delegated to our compensation committee by our board
from time to time.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Daniel Burgess, George Talbot and Stephen
Webster. Daniel Burgess is the chair of the nominating and corporate governance committee. The nominating and corporate
governance committee assists the board in selecting individuals qualified to become our directors and in determining the
composition of the board and its committees. The nominating and corporate governance committee is responsible for,
among other things:
● recommending to the board persons to be nominated for election or re-election to the board at any meeting of
shareholders;
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● overseeing the board’s annual review of its own performance and the performance of its committees; and
● developing and recommending to the board a set of corporate governance guidelines.
Executive Officers
The following table sets forth certain information regarding our executive officers, including their ages as of
March 1, 2021:
Name
Theodore Schroeder
Robert Crotty
Steven Gelone
Jennifer Schranz
Gary Sender
Daniel Dolan (1)
Age
65
47
53
56
58
44
Position
Chief Executive Officer
General Counsel and Secretary
President and Chief Operating Officer
Chief Medical Officer
Chief Financial Officer
Incoming Chief Financial Officer
(1) On February 24, 2021, our board of directors appointed Daniel Dolan as Chief Financial Officer of the
company, effective as of March 12, 2021. Mr. Dolan will succeed Gary Sender, whose resignation as Chief Financial
Officer of the company will be effective as of the close of business on March 12, 2021.
In addition to the biographical information for Mr. Schroeder and Dr. Gelone, which is set forth above under
“Board of Directors”, set forth below is certain biographical information about Dr. Schranz, and Messrs. Crotty and
Sender:
Robert Crotty has served as our general counsel and secretary since June 23, 2017. Mr. Crotty joined Nabriva
Austria as general counsel and secretary prior to the Redomiciliation on June 14, 2017. Previously, Mr. Crotty served as
vice president, general counsel, chief compliance officer and secretary of Vernalis Therapeutics, Inc. from January 2016 to
June 2017. Prior to joining Vernalis, Mr. Crotty held several positions at Dendreon Corporation from April 2012 to July
2015, including president, general counsel and secretary from February 2015 to July 2015, executive vice president,
general counsel and secretary from March 2014 to February 2015, and vice president, assistant general counsel and
assistant secretary from April 2012 to February 2014. Before Dendreon, Mr. Crotty was senior counsel at NPS
Pharmaceuticals from 2009 until 2012 and at ImClone Systems, Inc. from 2006 to 2009. Prior to going in-house,
Mr. Crotty was an associate at Morgan, Lewis & Bockius and Norton Rose Fulbright. Mr. Crotty received his B.A. from
Princeton University and J.D. from University of Pennsylvania.
Jennifer Schranz has served as our chief medical officer since March 21, 2018. Previously, Dr. Schranz served as
vice president, clinical research and development, global development team lead, for hereditary angioedema at Shire plc
from January 2014 until March 2018. Prior to Shire, Dr. Schranz served as vice president of clinical development for
ViroPharma, Inc. from March 2011 until January 2014. Before joining ViroPharma, Dr. Schranz was vice president, clinical
research at Cempra, Inc., where she was responsible for clinical and regulatory strategy. Earlier in her career, Dr. Schranz
worked in clinical development and medical affairs at several pharmaceutical companies, including Wyeth (now Pfizer),
Vicuron Pharmaceuticals, Inc. (now Pfizer), GlaxoSmithKline plc, and Merck & Co. Inc. Dr. Schranz completed two years
of biology and psychology at McMaster University prior to acceptance and subsequent completion of an M.D. from the
University of Toronto, where she completed her internal medicine training and was a fellow in infectious diseases. On
February 24, 2021, Dr. Schranz notified us of her decision to resign from the company, effective on March 19, 2021.
Gary Sender has served as our chief financial officer since April 12, 2017. Mr. Sender previously served as our
chief financial officer from May 2016 until the Redomiciliation. Prior to joining Nabriva Austria, he served as chief
financial officer and executive vice president at Synergy Pharmaceuticals from 2015 to 2016. From 2009 until 2015,
Mr. Sender served as senior vice president, Finance at Shire plc., supporting its Specialty Pharmaceuticals business and
subsequently its Global Commercial businesses. At Shire he was responsible for financial management and support of all
commercial areas of Shire’s Specialty Pharmaceutical and Rare Disease businesses, with an emphasis on resource
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allocation, financial forecasting, business cases and mergers and acquisitions. Prior to joining Shire, Mr. Sender was the
founding CFO of Tengion, Inc. Mr. Sender also spent 15 years in a number of finance leadership roles within Merck.
Mr. Sender is currently a member of the board of directors of Schrödinger, Inc., Harmony Biosciences Inc., and iBio Inc.
Mr. Sender received his B.S. from Boston University and an M.B.A from Carnegie-Mellon University. On February 1,
2021, Mr. Sender informed us of his intention to retire from the company, effective on March 12, 2021. He is expected to
become a consultant for the Company at least through the end of 2021.
Daniel Dolan has been appointed as chief financial officer, effective as of March 12, 2021.Mr. Dolan previously
served as Vice President of Finance at Radius Health, Inc., or Radius, a commercial-stage biopharmaceutical company,
from July 2017 to January 2021. He also acted as principal financial officer and principal accounting officer of Radius from
September 2020 to December 2020. Prior to joining Radius, Mr. Dolan worked at Shire plc from September 2005 to July
2017, where he held financial management positions of increasing responsibility, including Vice President of Finance,
Global Product Strategy from May 2016 to July 2017 and Senior Finance Director, GI/Internal Medicine from May 2013 to
May 2016. Mr. Dolan received his M.B.A. and B.S. from Widener University.
Code of Business Conduct and Ethics
Our Code of Business Conduct and Ethics is applicable to all of our directors, officers and employees and is
available on our website at http://investors.nabriva.com/corporate-governance/governance-overview. Our Code of Business
Conduct and Ethics provides that our directors, officers and employees are expected to avoid any action, position or
interest that conflicts with the interests of our company or gives the appearance of a conflict. We expect that any
amendment to this code, or any waivers of its requirements, will be disclosed on our website. Information contained on, or
that can be accessed through, our website is not incorporated by reference into this document, and you should not consider
information on our website to be part of this document.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10%
of our ordinary shares to file an initial report of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with
the SEC. Such officers, directors and 10% shareholders are also required by SEC rules to furnish us with copies of any
Forms 3, 4 or 5 that they file. The SEC rules require us to disclose late filings of initial reports of stock ownership and
changes in share ownership by our directors, executive officers and 10% shareholders.
Based solely on a review of copies of Forms 3, 4 and 5 furnished to us by reporting persons and any written
representations furnished by certain reporting persons, we believe that during the fiscal year ended December 31, 2020, all
Section 16(a) filing requirements applicable to our directors, executive officers and 10% shareholders were completed in a
timely manner other than one Form 4 for each of Gary Sender, Steven Gelone, Theodore Schroeder, Jennifer Schranz,
Francesco Maria Lavino and Robert Crotty, in each case filed June 3, 2020 and relating to the withholding of securities for
tax purposes on May 31, 2020 in connection with the vesting of restricted stock units.
ITEM 11. EXECUTIVE COMPENSATION
The following discussion provides the amount of compensation paid, and benefits in-kind granted, by us and our
subsidiaries to the members of our board of directors and certain executives for services provided in all capacities to us and
our subsidiaries for the year ended December 31, 2020. On December 2, 2020, our board of directors effected a one-for-ten
reverse stock split of our ordinary shares, or the Reverse Stock Split. All outstanding stock options, restricted stock units
and warrants entitling their holders to purchase or acquire ordinary shares were adjusted as a result of the Reverse Stock
Split. Accordingly, all ordinary share, common share, equity award, warrant and per share amounts have been adjusted to
reflect the Reverse Stock Split for all prior periods presented.
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Executive and Director Compensation Processes
Our executive compensation program is administered by the compensation committee of our board of directors,
subject to the oversight and approval of our full board of directors. Our compensation committee reviews our executive
compensation practices on an annual basis and based on this review approves, or, as appropriate, makes recommendations
to our board of directors for approval of our executive compensation program.
In designing our executive compensation program, our compensation committee considers publicly available
compensation data for national and regional companies in the biotechnology/pharmaceutical industry to help guide its
executive compensation decisions at the time of hiring and for subsequent adjustments in compensation. Since 2016, our
compensation committee has retained Radford, a part of Aon Hewitt, a business unit of Aon plc, as its independent
compensation consultant, to provide comparative data on executive compensation practices in our industry and to advise on
our executive compensation program generally. The committee also has retained Radford for guidelines and review of non-
employee director compensation. Although our compensation committee considers the advice and guidelines of Radford as
to our executive compensation program, our compensation committee ultimately makes its own decisions about these
matters. In the future, we expect that our compensation committee will continue to engage independent compensation
consultants to provide additional guidance on our executive compensation programs and to conduct further competitive
benchmarking against a peer group of publicly traded companies.
Our director compensation program is administered by our board of directors with the assistance of the
compensation committee. The compensation committee conducts an annual review of director compensation and makes
recommendations to the board of directors with respect thereto.
Summary Compensation Table
Our “named executive officers” for the year ended December 31, 2020 were as follows: Mr. Schroeder, our chief
executive officer, Dr. Schranz, our chief medical officer and Dr. Gelone, our president and chief operating officer. The
following table sets forth information regarding compensation awarded to, earned by or paid to our named executive
officers for the periods presented.
Name and principal position Year
2020
Theodore Schroeder
2019
Chief Executive Officer
Steven Gelone
President and Chief
Operating Officer
Jennifer Schranz (5)
Chief Medical Officer
2020
2019
2020
2019
Salary($) Bonus ($)(1)
576,800
560,000
486,300
472,100
—
—
—
—
Share
Awards
($)(2)
464,130
310,175
Option
Awards
($)(2)
339,625
478,367
270,863
200,925
231,493
309,859
Non-Equity
Incentive Plan
Compensation Compensation
All Other
($) (3)
242,256
119,250
153,185
181,420
($)(4)
Total ($)
1,654,570
1,496,164
31,759
28,372
12,675
13,976
1,154,516
1,178,280
460,000
436,200
100,000
—
183,488
99,750
156,818
261,555
145,203
151,200
28,604
33,450
1,074,113
982,155
(1) The amount reported in the “Bonus” column represents a $100,000 retention bonus awarded to Dr. Schranz in 2020, of
which 50% shall be repaid within 30 days following Dr. Schranz’s termination date.
(2) The amounts reported in the “Share Awards” and “Option Awards” columns reflect the aggregate grant-date fair value
of share-based compensation awarded during the year computed in accordance with the provisions of ASC Topic 718.
See Note 11 to the consolidated financial statements regarding assumptions underlying the valuation of equity awards.
(3) The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent awards to our named
executive officers under our annual cash bonus program.
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(4) The compensation included in the “All Other Compensation” column consists of amounts we contributed to our
401(k) plan and medical insurance premiums paid by us on behalf of such individual.
(5) On February 24, 2021, Dr. Schranz notified us of her decision to resign from the company, effective on March 19,
2021.
Narrative Disclosure to Summary Compensation Table
Base Salary
In 2020, we paid annualized base salaries of $576,800 to Mr. Schroeder; $486,300 to Dr. Gelone; and $449,300 to
Dr. Schranz. In 2019, we paid annualized base salaries of $560,000 to Mr. Schroeder; $472,100 to Dr. Gelone; and
$436,200 to Dr. Schranz.
In January 2021, our board of directors, following approval and recommendation from the compensation
committee and consistent with the recommendations of the compensation committee’s independent compensation
consultant, approved an increase to the base salaries of our named executive officers for 2021 as follows: $594,104 for
Mr. Schroeder, $500,889 for Dr. Gelone and $473,800 for Dr. Schranz . The board also approved the 2021 base salary for
Mr. Crotty, our general counsel and secretary, of $403,966, which was also consistent with the recommendation of the
compensation committee’s independent consultant.
None of our named executive officers is currently party to an employment agreement or other agreement or
arrangement that provides for automatic or scheduled increases in base salary.
Annual Performance-Based Compensation
Our executive officers, which include the named executive officers, participate in our performance-based bonus
program. All annual cash bonuses for our executives under the performance-based bonus program are tied to the
achievement of strategic and operational corporate goals for the company, which are set by the compensation committee
and approved by the board. There are no discretionary individual goals under the bonus program. The 2020 strategic and
operational goals for Nabriva related to the following objectives:
● commercialization of our products;
● finance, specifically fundraising;
● regulatory approvals;
● business development; and
● chemistry, manufacturing, and control (CMC).
Under their respective employment agreements, the annual target bonus for Mr. Schroeder is 60% of his current
base salary, the annual target bonus for Dr. Gelone is 45% of his current base salary and the annual target bonus for each of
Dr. Schranz, Mr. Sender and Mr. Crotty is 40% of their respective current base salaries. On February 24, 2021, Dr. Schranz
notified us of her decision to resign from the company, effective on March 19, 2021. On February 1, 2021, Mr. Sender
informed us of his intention to retire from the company, effective on March 12, 2021.
At a meeting held in January 2021, our compensation committee reviewed the accomplishments of the named
executive officers as measured against the aforementioned 2020 goals. The compensation committee reviewed whether
each goal had been obtained and the weight such goals should be given in determining the bonus payout for 2020
performance. Based on its review, the compensation committee recommended a 70% payout of the target bonuses for 2020
for Mr. Schroeder and Dr. Gelone, and an 80% payout of the target bonuses for Dr. Schranz, which were paid in
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February 2021. Accordingly, the 2020 bonus payouts were $242,256 for Mr. Schroeder, $153,185 for Dr. Gelone and
$145,203 for Dr. Schranz.
Equity Incentive Awards
We believe that equity grants provide our executive officers with a strong link to our long-term performance,
create an ownership culture and help to align the interests of our executive officers and our shareholders. In addition, we
believe that equity grants with a time-based vesting feature promote executive retention because this feature incents our
executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically
reviews the equity incentive compensation of our executive officers, which includes the named executive officers, and from
time to time may grant equity incentive awards to them in the form of stock options or restricted stock units, or RSUs. We
also generally make stock option grants to new executive officers in connection with the commencement of their
employment.
Since our initial public offering, we have granted stock options with exercise prices that are set at no less than the
fair market value of the underlying award on the date of grant, as determined by reference to the trading price of our
ordinary shares on Nasdaq, and approved by our compensation committee or our board.
The following table sets forth the number of our ordinary shares issuable upon vesting of the share awards granted
to our named executive officers in 2021:
Name
Theodore Schroeder
Steven Gelone
Jennifer Schranz
Option Award
(#)
—
—
—
RSU Award
(#)
117,500
42,500
22,500
On January 29, 2021, our board of directors granted restricted stock units, or RSUs, under the 2020 Share
Incentive Plan to Mr. Schroeder, Dr. Schranz and Dr. Gelone. The RSUs vest over a four year period beginning on January
29, 2021. Twenty five percent (25%) of the RSUs vest annually over the four year vesting period.
The following table sets forth the number of our ordinary shares issuable upon exercise or vesting of the share
awards granted to our named executive officers in 2020:
Name
Theodore Schroeder
Steven Gelone
Jennifer Schranz
Option Award
(#)
68,750
54,250
36,750
RSU Award
(#)
34,380
27,125
18,375
On February 6, 2020, our board of directors granted stock option awards, as well as restricted stock units, or
RSUs, under the 2020 Share Incentive Plan to Mr. Schroeder, Dr. Schranz and Dr. Gelone. The stock option awards and
RSUs vest over a four year period beginning on February 6, 2020, with 25% vesting upon the first anniversary of the grant
date and on a monthly pro rata basis thereafter over the remaining three years. Dr. Schranz and Dr. Gelone were also
awarded RSUs where vesting is subject to the commercial performance and life cycle management of the product and
product candidate portfolio.
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Outstanding Equity Awards as of December 31, 2020
The following table sets forth information regarding outstanding stock options and RSUs held by our named
executive officers as of December 31, 2020:
Option Awards
Number of
securities
underlying
unexercised
options
(#)
exercisable
Number of
securities
underlying
unexercised
options
(#)
unexercisable
Option
exercise
price
($)
51,353
2,594
—
8,879
5,590
10,829
7,291
4,682
437
13,339
—
—
10,312
11,260
—
—
33,647 (1)
22,386 (2)
68,750 (3)
— (4)
— (5)
471 (6)
2,709 (7)
3,068 (8)
313 (9)
14,501 (2)
31,000 (3)
23,250 (10)
4,688 (11)
12,240 (2)
21,000 (3)
15,750 (10)
35.30
19.00
13.50
72.05
83.40
85.00
64.70
35.30
24.90
19.00
13.50
5.30
50.30
19.00
13.50
5.30
Equity incentive
plan awards:
Number of
unearned shares,
units or other
rights that have
not vested
(#)
Equity incentive
plan awards:
Market or
payout value of
unearned shares,
units or other
rights that have
not vested
($)
8,842 (12)
34,380 (13)
—
5,728 (12)
15,500 (13)
11,625 (14)
—
—
—
—
—
—
2,842 (12)
10,500 (13)
7,875 (14)
—
21,398
45,382
—
13,862
37,510
28,133
—
—
—
—
—
—
6,878
25,410
19,058
—
Option
expiration
date
07/25/2028
01/31/2029
02/06/2030
07/05/2025
02/04/2026
02/07/2027
01/31/2028
07/25/2028
02/08/2028
01/31/2029
02/06/2030
09/25/2030
03/31/2028
01/31/2029
02/06/2030
09/25/2030
Name
Theodore Schroeder
Steven Gelone
Jennifer Schranz (15)
(1) Mr. Schroeder’s option to purchase 85,000 of our ordinary shares vests over four years, with 25% of the options
vesting on July 25, 2019, and the remaining 75% of the option vesting on a monthly pro rata basis over the remaining
three years of the vesting period.
(2) Mr. Schroeder’s, Dr. Schranz´s and Dr. Gelone’s option to purchase ordinary shares vests over four years, with 25% of
the options vesting on January 31, 2020, and the remaining 75% of the option vesting on a monthly pro rata basis over
the remaining three years of the vesting period.
(3) Mr. Schroeder’s, Dr. Schranz´s and Dr. Gelone’s option to purchase ordinary shares vests over four years, with 25% of
the options vesting on February 6, 2021, and the remaining 75% of the option vesting on a monthly pro rata basis over
the remaining three years of the vesting period.
(4) Dr. Gelone’s option to purchase 8,879 of our ordinary shares vests over four years, with 25% of the options vesting on
May 31, 2016, and the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three years
of the vesting period.
(5) Dr. Gelone’s option to purchase 5,590 of our ordinary shares vests over four years, with 25% of the options vesting on
February 28, 2017, and the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three
years of the vesting period.
(6) Dr. Gelone’s option to purchase 11,300 of our ordinary shares vests over four years, with 25% of the options vesting
on February 28, 2018, and the remaining 75% of the option vesting on a monthly pro rata basis over the remaining
three years of the vesting period.
(7) Dr. Gelone’s option to purchase 10,000 of our ordinary shares vests over four years, with 25% of the options vesting
on January 31, 2019, and the remaining 75% of the option vesting on a monthly pro rata basis over the remaining three
years of the vesting period.
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(8) Dr. Gelone’s option to purchase 7,750 of our ordinary shares vests over four years, with 25% of the options vesting on
July 25, 2019, and the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three years
of the vesting period.
(9) Dr. Gelone’s option to purchase 750 of our ordinary shares vests over four years, with 25% of the options vesting on
August 2, 2019, and the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three
years of the vesting period.
(10) Dr. Schranz’s and Dr. Gelone’s option to purchase ordinary shares is subject to the commercial performance and life
cycle management of the product and product candidate portfolio.
(11) Dr. Schranz’s option to purchase 15,000 of our ordinary shares vests over four years, with 25% of the options vesting
on March 31, 2019, and the remaining 75% of the option vesting on a monthly pro rata basis over the remaining three
years of the vesting period.
(12) Mr. Schroeder’s, Dr. Schranz´s and Dr. Gelone’s RSUs vest over four years, with 25% of the options vesting on
January 31, 2020, and the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three
years of the vesting period.
(13) Dr. Schranz´s and Dr. Gelone’s RSUs vest over four years, with 25% of the options vesting on February 6, 2021, and
the remaining 75% of the option vesting on a monthly pro-rata basis over the remaining three years of the vesting
period.
(14) Dr. Schranz´s and Dr. Gelone’s vesting of the RSUs is subject to the commercial performance and life cycle
management of the product and product candidate portfolio.
(15) On February 24, 2021, Dr. Schranz notified us of her decision to resign from the company, effective on March 19,
2021. Dr. Schranz´s right to exercise her option awards shall terminate three months after March 19, 2021, and Dr.
Schranz’s awards shall no longer vest after March 19, 2021.
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Employment Agreements with Executive Officers
Agreement with Theodore Schroeder, Chief Executive Officer and Director
Mr. Schroeder was appointed our chief executive officer and entered into an employment agreement dated and
effective as of July 23, 2018. He was appointed to our board on August 1, 2018. On March 10, 2021, we entered into an
amended and restated employment agreement with Mr. Schroeder, or the Schroeder Employment Agreement. The
Schroeder Employment Agreement continues until terminated in accordance with its terms, as described below.
Pursuant to the Schroeder Employment Agreement, Mr. Schroeder receives an annual base salary of $594,104 and
is eligible to receive an annual performance bonus targeted at 60% of his annual base salary, with the actual amount of such
bonus, if any, to be determined by the Board. Mr. Schroeder is also (1) eligible to receive equity awards at such times and
on such terms and conditions as the Board may determine and (2) entitled to participate in any and all benefit programs that
we make available to our executive officers, for which he may be eligible, under the plan documents governing such
programs.
The employment agreement, and Mr. Schroeder’s employment, may be terminated as follows: (1) upon Mr.
Schroeder’s death or “disability” (as disability is defined in his employment agreement); (2) at our election, with or without
“cause” (as cause is defined in his employment agreement); and (3) at Mr. Schroeder’s election, with or without “good
reason” (as good reason is defined in his employment agreement).
In the event of the termination of Mr. Schroeder’s employment by us without cause, including as a result of a
termination of his employment for good reason prior to, or more than twelve months following, a “change in control” (as
change in control is defined in the Schroeder Employment Agreement), Mr. Schroeder will be entitled to his base salary
that has accrued and to which he is entitled as of the termination date. In addition, subject to his execution and
nonrevocation of a release of claims in our favor and his continued compliance with his proprietary rights, non‑disclosure
and developments agreement with us, he is entitled to (1) continued payment of his base salary, in accordance with our
regular payroll procedures, for a period of 18 months (2) provided he is eligible for and timely elects to continue receiving
group medical insurance under COBRA and the payments would not result in the violation of nondiscrimination
requirements of applicable law, payment by us of the portion of health coverage premiums we pay for similarly‑situated,
active employees who receive the same type of coverage, for a period of up to 18 months following his date of termination,
(3) a lump sum payment equal to any earned but unpaid annual bonus for a previously completed calendar year, (4) a lump
sum payment equal to a prorated annual bonus for the year in which Mr. Schroeder’s employment is terminated based on
the number of days he provided services to us during the year in which his employment is terminated and (5) accelerated
vesting of his then‑unvested equity awards that are subject to time-based vesting and that would have vested within twelve
months of the termination date, whether granted under the 2017 Share Incentive Plan, 2020 Share Incentive Plan or any
successor equity incentive plan or as an inducement to his employment.
In the event of the termination of Mr. Schroeder’s employment by us without cause, including as a result of a
termination of his employment for good reason prior to, or by him for good reason within twelve months following a
change in control, subject (as described above with respect to certain payments), to his execution and nonrevocation of a
release of claims in our favor and his continued compliance with his proprietary rights, non‑disclosure and developments
agreement with us, Mr. Schroeder would be entitled to the same payments and benefits as described in the preceding
paragraph, except that, in lieu of a pro‑rated annual bonus payment, he would be entitled to receive a lump sum payment
equal to 100% of his target bonus for the year in which his employment is terminated and he shall also be entitled to full
vesting acceleration of his then‑unvested equity awards, whether granted under the 2017 Share Incentive Plan, 2020 Share
Incentive Plan or any successor equity incentive plan or as an inducement to his employment, such that his equity awards
become fully exercisable and non‑forfeitable as of the termination date, except as otherwise determined by the Board in the
case of awards subject to performance conditions.
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If Mr. Schroeder’s employment is terminated for any other reason, including as a result of his death or disability,
for cause, or voluntarily by Mr. Schroeder without good reason, our obligations under the Schroeder Employment
Agreement cease immediately, and Mr. Schroeder is only entitled to his base salary that has accrued and to which he is
entitled as of the termination date and solely if his employment is terminated as a result of his death or disability, subject to
his execution and nonrevocation of a release of claims in our favor and his continued compliance with his proprietary
rights, non‑disclosure and developments agreement with us, he or his estate, as applicable, is entitled to any earned but
unpaid annual bonus from a previously completed calendar year.
As a condition of his employment, Mr. Schroeder signed a proprietary rights, non‑disclosure and developments
agreement.
Agreements with Daniel Dolan, Chief Financial Officer, Steven Gelone, President, Chief Operating Officer and Director,
and Robert Crotty, General Counsel and Secretary
Mr. Dolan was appointed our chief financial officer effective as of March 12, 2021, and entered into an
employment agreement dated and effective as of March 10, 2021, or the Dolan Employment Agreement. Dr. Gelone was
appointed our chief development officer and entered into an employment agreement dated and effective as of December 1,
2014, which was amended and restated as of May 26, 2016 and further amended on restated on July 24, 2018. Dr. Gelone
was subsequently appointed our chief scientific officer on June 30, 2017 and our president and chief operating officer on
July 24, 2018. Dr. Gelone was appointed to our board on March 10, 2021. On March 10, 2021, we entered into an amended
and restated employment agreement with Dr. Gelone, or the Gelone Employment Agreement. Mr. Crotty was appointed as
our general counsel and secretary and entered into an employment agreement dated and effective as of June 14, 2017. On
March 10, 2021, we entered into an amended and restated employment agreement with Mr. Crotty, or the Crotty
Employment Agreement. Each of the Dolan Employment Agreement, Gelone Employment Agreement and Crotty
Employment Agreement, or the Executive Employment Agreements, provides that such executive officer is an at will
employee, and his employment with us can be terminated by the respective executive officer or us at any time and for any
reason.
Pursuant to the Dolan Employment Agreement, Mr. Dolan receives an annual base salary of $330,000 and is
eligible to receive an annual performance bonus targeted at 40% of his annual base salary, with the actual amount of such
bonus, if any, to be determined by the Board. Pursuant to the Gelone Employment Agreement, Dr. Gelone receives an
annual base salary of $509,888 and is eligible to receive an annual performance bonus targeted at 45% of his annual base
salary, with the actual amount of such bonus, if any, to be determined by the Board. Pursuant to the Crotty Employment
Agreement, Mr. Crotty receives an annual base salary of $403,966 and is eligible to receive an annual performance bonus
targeted at 40% of his annual base salary, with the actual amount of such bonus, if any, to be determined by the Board.
Each of Mr. Dolan, Dr. Gelone and Mr. Crotty are also (1) eligible to receive equity awards at such times and on such terms
and conditions as the Board may determine and (2) entitled to participate in any and all benefit programs that we make
available to our executive officers, for which he may be eligible, under the plan documents governing such programs.
In addition, pursuant to the Dolan Employment Agreement, subject to approval by the compensation committee of
the Board or a majority of our independent directors as defined in Nasdaq Listing Rule 5605(a)(2), Mr. Dolan shall receive
a nonqualified share option to purchase 100,000 ordinary shares at an exercise price per share equal to the closing price per
share of the ordinary shares on the Nasdaq Global Select Market on the date of grant, to vest over a period of four (4)
years, subject to the terms and conditions of our 2021 Inducement Share Incentive Plan and a nonqualified share option
agreement between us and Mr. Dolan, and awarded outside of our equity incentive plans as an “inducement grant” within
the meaning of Nasdaq Listing Rule 5635(e)(4).
Each Executive Employment Agreement and the employment of each of Mr. Dolan, Dr. Gelone and Mr. Crotty
may be terminated in one of three ways: (1) upon the death or “disability” (as disability is defined in the applicable
Executive Employment Agreement) of such executive officer; (2) at our election, with or without “cause” (as cause is
defined in the applicable Executive Employment Agreement); and (3) at such executive officer’s election, with or without
“good reason” (as good reason is defined in the applicable Executive Employment Agreement).
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In the event of the termination of such executive officer’s employment by us without cause or by him for good
reason prior to, or more than twelve months following, a “change in control” (as change in control is defined in the
applicable Executive Employment Agreement), such executive officer will be entitled to his base salary that has accrued
and to which he is entitled as of the termination date. In addition, subject to such executive officer’s execution and
nonrevocation of a release of claims in our favor and his continued compliance with his proprietary rights, non‑disclosure
and developments agreement with us, such executive officer is entitled to (1) continued payment of such executive officer’s
base salary, in accordance with our regular payroll procedures, for, in the case of Mr. Dolan and Mr. Crotty, a period of 12
months, and in the case of Dr. Gelone, a period of 15 months, (2) provided he is eligible for and timely elects to continue
receiving group medical insurance under COBRA and the payments would not result in the violation of nondiscrimination
requirements of applicable law, payment by us of the portion of health coverage premiums we pay for similarly‑situated,
active employees, who receive the same type of coverage, for, in the case of Mr. Dolan and Mr. Crotty, a period of up to 12
months and, in the case of Dr. Gelone, a period of 15 months, following the date of termination, (3) a lump sum payment
equal to any earned but unpaid annual bonus for a previously completed calendar year and (4) a lump sum payment equal
to a prorated annual bonus for the year in which such executive officer’s employment is terminated based on the number of
days such executive officer provided services to us during the year in which such executive officer’s employment is
terminated.
In the event of the termination of the executive officer’s employment by us without cause or by him for good
reason within twelve months following a change in control, subject (as described above with respect to certain payments)
to such executive officer’s execution and nonrevocation of a release of claims in our favor and his continued compliance
with his proprietary rights, non‑disclosure and developments agreement with us, such executive officer will be entitled to
the same payments and benefits as described in the preceding paragraph, except that, in lieu of a pro‑rated annual bonus
payment, such executive officer will be entitled to receive a lump sum payment equal to 100% of such executive officer’s
target bonus for the year in which his employment is terminated, and such executive officer shall also be entitled to full
vesting acceleration of his then‑unvested equity awards, whether granted under the 2017 Share Incentive Plan, 2020 Share
Incentive Plan or any successor equity incentive plan, such that his equity awards become fully exercisable and
non‑forfeitable as of the termination date, except as otherwise determined by the Board in the case of awards subject to
performance conditions.
If such executive officer’s employment is terminated for any other reason, including as a result of his death or
disability, for cause, or voluntarily by such executive officer without good reason, our obligations under the applicable
Executive Employment Agreements cease immediately, and such executive officer is only entitled to his base salary that
has accrued and to which he is entitled as of the termination date and, solely if such executive officer’s employment is
terminated as a result of his death or disability and subject to his execution and nonrevocation of a release of claims in our
favor and his continued compliance with his proprietary rights, non‑disclosure and developments agreement with us, such
executive officer or the estate of such executive officer, as applicable, is entitled to any earned but unpaid annual bonus
from a previously completed calendar year.
As a condition to their employment, each of Mr. Dolan, Dr. Gelone and Mr. Crotty signed a proprietary rights,
non‑disclosure and developments agreement.
Agreements with Jennifer Schranz and Gary Sender
On February 1, 2021, Mr. Sender informed us of his intention to retire from the company, effective on March 12,
2021. On February 24, 2021, Dr. Schranz notified us of her decision to resign from the company, effective on March 19,
2021. Our obligations under their respective employment agreements cease as of the effective date of their respective
resignations, and each executive officer is only entitled to his or her base salary that has accrued and to which he or she is
entitled as of such date.
Consulting Agreement with Sender Consulting LLC
On March 9, 2021, Sender Consulting LLC, a single-member limited liability company of which Gary Sender is
the principal, entered into a two-year consulting agreement with us, effective March 15, 2021, to provide financially
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related advice and actively manage projects as requested. In addition to an hourly service fee, Mr. Sender is entitled to
receive an award of 7,000 RSUs as of the effective date of the consulting agreement, which vests as to 50% of the shares
underlying the RSUs each year over the term of the consulting agreement.
Equity Incentive Plans
In this section, we describe our 2020 Share Incentive Plan, 2017 Share Incentive Plan and Stock Option Plan
2015. Prior to the Redomiciliation, Nabriva Austria granted awards to eligible recipients under the Stock Option Plan 2015.
In connection with the Redomiciliation, both plans were amended to take account of certain requirements under Irish law
and assumed by us, with each option to acquire one Nabriva Austria common share becoming an option to acquire ten of
our ordinary shares on the same terms and conditions. We currently make share awards to eligible recipients solely under
our 2017 Share Incentive Plan.
2020 Share Incentive Plan
On March 4, 2020, our board of directors adopted the 2020 Share Incentive Plan, or the 2020 Plan, which was
approved by our shareholders at the 2020 Annual General Meeting of Shareholders in July 2020, or the AGM. As of the
date of the 2020 AGM, the total number of ordinary shares reserved for issuance under the 2020 Plan was for the sum of
9,300,000 ordinary shares, plus 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.
As of January 31, 2020, under our 2020 Share Incentive Plan, there were options to purchase an aggregate of
284,205 of our ordinary shares at a weighted average exercise price of $10.18 per share, 455,648 restricted stock units
outstanding with a weighted average grant date fair value of $3.39 per share, and 492,670 ordinary shares available for
future issuance under the plan.
The 2020 Plan is administered by the board of directors. The exercise or measurement prices, vesting periods,
performance goals and other award restrictions are determined at the discretion of the board of directors, except that the
exercise price or measurement price per share of options or share appreciation rights may not be less than 100% of the fair
market value of the ordinary shares on the date of grant, provided that if the board of directors approves the grant of an
option or a share appreciation right with an exercise or measurement price to be determined on a future date, the exercise or
measurement price may not be less than 100% of the fair market value of the ordinary shares on such future date. No share
option or share appreciation right will be granted under the 2020 Plan with a term in excess of ten years.
If, during the term of the 2020 Plan, there is a change in our share capital or a restructuring measure which has an
effect on our share capital, such as a share split or reverse share split, the board of directors will make equitable
adjustments to the price or the amount of outstanding awards.
The 2020 Plan also contains provisions addressing the consequences of any reorganization event. A reorganization
event is defined as (a) any merger or consolidation of ours with or into another entity as a result of which all of our
ordinary shares are converted into or exchanged for the right to receive cash, securities or other property, or are canceled,
(b) any transfer or disposition of all of our ordinary shares for cash, securities or other property pursuant to a share
exchange or other transaction or (c) any liquidation or dissolution of ours; any one of which, (a), (b) or (c), may be effected
pursuant to the laws of the Republic of Ireland.
The 2020 Plan provides that, if a reorganization event occurs, the board of directors may take one or more of the
following actions with respect to all or any outstanding awards other than restricted shares on such terms as the board of
directors determines: (1) provide that such awards will be assumed, or substantially equivalent awards will be
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substituted, by the acquiring or succeeding corporation (or an affiliate thereof), (2) upon written notice to a participant,
provide that all of the participant’s unvested awards will be forfeited immediately prior to the consummation of such
reorganization event and/or that all of the participant’s unexercised awards will terminate immediately prior to the
consummation of such reorganization event unless exercised by the participant (to the extent then exercisable) within a
specified period following the date of such notice, (3) provide that outstanding awards will become exercisable, realizable,
or deliverable, or restrictions applicable to an award will lapse, in whole or in part prior to or upon such reorganization
event, (4) in the event of a reorganization event under the terms of which holders of our ordinary shares will receive, upon
consummation thereof, a cash payment for each share surrendered in the reorganization event, or the Acquisition Price,
make or provide for a cash payment to participants with respect to each award held by a participant equal to (A) the
number of ordinary shares subject to the vested portion of the award (after giving effect to any acceleration of vesting that
occurs upon or immediately prior to such reorganization event) multiplied by (B) the excess, if any, of (I) the Acquisition
Price over (II) the exercise, measurement or purchase price of such award and any applicable tax withholdings, in exchange
for the termination of such award, (5) provided that, in connection with our liquidation or dissolution, awards will convert
into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and
any applicable tax withholdings) and (6) any combination of the foregoing. Our board of directors is not obligated to treat
all awards, all awards held by a participant, or all awards of the same type, identically.
No award may be granted under the 2020 Plan after the date that is ten years from the date the 2020 Plan is
approved by our shareholders. Our board of directors may, at any time, amend, suspend or terminate the 2020 Plan or any
portion thereof. However, if shareholder approval is required, including by application of Irish law or the terms of the 2020
Plan, the board of directors may not effect such modification or amendment without such approval.
2017 Share Incentive Plan
The 2017 Share Incentive Plan permits the award of share options, share appreciation rights, or SARs, restricted
shares, restricted share units or RSUs, and other share-based awards to our employees, officers, directors, consultants and
advisers. Our board of directors will administer the 2017 Share Incentive Plan. As of January 31, 2020, under our 2017
Share Incentive Plan, there were options to purchase an aggregate of 428,142 of our ordinary shares at a weighted average
exercise price of $30.35 per share and 151,034 restricted stock units outstanding with a weighted average grant date fair
value of $14.75 per share.
If, during the term of the 2017 Share Incentive Plan, there is a change in our capital or a restructuring measure
which has an effect on our capital, such as a share split or reverse share split, which change or measure results in a change
in the value of the share-based awards outstanding under the 2017 Share Incentive Plan, the board will make appropriate
adjustments to the price or the amount of such outstanding awards.
The 2017 Share Incentive Plan also contains provisions addressing the consequences of any reorganization event.
A reorganization event is defined as (a) any merger or consolidation of us with or into another entity as a result of which all
of our ordinary shares are converted into or exchanged for the right to receive cash, securities or other property, or are
cancelled, (b) any transfer or disposition of all of our ordinary shares for cash, securities or other property pursuant to a
share exchange or other transaction or (c) our liquidation or dissolution; any one of which, (a), (b) or (c), may be effected
pursuant to the laws of the Republic of Ireland.
The 2017 Share Incentive Plan provides that, if a reorganization event occurs, the board of directors may take one
or more of the following actions to all or any outstanding awards other than restricted shares on such terms as the board of
directors determines: (1) provide that such awards will be assumed, or substantially equivalent awards will be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), (2) upon written notice to a participant, provide that all
of the participant’s unvested awards will be forfeited immediately prior to the consummation of such reorganization event
and/or that all of the participant’s unexercised awards will terminate immediately prior to the consummation of such
reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period following
the date of such notice, (3) provide that outstanding awards will become exercisable, realizable, or deliverable, or
restrictions applicable to an award will lapse, in whole or in part prior to or upon such reorganization event, (4) in the event
of a reorganization event under the terms of which holders of our ordinary shares
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will receive, upon consummation thereof, a cash payment for each share surrendered in the reorganization event, which we
refer to as the Acquisition Price, make or provide for a cash payment to participants with respect to each award held by a
participant equal to (A) the number of ordinary shares subject to the vested portion of the award (after giving effect to any
acceleration of vesting that occurs upon or immediately prior to such reorganization event) multiplied by (B) the excess, if
any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such award and any applicable tax
withholdings, in exchange for the termination of such award, (5) provide that, in connection with our liquidation or
dissolution, awards will convert into the right to receive liquidation proceeds (if applicable, net of the exercise,
measurement or purchase price thereof and any applicable tax withholdings) and (6) any combination of the foregoing. Our
board is not obligated to treat all awards, all awards held by a participant, or all awards of the same type, identically.
No additional awards may be granted under the 2017 Share Incentive Plan. The board of directors may, at any
time, amend, suspend or terminate the 2017 Share Incentive Plan or any portion thereof. However, if shareholder approval
is required, including by application of Irish law, the board may not effect such modification or amendment without such
approval.
Stock Option Plan 2015
The Stock Option Plan 2015 provided for the grant of options to purchase our ordinary shares to our employees,
including executive officers, and to directors. As of January 31, 2020, under our Stock Option Plan 2015, there were
options to purchase an aggregate of 189,730 of our ordinary shares at a weighted average exercise price of $81.29 per share
and no ordinary shares are available for issuance under the plan. Following the approval of the 2017 Share Incentive Plan
by our shareholders on September 15, 2017, we ceased granting awards under the Stock Option Plan 2015. Unless the
context specifically indicates otherwise, references to our Stock Option Plan 2015 in this Annual Report on Form 10-K
refer to the Stock Option Plan 2015, as amended and adopted by us.
Options granted under the Stock Option Plan 2015 entitle beneficiaries thereof to purchase our ordinary shares at
an exercise price equal to 100% of the fair market value per share on the beneficiary’s date of participation, which
following the Redomiciliation was derived from the closing sale price of our ordinary shares on the Nasdaq Global Select
Market. Options granted under the Stock Option Plan 2015 generally vest over four years from the beneficiary’s date of
participation. Typically, 25% of the options subject to a particular grant vest on the last day of the last calendar month of
the first year of the vesting period, and the remaining 75% vests on a monthly pro-rata basis over the second, third and
fourth years of the vesting period (i.e., 2.083% per month). Any alternative vesting period determined by us is subject to
approval by our executive officers, board of directors or shareholders, in accordance with any applicable voting
requirements.
The Stock Option Plan 2015 provides that, if a liquidity event (as defined below) occurs, all options outstanding
under the Stock Option Plan 2015 will be assumed (or substantially equivalent awards will be substituted by an acquiring
or succeeding corporation (or an affiliate of the acquiring or succeeding corporation)), and any then-unvested options shall
continue to vest in accordance with the beneficiary’s original vesting schedule. If a beneficiary is terminated due to a good
leaver event (within the meaning of the Stock Option Plan 2015), on or prior to the first anniversary of the date of the
liquidity event, the beneficiary’s options will be immediately exercisable in full as of the date of such termination. If the
acquiring or succeeding corporation (or an affiliate of the acquiring or succeeding corporation) refuses to assume the
options outstanding under the Stock Option Plan 2015 or to substitute substantially equivalent options therefor, all then-
unvested options under the Stock Option Plan 2015 will automatically vest in full upon the liquidity event. For purposes of
the Stock Option Plan 2015, a liquidity event generally refers to an exclusive license of or the sale, lease or other disposal
of all or substantially all of our assets, a sale or other disposal (but not a pledge) of 50% or more of our shares, a merger or
consolidation of us with or into any third party, or our liquidation, winding up or other form of dissolution of us.
Unless otherwise specifically permitted in an option agreement or resolved upon by the board of directors, the
exercise of vested options is permitted under the Stock Option Plan 2015 only during specified periods and on specified
terms in the case of a liquidity event or following an initial public offering occurring during the term of the option. A
beneficiary is entitled to exercise vested options at any time during the remaining term of the option while the
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beneficiary is providing services to us, and within the three-month period following a termination of the beneficiary’s
services due to a good leaver event. Options granted under the Stock Option Plan 2015 will have a term of no more than
ten years from the beneficiary’s date of participation.
If, during the term of the Stock Option Plan 2015, there is a change in our capital or a restructuring measure which
has an effect on our capital, such as a stock split or reverse stock split, which change or measure results in a change in the
value of the options outstanding under the Stock Option Plan 2015, the board may make appropriate adjustments to the
price or the amount of such outstanding options.
The board of directors may, at any time, amend, suspend or terminate the Stock Option Plan 2015 in whole or in
part. However, if shareholder approval is required, including by application of Irish law, the board may not effect such
modification or amendment without such approval.
401(k) Plan
We maintain a defined contribution employee retirement plan for our U.S.-based employees. Our 401(k) plan is
intended to qualify as a tax-qualified plan under Section 401 of the Internal Revenue Code, so that contributions to our
401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from
the 401(k) plan. Our 401(k) plan provides that each participant may contribute up to 100% of his or her pre-tax
compensation, up to a statutory limit, which is $19,500 for 2020. Participants who are at least 50 years old can also make
“catch-up” contributions, which in 2020 may be up to an additional $6,500 above the statutory limit. Under our 401(k)
plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and
invested by the plan’s trustee, subject to participants’ ability to give investment directions by following certain procedures.
We generally match 100.0% of the first 3.0% of the employee’s voluntary contribution to the 401(k) plan and 50.0% of the
next 2.0% contributed by the employee. Our 401(k) matching policy was temporarily suspended during a portion of 2020.
Risk Considerations in Our Compensation Program
Our compensation committee has reviewed and evaluated the philosophy and standards on which our
compensation plans have been developed and implemented across our company. It is our belief that our compensation
programs do not encourage inappropriate actions or risk taking by our executive officers. We do not believe that any risks
arising from our employee compensation policies and practices are reasonably likely to have a material adverse effect on
our company. In addition, we do not believe that the mix and design of the components of our executive compensation
program encourage management to assume excessive risks.
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Summary Compensation Table
DIRECTOR COMPENSATION
The following table sets forth a summary of the compensation earned by the non-employee members of the board
of directors for the year ended December 31, 2020.
Name
Daniel Burgess
Colin Broom
George Talbot
Charles Rowland, Jr.
Stephen Webster
Carrie Bourdow
Mark Corrigan (5)
Fees Earned or
Paid in Cash
($)(1)
90,000
40,000
45,000
65,000
65,000
47,500
21,144
Option Awards RSU Awards
($)(2)(3)
17,115
17,115
17,115
17,115
17,115
17,115
—
($)(2)(4)
13,790
13,790
13,790
13,790
13,790
13,790
Total ($)
120,905
70,905
75,905
95,905
95,905
78,405
— 21,144
(1) Fees earned consist of gross director retainer fees which were subject to income tax withholdings in Ireland.
(2) The amounts reported in the “Option Awards” and “RSU Awards” columns reflect the aggregate fair value of share-
based compensation awarded during 2020 computed in accordance with the provisions of ASC Topic 718. See Note 11
to the consolidated financial statements regarding assumptions underlying the valuation of equity awards.
(3) Represents the grant of an option to purchase 3,500 of our ordinary shares vesting with respect to all of the shares on
the last date of the month of the first anniversary of the grant date.
(4) Represents the grant of 1,750 RSUs vesting with respect to all of the shares on the last date of the month of the first
anniversary of the grant date.
(5) Mark Corrigan resigned as a director on May 26, 2020.
Director Compensation Arrangements
Effective as of October 31, 2018, our board of directors adopted a non-employee director compensation policy,
which provided for the following:
● each new non-employee director receives an initial grant of an option to purchase 7,000 of our ordinary
shares upon his or her initial election to the board of directors;
● each non-employee director receives an annual grant of an option to purchase 3,500 of our ordinary shares on
the date of our annual general meeting of shareholders;
● each non-employee director receives an annual cash fee of $40,000;
● the chairman of our board of directors receives an additional annual cash fee of $30,000;
● each non-employee director who is a member of the audit committee receives an additional annual cash fee
of $10,000 ($20,000 for the audit committee chair);
● each non-employee director who is a member of the compensation committee receives an additional annual
cash fee of $7,500 ($15,000 for the compensation committee chair); and
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● each non-employee director who is a member of the nominating and corporate governance committee
receives an additional annual cash fee of $5,000 ($10,000 for the nominating and corporate governance
committee chair).
The board of directors approved the annual grants to non-employee directors for the 2020 fiscal year on July 29,
2020.
On December 16, 2019, our board of directors approved an amendment to our non-employee director
compensation policy. Effective as of December 16, 2019, the amendment increased the initial grant of an option to
purchase our ordinary shares to new non-employee directors upon their initial election to the board of directors to 10,500
ordinary shares and increased the annual grant of an option to purchase our ordinary shares to 3,500 ordinary shares and
1,750 restricted stock units.
The stock options to be granted to our non-employee directors under our non-employee director compensation
policy have an exercise price equal to the fair market value of our ordinary shares on the date of grant and will expire ten
years after the date of grant. The initial stock options granted to newly elected director vest, subject to such director’s
continued service on the board, over a three-year period on a monthly pro-rata basis at the end of each successive month
following the date of the initial grant. The annual stock options granted to directors will vest, subject to such director’s
continued service on the board, fully on the last date of the month of the first anniversary of the grant date. The annual
restricted stock units awarded to directors will vest, subject to such director’s continued service on the board, fully on the
last date of the month of the first anniversary of the grant date.
Under our non-employee director compensation policy, the annual cash fees are payable in arrears in four equal
quarterly installments payable the week following the end of each quarter. Each non-employee director is also entitled to
reimbursement for reasonable travel and other expenses incurred in connection with attending meetings of the board of
directors and any committee on which he or she serves or otherwise in direct service of the company.
Compensation Committee Interlocks and Insider Participation
For the fiscal year ended December 31, 2020, the members of our compensation committee were Carrie Bourdow,
Charles Rowland Jr., and Stephen Webster. No member of our compensation committee is, or has been, an officer or
employee of ours or any subsidiary of ours. None of our executive officers served as a director or a member of a
compensation committee (or other committee serving an equivalent function) of any other entity that had one or more
executive officers serving as a director or member of our compensation committee during the year ended December 31,
2020.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of
January 31, 2021 by:
● each of our directors and director nominees;
● each of our “named executive officers”;
● all of our directors and executive officers as a group; and
● each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our
ordinary shares.
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The percentages in the columns entitled “Percentage of Shares Beneficially Owned” are based on a total of
21,628,223 ordinary shares outstanding as of January 31, 2021.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or
investment power with respect to our ordinary shares. Our ordinary shares subject to options that are currently exercisable
or exercisable within 60 days of January 31, 2021 are considered outstanding and beneficially owned by the person holding
the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the
percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting
and investing power with respect to all of the ordinary shares beneficially owned by them, subject to community property
laws, where applicable. Except as otherwise set forth below, the address of the beneficial owner is c/o Nabriva
Therapeutics plc, 25-28 North Wall Quay, Dublin 1, Ireland.
Name and Address of Beneficial Owner
Directors and Named Executive Officers:
Daniel Burgess(1)
George H. Talbot(2)
Stephen Webster(3)
Charles A. Rowland, Jr.(4)
Carrie Bourdow(5)
Colin Broom(6)
Steven Gelone(7)
Theodore Schroeder(8)
Jennifer Schranz(9)
All current directors and executive officers as a group (11 individuals)(10)
5% Shareholders:
Number of
Shares
Beneficially
Owned
Percentage of
Shares
Beneficially
Owned
15,539
17,184
11,239
16,320
9,430
95,640
82,450
130,653
36,327
506,365
* %
* %
* %
* %
* %
* %
* %
* %
* %
2.30 %
Fidelity Management & Research Company LLC(11)
1,429,259
6.61 %
*
Less than one percent.
(1) Consists of (i) 3,600 ordinary shares and (ii) 11,939 ordinary shares issuable upon exercise of stock options
exercisable within 60 days of January 31, 2021.
(2) Consists of (i) 4,764 ordinary shares and (ii) 12,420 ordinary shares issuable upon exercise of stock options
exercisable within 60 days of January 31, 2021.
(3) Consists of (i) 800 ordinary shares and (ii) 10,439 ordinary shares issuable upon exercise of stock options exercisable
within 60 days of January 31, 2021.
(4) Consists of (i) 5,300 ordinary shares and (ii) 11,020 ordinary shares issuable upon exercise of stock options
exercisable within 60 days of January 31, 2021.
(5) Consists of 9,430 ordinary shares issuable upon exercise of stock options exercisable within 60 days of January 31,
2021.
(6) Consists of (i) 20,875 ordinary shares directly owned by Dr. Broom and (ii) 74,765 ordinary shares issuable upon
exercise of stock options exercisable within 60 days of January 31, 2021.
(7) Consists of (i) 14,785 ordinary shares, (ii) 62,807 ordinary shares issuable upon exercise of stock options exercisable
within 60 days of January 31, 2021 and (iii) 4,858 ordinary shares issuable upon the vesting of restricted stock units
within 60 days of January 31, 2021.
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(8) Consists of (i) 21,757 ordinary shares, (ii) 98,565 ordinary shares issuable upon exercise of stock options exercisable
within 60 days of January 31, 2021 and (iii) 10,331 ordinary shares issuable upon the vesting of restricted stock units
within 60 days of January 31, 2021.
(9) Consists of (i) 3,490 ordinary shares, (ii) 29,666 ordinary shares issuable upon exercise of stock options exercisable
within 60 days of January 31, 2021 and (iii) 3,171 ordinary shares issuable upon the vesting of restricted stock units
within 60 days of January 31, 2021. On February 24, 2021, Dr. Schranz notified us of her decision to resign from the
company, effective on March 19, 2021.
(10) Consists of (i) 89,819 ordinary shares and (ii) 391,844 ordinary shares issuable upon exercise of stock options within
60 days of January 31, 2021 and (iii) 24,702 ordinary shares issuable upon the vesting of restricted stock units within
60 days of January 31, 2021.
(11) Based solely on information provided in a Schedule 13G/A filed jointly by FMR LLC and Abigail P. Johnson on
February 8, 2021. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC.
Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts,
of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson
family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all
Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares.
Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting
agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or
direct the voting of the shares owned directly by the various investment companies registered under the Investment
Company Act, or Fidelity Funds, advised by Fidelity Management & Research Company, or FMR Co, a wholly owned
subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. FMR Co carries out the
voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. FMR LLC reports
that it holds sole dispositive power with respect to 1,429,259 shares. The address of FMR LLC is 245 Summer Street,
Boston, Massachusetts 02210.
Securities Authorized for Issuance under Equity Compensation Plans
The following table contains information about our equity compensation plans as of December 31, 2020. As of
December 31, 2020, we had four equity compensation plans: the 2020 Share Incentive Plan, the 2017 Share Incentive Plan,
the Stock Option Plan 2015 and the 2018 Employee Share Purchase Plan, each of which were approved by our
shareholders. In addition, from time to time, the compensation committee grants inducement equity awards to individuals
as an inducement material to the individual’s entry into employment with us within the meaning of Nasdaq Listing Rules,
including pursuant to our 2021 Inducement Share Incentive Plan, or the Inducement Plan, that was adopted by our board of
directors without shareholder approval. We also previously made such inducement awards pursuant to our 2019
Inducement Share Incentive Plan.
Plan category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of
securities to be
issued upon
exercise
of outstanding
options, warrants
and rights
(a)
1,181,407 (1) $
110,815 (2)
$
1,292,222
Weighted‑average
exercise price of
outstanding
options, warrants
and rights
(b)
35.73 (3)
31.51 (3)
35.37 (4)
Number of
securities
remaining
available for future
issuance under
equity
compensation plans
(excluding
securities reflected
in column(a))
(c)
839,160 (5)
—
839,160
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Table of Contents
(1) Includes ordinary shares underlying awards outstanding under our 2020 Share Incentive Plan, 2017 Share Incentive
Plan and our Stock Option Plan 2015.
(2) Represents an option award and a performance-based restricted share unit award granted to Mr. Schroeder on July 25,
2018, as an inducement material to Mr. Schroeder’s acceptance of employment with the company in accordance with
Nasdaq Listing Rule 5635(c)(4) and other inducement awards made in accordance with Nasdaq Listing Rule 5635(c)
(4) under our 2019 Inducement Share Incentive Plan.
(3) Only share option awards were used in computing the weighted-average exercise price.
(4) Only share option awards were used in computing the weighted-average exercise price.
(5) Includes ordinary shares available for issuance under our 2020 Share Incentive Plan and 2018 Employee Share
Purchase Plan.
2021 Inducement Share Incentive Plan
On December 9, 2020, our board of directors adopted without stockholder approval the 2021 Inducement Share
Incentive Plan (the “2021 Inducement Plan”) and, subject to the adjustment provisions of the 2021 Inducement Plan,
reserved 200,000 oridnary shares for issuance purusant to equity awards granted under the 2021 Inducement Plan. In
accordance with Nasdaq Listing Rule 5635(c)(4), awards under the 2021 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.
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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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Board Determination of Independence
Applicable Nasdaq rules require a majority of a listed company’s board of directors to be comprised of
independent directors within one year of listing. In addition, the Nasdaq rules require that, subject to specified exceptions,
each member of a listed company’s audit, compensation and nominating and corporate governance committees be
independent under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Audit committee members
must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee
members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under applicable
Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s board of
directors, that person does not have a relationship that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. To be considered independent for purposes of Rule 10A-3, a member of an
audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the
board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other
compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed
company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board must
consider, for each member of a compensation committee of a listed company, all factors specifically relevant to
determining whether a director has a relationship to such company which is material to that director’s ability to be
independent from management in connection with the duties of a compensation committee member, including, but not
limited to: (1) the source of compensation of the director, including any consulting, advisory or other compensatory fee
paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries
or affiliates.
In April 2020, our board of directors undertook a review of the independence of each director. Based upon
information requested from and provided by each director concerning his or her background, employment and affiliations,
including family relationships, our board determined that each of our directors, with the exception of Colin Broom,
Theodore Schroeder and Steven Gelone, is an “independent director” as defined under applicable Nasdaq rules, including,
in the case of all the members of our audit committee, the independence criteria set forth in Rule 10A-3 under the
Exchange Act, and in the case of all the members of our compensation committee, the independence criteria set forth in
Rule 10C-1 under the Exchange Act. In making such determination, our board considered the relationships that each such
director has with us, including each of the transactions described below in “—Board Policies—Related Person
Transactions—Certain Relationships and Related Transactions”, and all other facts and circumstances that our board
deemed relevant in make such independence determination. Mr. Schroeder is not an independent director because he is our
chief executive officer, and Dr. Broom is not an independent director because he was employed as our chief executive
officer during the past three years. In addition, Dr. Gelone is not an independent director because he is our president and
chief operating officer.
Board Policies
Related Person Transactions
Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement
or relationship in which the company is a participant, the amount involved exceeds the lesser of $120,000 and one percent
of the average of the our total assets at year-end for the last two completed fiscal years and one of our executive officers,
directors, director nominees or 5% shareholders, or their immediate family members, each of whom we refer to as a
“related person”, has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a
“related person transaction”, the related person must report the proposed related person transaction to our chief financial
officer or general counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed
appropriate, approved by our audit committee. Whenever practicable, the reporting, review and approval will occur prior to
entry into the transaction. If advance review and approval is not practicable, the committee will review, and, in its
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discretion, may ratify the related person transaction. The policy also permits the chair of the audit committee to review and,
if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to
ratification by the committee at its next meeting. Any related person transactions that are ongoing in nature will be
reviewed annually.
A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized
by the audit committee after full disclosure of the related person’s interest in the transaction. As appropriate for the
circumstances, the audit committee will review and consider:
● the related person’s interest in the related person transaction;
● the approximate dollar value of the amount involved in the related person transaction;
● the approximate dollar value of the amount of the related person’s interest in the transaction without regard to
the amount of any profit or loss;
● whether the transaction was undertaken in the ordinary course of our business;
● whether the terms of the transaction are no less favorable to us than terms that could have been reached with
an unrelated third party;
● the purpose of, and the potential benefits to us of, the transaction; and
● any other information regarding the related person transaction or the related person in the context of the
proposed transaction that would be material to investors in light of the circumstances of such transaction.
Our audit committee may approve or ratify the transaction only if it determines that, under all of the
circumstances, the transaction is in our best interests. Our audit committee may impose any conditions on the related
person transaction that it deems appropriate.
In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction
disclosure rule, our board of directors has determined that the following transactions do not create a material direct or
indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:
● interests arising solely from the related person’s position as an executive officer of another entity, whether or
not the person is also a director of the entity, that is a participant in the transaction where the related person
and all other related persons own in the aggregate less than a 10% equity interest in such entity, the related
person and his or her immediate family members are not involved in the negotiation of the terms of the
transaction and do not receive any special benefits as a result of the transaction and the amount involved in
the transaction is less than the greater of $200,000 or 5% of the annual gross revenues of the company
receiving payment under the transaction; and
● a transaction that is specifically contemplated by provisions of our memorandum and articles of association.
The policy provides that transactions involving compensation of our executive officers shall be reviewed and
approved by our compensation committee in the manner specified in the compensation committee’s charter.
In addition, under our Code of Business Conduct and Ethics, our directors, executive officers and employees have
an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a
conflict of interest.
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Table of Contents
Certain Relationships and Related Transactions
Since January 1, 2019, we have engaged in the following transactions with our executive officers, directors and
holders of more than 5% of our voting securities, and affiliates of our executive officers, directors and 5% shareholders. We
believe that all of the transactions described below were made on terms no less favorable to us than could have been
obtained from unaffiliated third parties:
Consulting Agreement with Sender Consulting LLC
On March 9, 2021, Sender Consulting LLC, a single-member limited liability company of which Gary Sender is
the principal, entered into a two-year consulting agreement with us, effective March 15, 2021, to provide financially related
advice and actively manage projects as requested. In addition to an hourly service fee, Mr. Sender is entitled to receive an
award of 7,000 RSUs as of the effective date of the consulting agreement, which vests as to 50% of the shares underlying
the RSUs each year over the term of the consulting agreement.
June 2020 Financing
In June 2020, 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 4,144,537 ordinary shares and accompanying
warrants to purchase up to an aggregate of 4,144,537 ordinary shares. Each share in the offering was issued and sold
together with an accompanying warrant at a combined price of $9.1686. Each warrant has an exercise price of $7.92 per
share, was immediately exercisable following the date of issuance and expires on the two-year anniversary of the date of
issuance. In connection with such offering, entities affiliated with FMR LLC, a beneficial owner of more than 5% of our
voting securities, purchased an aggregate of 872,498 ordinary shares and accompanying warrants to purchase up to
872,498 ordinary shares at a purchase price of $9.1686 per ordinary share and accompanying warrant for an aggregate
purchase price of $7,999,601.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth, for each of the years indicated, the aggregate fees billed or expected to be billed to
us for services rendered by KPMG LLP, or KPMG.
(in thousands)
Audit Fees(1)
Tax Fees(2)
All Other Fees
Total
Year Ended
December 31,
2020
2019
$
$
724
9
—
733
$
$
605
40
40
685
(1) Includes fees related to services associated with our at-the-market facility and December 2020 public offering.
(2) Fees related to services rendered on tax compliance, tax advice and tax planning.
Pre-Approval Policies and Procedures
Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit
services that are to be performed by our independent registered public accounting firm. This policy generally provides that
we will not engage our independent registered public accounting firm to render audit or non-audit services unless the
service is specifically approved in advance by our audit committee or the engagement is entered into pursuant to a de
minimis exception in accordance with applicable SEC rules.
All of the services provided to us by KPMG during the last two fiscal years were approved by the audit
committee.
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Table of Contents
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a)
(1)
(2)
(3)
Financial Statements: See Index to Consolidated Financial Statements on page F-1 of this Annual Report
on Form 10-K.
No financial statement schedules have been filed as part of this Annual Report on Form 10-K because they
are not applicable, not required or because the information is otherwise included in our financial
statements or notes thereto.
The exhibits listed on the Exhibit Index set forth immediately following Item 16 are filed or furnished as
part of this Annual Report. The Exhibit Index is incorporated herein by reference.
ITEM 16. FORM 10-K SUMMARY
None
Exhibit
Number
Description of Exhibit
Form
File Number
Date of
Filing
Exhibit
Number
Filed
Herewith
EXHIBIT INDEX
Incorporated by Reference
2.1* Agreement and Plan of Merger
dated as of July 23, 2018, by and
among Nabriva Therapeutics plc,
Zuperbug Merger Sub I, Inc.,
Zuperbug Merger Sub II, Inc.,
Zavante Therapeutics, Inc. and
Cam Gallagher, solely in his
capacity as Stockholder
Representative
3.1 Amended and Restated
Memorandum and Articles of
Association of Nabriva
Therapeutics plc
4.1 Description of the Registrant’s
Securities Registered under Section
12 of the Exchange Act
10.1 Form of Indemnification
Agreement
10.2# 2017 Share Incentive Plan, as
Amended
10.3# Stock Option Plan 2007, as
Amended
10.4# Stock Option Plan 2015, as
Amended
10.5 Lease Agreement, dated March 16,
2007, by and between Nabriva
Therapeutics AG and CONTRA
Liegenschaftsverwaltung GmbH
8-K
001-37558
07/25/2018
2.1
8-K
001-37558
12/3/2020
3.1
X
8-K
001-38132
06/26/2017
10.1
10-Q
001-37558
11/09/2017
10.2
8-K
8-K
001-38132
06/26/2017
10.2
001-38132
6/26/2017
10.3
F-1
333-205073
06/18/15
10.4
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10.6 Sublease Agreement, dated July 7,
2015, by and between Nabriva
Therapeutics AG and Card
Connect, LLC
10.7# Employment Agreement dated
May 2, 2016 by and between
Nabriva Therapeutics US, Inc. and
Gary Sender
10.8# Amended and Restated
Employment Agreement, by and
between Nabriva Therapeutics
US, Inc. and Robert Crotty, dated as
of March 10, 2021
10.9# Form of Restricted Share Unit
Agreement under the 2017 Share
Incentive Plan (Share Withholding)
10.10# Form of Restricted Share Unit
Agreement under the 2017 Share
Incentive Plan (Automatic Sale)
10.11# Form of Share Option Agreement
under the 2017 Share Incentive Plan
10.12** Manufacturing Services Agreement,
dated May 8, 2017, by and between
Patheon UK Limited and Nabriva
Therapeutics AG
10.13** Master Agreement for the
Manufacture, Packaging and Supply
of Products, dated August 7, 2017,
by and between ALMAC Pharma
Services Limited and Nabriva
Therapeutics Ireland DAC
10.14** Key Intermediate Supply
Agreement, dated of August 28,
2017 by and among Nabriva
Therapeutics Ireland DAC, and
SEL Biochem Xinjiang Co., Ltd,
and Fountain International
Development Holding Limited
10.15 Open Market Sale AgreementSM,
dated June 25, 2019, by and
between Nabriva Therapeutics plc
and Jefferies LLC
F-1
333-205073
8/24/15
10.11
6-K
001-37558
08/09/16
10.2
X
10-K
001-37558
03/12/2019
10.10
8-K
8-K
001-37558
02/02/2018
10.1
001-37558
02/02/2018
10.2
10-K
03/16/2018
03/16/2018
10.16
10-K
03/16/2018
03/16/2018
10.17
10-K
03/16/2018
03/16/2018
10.18
8-K
001-37558
06/25/2019
1.1
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Table of Contents
10.16** License Agreement, dated
March 26, 2018, by and among
Nabriva Therapeutics Ireland DAC,
Sinovant Sciences, Ltd., Nabriva
Therapeutics GmbH and Roivant
Sciences, Ltd.
10.17 Transition, Separation and Release
of Claims Agreement, by and
between Nabriva Therapeutics
US, Inc. and Colin Broom, dated as
of July 23, 2018
10.18# Amended and Restated
Employment Agreement, by and
between Nabriva Therapeutics
US, Inc. and Theodore Schroeder,
dated as of March 10, 2021
10.19 Consulting Agreement, by and
between Nabriva Therapeutics
US, Inc. and Colin Broom, dated as
of July 24, 2018 (included as
Attachment A to Exhibit 10.1)
10.20 Form of Inducement Option Award
Agreement.
10.21 Form of Inducement Performance-
Based Share Award Agreement.
10.22 Stock Purchase Agreement by and
among SG Pharmaceuticals, Inc.,
the Sellers named on Annex A, and
Julia Feliciano, as Sellers’
Representative, dated as of May 5,
2015
10.23** License Agreement by and between
ICPD Holdings, LLC and Evelyn J.
Ellis-Grosse and Zavante
Therapeutics, Inc., dated as of
March 1, 2014
10.24 Office Lease by and between AGP
Sorrento R&D, LP and Zavante
Therapeutics, Inc., dated as of
June 16, 2016
10.25** Manufacturing and Supply
Agreement by and between Zavante
Therapeutics, Inc. and Ercros, S.A.,
dated as of July 28, 2016
10-Q
001-37558
05/08/2018
10.2
8-K
001-37558
07/25/2018
10.1
X
8-K
S-8
S-8
001-37558
07/25/2018
10.1
333-226330
07/25/2018
99.2
333-226330
07/25/2018
99.3
10-Q
001-37558
11/06/2018
10.4
10-Q
001-37558
11/06/2018
10.5
10-Q
001-37558
11/06/2018
10.6
10-Q
001-37558
11/06/2018
10.7
172
Table of Contents
10.26** Amended and Restated Three-Way
Agreement by and between
Laboratorios ERN, S.A,
Ercros, S.A., and Zavante
Therapeutics, Inc., dated as of
July 28, 2016
10.27** Amended and Restated
Pharmaceutical Manufacturing and
Exclusive Supply Agreement by
and between Laboratorios
ERN, S.A. and Zavante
Therapeutics, Inc. dated as of
July 28, 2016, as amended
10.28** Manufacturing and Supply
Agreement by and between Zavante
Therapeutics, Inc. and
Fisiopharma, S.r.l., dated as of
April 25, 2017
10.29** Commercial Packaging Agreement
by and between Zavante
Therapeutics, Inc. and
AndersonBrecon Inc., d/b/a PCI of
Illinois, dated as of December 26,
2017
10.30** Packaging and Supply Agreement
by and between Sharp Corporation
and Nabriva Therapeutics US, Inc.,
dated as of August 30, 2018
10.31# Third Amended and Restated
Employment Agreement by and
between Nabriva Therapeutics US,
Inc. and Steven Gelone, dated as of
March 10, 2021
10.32# 2018 Employee Share Purchase
10-Q
001-37558
11/06/2018
10.8
10-Q
001-37558
11/06/2018
10.9
10-Q
001-37558
11/06/2018
10.10
10-Q
001-37558
11/06/2018
10.11
10-Q
001-37558
11/06/2018
10.12
X
Plan
DEF 14A
001-37558
06/19/2018
99.1
10.33** Loan and Security Agreement,
dated as of December 20, 2018, by
and among Nabriva
Therapeutics plc, Nabriva
Therapeutics Ireland DAC, certain
other subsidiaries of Nabriva
Therapeutics plc from time to time
party thereto, any bank and other
financial institution or entity from
time to time party thereto and
Hercules Capital, Inc, as
administrativeagent and collateral
agent.
10-K
001-37558
3/12/2019
10.35
173
Table of Contents
10.34# Employment Agreement, by and
between Nabriva Therapeutics
US, Inc. and Jennifer Schranz,
dated as of March 21, 2018
10.35** Agreement for the Commercial
Supply of Products by and between
Arran Chemical Company Limited
and Nabriva Therapeutics Ireland
DAC, dated as of November 12,
2018
10.36** Active Pharmaceutical Ingredient
Supply Agreement by and between
Nabriva Therapeutics Ireland DAC
and Hovione Limited, dated as of
November 23, 2018.
10.37 2019 Inducement Share Incentive
10-K
001-37558
3/12/2019
10.36
10-K
001-37558
3/12/2019
10.37
10-K
001-37558
3/12/2019
10.38
Plan
S-8
333-230216
3/12/2019
99.1
10.38 First Amendment to Loan and
Security Agreement, dated as of
September 26, 2019, by and among
Nabriva Therapeutics Public
Limited Company, Nabriva
Therapeutics Ireland Designated
Activity Company, Nabriva
Therapeutics GmbH, Nabriva
Therapeutics US, Inc., Zavante
Therapeutics, Inc., and Hercules
Capital, Inc.
10.39 Second Amendment to Loan and
Security Agreement, dated as of
January 8, 2020, by and among
Nabriva Therapeutics Public
Limited Company, Nabriva
Therapeutics Ireland Designated
Activity Company, Nabriva
Therapeutics GmbH, Nabriva
Therapeutics US, Inc., Zavante
Therapeutics, Inc., and Hercules
Capital, Inc.
10.40 Third Amendment to Loan and
Security Agreement, dated as of
March 11, 2020, by and among
Nabriva Therapeutics Public
Limited Company, Nabriva
Therapeutics Ireland Designated
Activity Company, Nabriva
Therapeutics GmbH, Nabriva
Therapeutics US, Inc., Zavante
Therapeutics, Inc., and Hercules
Capital, Inc.
10-Q
001-37558
11/12/2019
10.1
10-K
001-37558
03/12/2020
10.40
10-K
001-37558
03/12/2020
10.41
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Table of Contents
10.41# Form of Share Option / Cash
Settled Share Appreciation Right
Agreement under the 2020 Share
Incentive Plan
10.42# 2020 Share Incentive Plan, as
amended
10.43 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.
10.44# Retention Agreement, dated August
5, 2020, by and between Nabriva
Therapeutics US, Inc. and Jennifer
Schranz
10.45 Sublease Agreement, dated as of
February 8, 2021, by and between
Professional Payroll Solutions, LLC
and Nabriva Therapeutics US, Inc.
10.46# 2021 Inducement Share Incentive
Plan
10.47# Employment Agreement, by and
between Nabriva Therapeutics US,
Inc. and Daniel Dolan, dated as of
March 10, 2021
10.48*** First Amendment to License
Agreement, dated October 29,
2021, by and among Nabriva
Therapeutics Ireland DAC,
Sinovant Sciences, Ltd., Nabriva
Therapeutics GmbH and Roivant
Sciences, Ltd.
10.49 Consulting Agreement, by and
between Nabriva Therapeutics US,
Inc. and Sender Consulting LLC,
dated as of March 9, 2021.
21.1 Subsidiaries of Nabriva
Therapeutics plc
23.1 Consent of KPMG LLP
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.
10-K
001-37558
03/12/2020
10.43
8-K
001-37558
07/29/2020
99.1
10-Q
001-37558
08/6/2020
10.2
10-Q
001-37558
11/5/2020
10.1
8-K
001-37558
02/12/2021
10.1
X
X
X
X
X
X
X
175
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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.
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.
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.
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension
Schema Document
101.CAL XBRL Taxonomy Calculation
Linkbase Document
101.DEF XBRL Taxonomy Extension
Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase
Document
101.PRE XBRL Taxonomy Presentation
Linkbase Document
104 Cover Page Interactive Data File
(formatted as Inline XBRL and
contained in Exhibit 101)
X
X
X
X
X
X
X
X
X
X
# Management contract or compensatory plan or arrangement filed in response to Item 15(a)(3) of the Instructions to the
Annual Report on Form 10-K.
* Confidential treatment was granted for certain portions that are omitted from this exhibit. The omitted information has
been filed separately with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the registrant’s
application for confidential treatment. In addition, schedules have been omitted from this exhibit pursuant to Item 601(b)
(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request;
provided, however, that the registrant may request confidential treatment for any document so furnished.
** Confidential treatment has been granted as to certain portions, which portions have been omitted and separately filed
with the Securities and Exchange Commission.
***
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 Section 13 or 15(d) 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.
Date: March 11, 2021
NABRIVA THERAPEUTICS PLC
By:
/s/ THEODORE SCHROEDER
Theodore Schroeder
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ THEODORE SCHROEDER
Theodore Schroeder
Director, Chief Executive Officer (Principal
Executive Officer)
/s/ GARY SENDER
Gary Sender
Chief Financial Officer (Principal Financial and
Accounting Officer)
March 11, 2021
March 11, 2021
/s/ DANIEL BURGESS
Daniel Burgess
/s/ COLIN BROOM
Colin Broom
/s/ CARRIE BOURDOW
Carrie Bourdow
/s/ GEORGE TALBOT
George Talbot
/s/ CHARLES A. ROWLAND JR.
Charles A. Rowland Jr.
/s/ STEPHEN WEBSTER
Stephen Webster
/s/ STEVEN GELONE
Steven Gelone
Chairman of the Board
March 11, 2021
Director
Director
Director
Director
Director
March 11, 2021
March 11, 2021
March 11, 2021
March 11, 2021
March 11, 2021
Director, President and Chief Operating Officer
March 11, 2021
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INDEX TO FINANCIAL STATEMENTS
Nabriva Therapeutics plc
Audited Consolidated Financial Statements
Report of KPMG LLP, Independent Registered Public Accounting Firm
Consolidated balance sheets as of December 31, 2019 and 2020
Consolidated statements of operations for the years ended December 31, 2018, 2019 and 2020
Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2018, 2019 and
2020
Consolidated statements of cash flows for the years ended December 31, 2018, 2019 and 2020
Notes to the consolidated financial statements
F-2
F-4
F-5
F-6
F-7
F-8
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Nabriva Therapeutics plc:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Nabriva Therapeutics plc and subsidiaries (the
Company) as of December 31, 2019 and 2020, the related consolidated statements of operations, changes in stockholders’
equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2019 and 2020, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with
U.S. generally accepted accounting principles.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses
and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern.
Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our
audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
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Evaluation of net realizable value of excess or obsolete inventory
As discussed in Note 2 to the consolidated financial statements, the Company had inventory with a carrying value
of $5.8 million as of December 31, 2020. Inventory is stated at the lower of cost or net realizable value, with cost
determined on a first-in, first-out basis. The Company reviews inventories for realization and records a provision
for estimated excess, slow-moving and obsolete inventory, as well as inventory with a carrying value in excess of
net realizable value when necessary.
We identified the evaluation of net realizable value of excess or obsolete inventory as a critical audit matter.
Evaluating estimates of forecasted sales and the resulting inventory consumption prior to inventory expiration
dates, required a high degree of auditor judgment.
The following are the primary procedures we performed to address this critical audit matter. We evaluated
forecasted sales by comparing to third-party market research. We inquired of operational personnel of the
Company and inspected external documents regarding expected future sales. To evaluate the need for a provision
for excess inventory that may expire prior to being sold, we compared the forecasted sales quantities to inventory
expiration date by manufacturing lot.
/s/ KPMG LLP
We have served as the Company’s auditor since 2017.
Philadelphia, Pennsylvania
March 11, 2021
F-3
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NABRIVA THERAPEUTICS plc
Consolidated Balance Sheets
(in thousands, except share data)
Assets
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net and other receivables
Inventory
Prepaid expenses
Total current assets
Property, plant and equipment, net
Intangible assets, net
Long-term receivables
Total assets
Liabilities and stockholders´ equity
Current liabilities:
Current portion of long-term debt
Accounts payable
Accrued expense and other current liabilities
Deferred revenue
Total current liabilities
Non-current liabilities
Long-term debt
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies (Note 17)
Stockholders’ Equity:
Ordinary shares, nominal value $0.01, 100,000,000 ordinary shares authorized at
December 31, 2020; 9,454,511 and 21,078,781 issued and outstanding at December
31, 2019 and December 31, 2020, respectively
Preferred shares, par value $0.01, 100,000,000 shares authorized at December 31,
2020; None issued and outstanding
Additional paid in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
As of
As of
December 31, 2019 December 31, 2020
$
$
$
$
86,019
392
175
2,744
682
1,158
91,170
2,474
91
378
94,113
$
$
— $
4,673
11,966
—
16,639
34,502
1,698
36,200
52,839
41,359
231
16
3,909
5,823
5,880
57,218
768
80
370
58,436
2,041
2,889
12,844
750
18,524
5,686
1,091
6,777
25,301
95
211
—
517,894
27
(476,742)
41,274
94,113
$
—
579,123
27
(546,226)
33,135
58,436
The accompanying notes form an integral part of these consolidated financial statements.
F-4
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NABRIVA THERAPEUTICS plc
Consolidated Statements of Operations
(in thousands, except share and per share data)
Revenues:
Product revenue, net
Collaboration revenue
Research premium and grant revenue
Total revenue
Operating expenses:
Cost of product sales
Research and development expenses
Selling, general and administrative expenses
Total operating expenses
Loss from operations
Other income (expense):
Other income (expense), net
Interest income
Interest expense
Loss on extinguishment of debt
Loss before income taxes
Income tax expense
Net loss
Loss per share
Basic and Diluted ($ per share)
Weighted average number of shares:
Basic and Diluted
2018
Year ended December 31,
2019
2020
$
$
$
—
6,500
3,156
9,656
—
(82,288)
(41,743)
(124,031)
(114,375)
(272)
49
(133)
—
(114,731)
(49)
(114,780)
(22.60)
$
$
$
1,538
6,210
1,733
9,481
(70)
(26,415)
(62,485)
(88,970)
(79,489)
215
255
(3,644)
—
(82,663)
(101)
(82,764)
(11.15)
$
$
$
108
2,756
2,163
5,027
(766)
(15,102)
(55,285)
(71,153)
(66,126)
1,187
86
(1,735)
(2,757)
(69,345)
(139)
(69,484)
(5.41)
5,079,576
7,419,948
12,845,089
The accompanying notes form an integral part of these consolidated financial statements.
F-5
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NABRIVA THERAPEUTICS plc
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands)
January 1, 2018
Issuance of ordinary shares
Equity transaction costs
Stock-based compensation expense
Shares issued in connection with the acquisition of
Zavante Therapeutics, Inc.
Net loss
December 31, 2018
Issuance of ordinary shares and warrants
Equity transaction costs
Stock-based compensation expense
Shares issued in connection with the vesting of
restricted stock units
Shares issued in connection with the employee stock
purchase plan
Shares issued in connection with the acquisition of
Zavante Therapeutics, Inc.
Net loss
December 31, 2019
Issuance of ordinary shares
Shares issued in connection with the employee stock
purchase plan
Shares issued in connection with the vesting of
restricted stock units
Equity transaction costs
Stock-based compensation expense
Net loss
December 31, 2020
Ordinary Shares
Additional
paid in
Accumulated
other
comprehensive
Accumulated
Total
Stockholders'
Number of
Shares
Amount
capital
income
deficit
Equity
3,671
2,297
$
—
—
734
—
6,702
2,584
—
—
66
21
82
—
9,455
11,571
9
44
—
—
—
21,079
$
$
37
23
—
—
7
—
67
26
—
—
1
—
1
—
95
116
—
—
—
—
—
211
$
$
361,202
74,196
(4,933)
5,154
26,895
—
462,514
48,056
(2,794)
9,748
(1)
372
(1)
—
517,894
60,944
43
—
(4,977)
5,219
—
579,123
$
27
$
—
—
—
—
—
27
—
—
—
—
—
—
—
27
—
—
—
—
—
—
27
$
(279,198)
$
—
—
—
—
(114,780)
(393,978)
—
—
—
—
—
—
(82,764)
(476,742)
—
—
—
—
—
(69,484)
(546,226)
$
82,068
74,219
(4,933)
5,154
26,902
(114,780)
68,630
48,082
(2,794)
9,748
—
372
—
(82,764)
41,274
61,060
43
—
(4,977)
5,219
(69,484)
33,135
The accompanying notes form an integral part of these consolidated financial statements.
F-6
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NABRIVA THERAPEUTICS plc
Consolidated Statements of Cash Flows
(in thousands)
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash other income/expense, net
Non-cash interest income
Non-cash interest expense
Loss on extinguishment of debt
Depreciation and amortization expense
Amortization of right-of-use assets
Stock-based compensation
In-process research and development in connection with acquisition
Other, net
Changes in operating assets and liabilities:
Increase/(decrease) in long-term receivables
Increase/(decrease) in accounts receivable, net and other receivables and prepaid expenses
Increase in inventory
Increase/(decrease) in accounts payable
Increase/(decrease) in accrued expenses and other liabilities
Increase in deferred revenue
Increase/(decrease) in other non-current liabilities
Increase/(decrease) in income tax liabilities
Net cash used in operating activities
Cash flows from investing activities
Purchases of plant and equipment and intangible assets
Purchases of term deposits
Changes in restricted cash
Transaction costs related to Zavante acquisition, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of warrants
Proceeds from issuance of ordinary shares and warrants
Proceeds from at-the-market facility
Proceeds from long-term debt, net of issuance costs
Proceeds from employee stock purchase plan
Repayments of long-term borrowings
Equity transaction costs
Net cash provided by financing activities
Effects of exchange rate changes on the balance of cash held in foreign currencies
Net increase/(decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental disclosure of cash flow information:
Interest paid
Taxes paid
Equity transaction costs included in accounts payable and accrued expenses
Year Ended December 31,
2019
2020
2018
$
(114,780)
$
(82,764)
$
(69,484)
362
45
(104)
—
510
—
5,154
32,048
14
(3)
1,139
—
(2,969)
5,742
—
61
58
(72,723)
(229)
(115)
—
(4,260)
(4,604)
—
50,000
24,219
23,545
—
—
(40)
22
519
—
396
374
9,748
—
48
50
2,582
(682)
1,310
(3,209)
—
(172)
(74)
(71,892)
(61)
—
392
—
331
—
20,138
27,945
9,980
372
—
(2,360)
56,075
(4,841)
92,923
(362)
15,234
86,769
102,003
(7)
(4)
120
$
(106)
(15,592)
102,003
86,411
$
$
(2,560)
(11)
552
50
—
636
2,757
417
403
5,219
—
62
8
(5,887)
(5,141)
(1,813)
714
750
(2)
(20)
(71,331)
(113)
—
(161)
—
(274)
665
53,460
7,520
—
43
(30,000)
(4,764)
26,924
(140)
(44,821)
86,411
41,590
(1,396)
(4)
765
The accompanying notes form an integral part of these consolidated financial statements.
F-7
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NABRIVA THERAPEUTICS plc
Notes to the Consolidated Financial Statements
(in thousands, except per share data)
1. Organization and Business Activities
Nabriva Therapeutics plc, or Nabriva Ireland, together with its wholly owned and consolidated subsidiaries,
Nabriva Therapeutics GmbH, or Nabriva Austria, Nabriva Therapeutics US, 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.
In September 2020, the Centers for Medicare & Medicaid Services, or CMS, granted a new technology add-on
payment, or NTAP, for XENLETA® (lefamulin) for injection, when administered in the hospital inpatient setting. Both the
intravenous, or IV and oral formulations of XENLETA were granted Qualified Infectious Disease Product, or QIDP, and
Fast Track designation by the U.S. Food and Drug Administration, or FDA. CONTEPO was granted an NTAP making it
the first QIDP antibiotic to be granted conditional NTAP approval prior to receiving FDA approval. CONTEPO was
granted QIDP and Fast Track Designation by the FDA for the treatment of complicated urinary tract infections, or cUTIs,
including acute pyelonephritis.
In July 2020, the Company 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 launch of XENLETA across the
European Economic Area, or EEA, and United Kingdom, or U.K. The EC approved XENLETA for all countries of the
European Economic Area, or EEA, and United Kingdom, or U.K. Nabriva intends to work with a commercial partner to
make XENLETA available to patients in the European Economic Area, or EEA, and United Kingdom, or U.K.
In July 2020, the Company announced that Sunovion Pharmaceuticals Canada Inc., or Sunovion, received approval
from Health Canada to market oral and 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.
In July 2020, the Company announced that it entered into a Sales Promotion and Distribution Agreement, or the
Distribution Agreement, with MSD International GmbH, or MSD, and Merck Sharp & Dohme Corp., or 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 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.
In June 2020 the Company announced that WE Pharma Ltd., or WEP Clinical, a specialist pharmaceutical services
company, had 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, or 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.
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In September 2019, the Company announced that the oral and IV formulations of XENLETA (lefamulin) are
available in the United States for the treatment of community-acquired bacterial pneumonia, or CABP, through major
specialty distributors. This followed the approval by the FDA of the Company’s New Drug Application, or NDA, for
XENLETA on August 19, 2019 for the treatment of adults with CABP. XENLETA is the first oral and IV treatment in the
pleuromutilin class of antibiotics available for the systematic administration in humans.
In July 2018, the Company acquired Zavante Therapeutics Inc., or Zavante, a biopharmaceutical company focused
on developing CONTEPO (fosfomycin for injection), and entered into an Agreement and Plan of Merger, or 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 cUTI and may potentially develop XENLETA and CONTEPO for additional
indications. In April 2019, the FDA issued a Complete Response Letter, or 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. In June 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 continue to interact with FDA to discuss its plans
for conducting inspections at their sites. On October 30, 2020, the Company participated in a Type A meeting with the
FDA to obtain any new information related to the FDA’s pending conduct of inspections of foreign manufacturers during
the COVID-19 pandemic that has negatively impacted a number of FDA product reviews, including the CONTEPO NDA.
The FDA informed the Company that it has not yet determined how it will conduct international inspections during the
COVID-19 pandemic. As a result, next steps and specific timing of the CONTEPO NDA resubmission cannot be finalized
until the FDA issues industry guidance. The Company and the industry await future communication from the FDA as it
continues to assess the options available under existing regulations and laws to conduct these foreign facility inspections.
CONTEPO has been granted Qualified Infectious Disease Product, or 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.
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 December 31, 2020, the Company had cash and cash equivalents,
restricted cash and short-term investments of $41.6 million.
The Company follows the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards
Codification, or ASC, Topic 205-40, Presentation of Financial Statements — Going Concern, or 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
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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 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 were restricted to conducting
educational and promotional activities virtually. The Company has secured a new virtual and in-person sales effort with
community-based expertise with Amplity Health, which is a Contract Sales Organization, to replace its hospital-based sale
force. In September 2020, the Company began a small and focused sales effort for SIVEXTRO and XENLETA, by
utilizing 15 sales representatives. The Company expanded this effort to 60 sales representatives in November 2020 and the
Company may expand it further in 2021.
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. 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.
Based on its current operating plans, the Company expects that its existing cash, cash equivalents, restricted cash
and short-term investments as of the date of this filing will be sufficient to enable the Company to fund its operating
expenses, debt service obligations and capital expenditure requirements into the fourth 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.
In June 2019, the Company entered into an Open Market Sale AgreementSM (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
and filed a new prospectus supplement with the Securities and Exchange Commission in connection with the
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Offering under the Company’s new shelf Registration Statement on Form S-3 (File No. 333-248530), which became
effective on September 11, 2020.
As of December 31, 2020, the Company has issued and sold an aggregate of 1,992,390 ordinary shares pursuant to
the Jefferies ATM Agreement and received gross proceeds of $21.9 million and net proceeds of $20.4 million, after
deducting commissions to Jefferies and other offering expenses. From January 1, 2021 and through the date of this filing,
the Company sold and issued 3,933,350 ordinary shares pursuant to the Jefferies ATM Agreement for net proceeds of
approximately $11.5 million. As of the date of this filing, the Company may issue and sell ordinary shares for gross
proceeds of up to $16.3 million under the Jefferies ATM Agreement.
In May 2020, the Company sold to certain institutional investors, including Fidelity Management & Research
Company, LLC, in a registered direct offering an aggregate of 4,144,537 ordinary shares and accompanying warrants to
purchase up to an aggregate of 4,144,537 ordinary shares at a combined price of $9.1686 per security. The proceeds to the
Company from the offering were $38.0 million gross and $35.2 million net, after deducting the placement agent’s fees and
other offering expenses. As of December 31, 2020, there were 4,059,532 warrants outstanding, where each warrant has an
exercise price of $7.92 per share and is immediately exercisable and will expire on the two-year anniversary of the issuance
date.
In December 2020, the Company completed a registered public offering in which it sold 6,000,000 ordinary shares
at a public offering price of $2.50. The proceeds to the Company from the offering were $15.0 million gross and $13.3
million net, after deducting the placement agent’s fees and other offering expenses.
In March 2021, the Company entered into a securities purchase agreement with certain institutional investors
pursuant to which the Company agreed to issue and sell in a registered direct offering (1) an aggregate of 9,761,010
ordinary shares, $0.01 nominal value per share, and accompanying warrants to purchase up to an aggregate of 4,880,505
ordinary shares and (2) pre-funded warrants to purchase up to an aggregate of 600,000 ordinary shares and accompanying
ordinary share warrants to purchase up to an aggregate of 300,000 ordinary shares. Each share was issued and sold together
with an accompanying ordinary share warrant at a combined price of $2.4525, and each pre-funded warrant was issued and
sold together with an accompanying ordinary share warrant at a combined price of $2.4425. The proceeds to us from the
offering were $25.4 million gross and $23.4 million net after deducting the placement agent’s fees and other estimated
offering expenses. Each pre-funded warrant had an exercise price per ordinary share equal to $0.01 and each pre-funded
warrant was exercised in full on the issuance date. Each ordinary share warrant has an exercise price per ordinary share
equal to $2.39, was exercisable on the date of issuance and will expire on the five-year anniversary of the date of issuance.
2. Summary of Significant Accounting Policies
Basis of Preparation
The consolidated financial statements have been prepared in accordance with generally accepted accounting
principles in the United States of America, or US GAAP, and US Securities and Exchange Commission, or SEC,
regulations for annual reporting. The consolidated financial statements include the accounts of Nabriva Therapeutics plc
and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Reverse Stock Split
On December 2, 2020, the Company filed an Amended and Restated Memorandum and Articles of Association of
the Company with the Irish Companies Registration Office and effected, a one-for-ten reverse stock split (the “Reverse
Stock Split”) of the Company’s ordinary shares. As a result of the Reverse Stock Split, every ten ordinary shares in the
authorized and unissued and authorized and issued share capital of the Company were consolidated into one ordinary share.
No fractional shares were issued in connection with the Reverse Stock Split. Shareholders who would otherwise be entitled
to a fractional ordinary share were instead entitled to receive a proportional cash payment. All ordinary share,
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per share and related information presented in the consolidated financial statements and notes has been retroactively
adjusted to reflect the Reverse Stock Split.
Functional Currency Transactions and Balances
In preparing the consolidated financial statements, transactions in currencies other than the U.S. dollar are
recognized at the exchange rates prevailing at the dates of the transactions. Foreign currency exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognized in the consolidated statements of operations.
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the amount of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers highly liquid investments with original maturities of three months or less to be cash
equivalents.
Restricted Cash
The Company classifies funds contributed by its employees to its Employee Stock Purchase Plan (See Note 11) as
restricted in nature since these amounts can only be utilized to purchase Company stock at the end of each six month
offering period. Prior to the conclusion of the offering period, employees can request reimbursement of the funds they
previously contributed and if they leave the Company prior to the end of the offering period the funds are returned to the
employee.
Short-term Investments
The Company has designated its investments in securities as available-for-sale securities and measures these
securities at their respective fair values. Investments that mature in one year or less are classified as short-term available-
for-sale securities. Investments that are not considered available for use in current operations are classified as long-term
available-for-sale securities. Changes in the fair value of available-for-sale investments are recognized in other
comprehensive income (loss).
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. For the year ended December 31, 2020, the Company
recorded a $0.7 million non-cash reserve for excess and obsolete inventory due to the uncertainty of commercial activities
underlying XENLETA product sales.
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The components of our inventory at December 31, 2019 and 2020 are as follows:
(in thousands)
Raw materials
Work in process
Finished goods
Total Inventory
Property, Plant and Equipment
As of December 31,
2019
2020
— $
498
184
682
$
952
4,608
263
5,823
$
$
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using
the straight-line method over the estimated useful lives of the assets. The estimated useful lives of property, plant and
equipment are as follows: 3-5 years for IT equipment, 5-10 years for laboratory equipment and 3-10 years for other plant
and office equipment. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
reporting date. When assets are sold or otherwise disposed of, the difference between the net proceeds, if any, and the net
carrying amount of the asset is recognized as a gain or a loss in other operating income or expenses.
Intangible Assets and Other Long-lived Assets
Intangible assets, such as acquired computer software licenses, are capitalized on the basis of the costs incurred to
acquire the software and bring it into use. These costs are amortized on a straight-line basis over their estimated useful
lives (3-10 years).
Long-lived assets are assessed for potential impairment when there is evidence that events or changes in
circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss would be recognized
when undiscounted cash flows expected to be generated by an asset, is less than its carrying amount. The impairment loss
would be measured as the amount by which the asset’s carrying value exceeds its fair value and recognized in these
financial statements.
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is
available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate
resources and in assessing performance. The Company views its operations and manages its business as one operating
segment, which is the commercialization and development of novel anti-infective agents to treat serious and life-
threatening infections.
Revenue Recognition—The Company recognizes revenue from sales of its commercial products in accordance with ASC
606, Revenue from Contracts with Customers, or ASC 606.
Net Product Revenue
Beginning in September 2019, the Company began selling its XENLETA product principally to a limited number
of specialty distributors in the United States. The distributors place orders with the Company for sufficient quantities of its
products to maintain an appropriate level of inventory based on its customers’ anticipated purchase volumes and demand.
The Company recognizes revenue once it has transferred physical possession of the goods and the distributor obtains legal
title to the product. Payment terms between Nabriva and its customers are generally approximately 60 days from the
invoice date. In addition to distribution agreements with customers, the Company enters into arrangements with health care
providers and payers that provide for government mandated and/or privately negotiated rebates, chargebacks and discounts
with respect to the purchase of its product.
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The transaction price that the Company recognizes as revenue reflects the amount it expects to be entitled to in
connection with the sale and transfer of control of product to its customers. At the time that the Company’s customers take
control of the product, which is when the Company’s performance obligation under the sales contracts is complete, the
Company records product revenues net of applicable reserves for various types of variable consideration. The types of
variable consideration are as follows:
● Fees-for-service
● Product returns
● Chargebacks and rebates
● Government rebates
● Commercial payer and other rebates
● Group Purchasing Organizations, or GPO, administration fees
● Voluntary patient assistance programs
In determining the amounts of certain allowances and accruals, the Company must make significant judgments
and estimates. For example, in determining these amounts, the Company estimates prescription demand from the specialty
pharmacies, hospital demand, buying patterns by hospitals, hospital systems and/or group purchasing organizations and the
levels of inventory held by specialty distributors and customers. The Company also analyzes third party end usage product
consumption patterns to gauge demand for its products. Making these determinations involves analyzing third party
industry data to determine whether trends in historical channel distribution patterns will predict future product sales. The
Company receives data periodically from its specialty distributors and customers on inventory levels and historical channel
sales mix, and the Company considers this data when determining the amount of the allowances and accruals for variable
consideration, however given the recent launch of its XENLETA product this data is limited.
In assessing the amount of net revenue to record, the Company considers both the likelihood and the magnitude of
the revenue reversal. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If
actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect
net product revenue and earnings in the period such variances become known. The specific considerations the Company
uses in estimating these amounts related to variable consideration associated with the Company’s products are as follows:
Fees-for-service – The Company offers discounts and pays certain distributor service fees which are recorded as a
reduction of revenue in the period the related product revenue is recognized. The Company does not consider the fees
separate from the distributors’ purchase of the product. The Company records its fee-for-service accruals based on
distributors’ purchases and the applicable discount rate.
Product returns – Generally, the Company’s customers have the right to return products during the 18-month
period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date.
Since the Company has a limited history of XENLETA returns, the Company estimated returns based on industry data for
comparable products in the market. As the Company distributes its product and establishes historical sales over a longer
period of time (i.e., two to three years), the Company will be able to place more reliance on historical purchasing, demand
and return patterns of its customers when evaluating its reserves for product returns. The Company’s XENLETA product
has a thirty-six-month shelf life.
The Company’s customers also have the right to return excess inventory on new products that do not yield
forecasted sales. To the extent the Company’s customers determine that the quantities they purchased are in excess of
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their customers demand, product returns could increase in excess of what the Company has currently reserved which would
result in a reduction to net revenues in future periods.
At the end of each reporting period for any of its products, the Company may decide to constrain revenue for
product returns based on information from various sources, including channel inventory levels and dating and sell-through
data, the expiration dates of product currently being shipped, price changes of competitive products and introductions of
generic products.
Chargebacks and rebates – Although the Company primarily sells products to specialty distributors in the United
States, the Company also enters into agreements with hospitals and retail pharmacies, either directly or through group
purchasing organizations acting on behalf of their members, in connection with the purchase of product. Based on these
agreements, certain of the Company’s customers have the right to receive a discounted price on product purchases. The
Company typically provides a credit to its specialty distributors customers (i.e., chargeback), representing the difference
between the customer’s acquisition list price and the discounted price. The calculation of the accrual for chargebacks and
rebates is based on estimates of claims and their associated cost that the Company expects to receive associated with
product sales that have been recognized as revenue but remain in the distribution channel as inventory at the end of each
reporting period.
Government rebates –The Company is subject to discount obligations primarily under state Medicaid and
Medicare programs. The Company estimates its Medicaid and Medicare rebates based upon a range of possible outcomes
that are probability-weighted for the estimated payer mix. These reserves are recorded in the same period the related
product revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability that is
included in accrued expenses on the consolidated balance sheet. For Medicare, the Company also estimates the number of
patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare
Part D program. The calculation of the accrual for government rebates is based on estimates of claims and their associated
cost that the Company expects to receive associated with product sales that have been recognized as revenue but remain in
the distribution channel as inventory at the end of each reporting period.
Commercial payer and other rebates – The Company contracts with certain private payer organizations, primarily
insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of XENLETA
and contracted formulary status. The Company estimates these rebates and records reserves for such estimates in the same
period the related revenue is recognized. Currently, the reserve for customer payer rebates considers future utilization based
on third party studies of payer prescription data; the utilization is applied to product that remains in the distribution and
retail pharmacy channel inventories at the end of each reporting period. The calculation of the accrual for commercial
payer and other rebates is based on estimates of claims and their associated cost that the Company expects to receive
associated with product sales that have been recognized as revenue but remain in the distribution channel as inventory at
the end of each reporting period.
GPO administration fees – The Company contracts with GPOs and pays administration fees related to contacting
and membership management services provided. In assessing if the consideration paid to the GPO should be recorded as a
reduction in the transaction price, the Company determines whether the payment is for a distinct good or service or a
combination of both. Since GPO fees are not specifically identifiable, the Company does not consider the fees separate
from the purchase of the product. Additionally, the GPO services generally cannot be provided by a third party. Because of
these factors, the consideration paid is considered a reduction of revenue.
Patient assistance – The Company offers certain voluntary patient assistance programs for prescriptions, such as
co-pay assistance programs, which are intended to provide financial assistance to qualified commercially insured patients
with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an
estimate of claims and the cost per claim that the Company expects to receive associated with product sales that have been
recognized as revenue but remains in the distribution channel as inventory at the end of each reporting period.
At the end of each reporting period, the Company will adjust its variable consideration estimates for product
returns, chargebacks, and rebates when the Company believes actual experience may differ from current estimates.
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The following table summarizes balances and activity of product revenue allowances and reserves:
Balance at January 1
Provision related to current period sales
Adjustment related to prior period sales
Credit or payments made during the period
Balance at December 31
Cost of Product Sales
2019
2020
$
$
—
635
—
(101)
534
$
$
534
182
194
(248)
662
Cost of product sales primarily represents direct and indirect manufacturing costs of XENLETA. 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 the Company’s control and therefore not considered probable. As
such, the majority of the expenses incurred for initial inventories of XENLETA has been previously expensed. For the year
ended December 31, 2020 the cost of product sales includes a $0.7 million non-cash reserve for excess and obsolete
inventory due to the uncertainty of commercial activities underlying XENLETA sales.
Research Premium and Grant Revenue
Grant revenue comprises (a) the research premium from the Austrian government, (b) grants received from the
Austrian Research Promotion Agency (Österreichische Forschungsförderungsgesellschaft, or FFG), and (c) the benefit of
government loans at below-market interest rates.
The research premium the Company receives from the Austrian government is calculated at a specified percent of
specified research and development cost base. The Company recognizes the research premium as long as it has incurred
research and development expenses. All grants are non-refundable as long as the conditions of the grant are met. Nabriva is
and has been in full compliance with the conditions of the grants and all related regulations.
Research and Development Expenses
All research and development costs are expensed as incurred. Research and development costs included direct
personnel and material costs, related overheads, depreciation of equipment used for research or development purposes;
costs for clinical research; costs for the utilization of third parties’ patents for research and development purposes and other
taxes related to research facilities.
Share-based Payments
The Company measures the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award in accordance with ASC 718, Compensation—Stock Compensation. The fair
value of stock options is estimated using the Black-Scholes option pricing model. All grants under share-based payment
programs are accounted for at fair value and that cost is recognized over the period during which an employee is required
to provide service in exchange for the award—the requisite service period (vesting period). The Company accounts for
forfeitures as incurred. Compensation expense for options granted to non-employees is determined as the fair value of the
consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. The fair
value of awards granted to non-employees is re-measured each period until the related service is complete.
Leases
In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), or
ASU 2016-02, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for
both lessees and lessors. On January 1, 2019, the Company adopted the new lease standard using the optional transition
method under which comparative financial information has not been restated and will continue to apply the provisions of
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the previous lease standard in its annual disclosures for the comparative periods. In addition, the new lease standard
provides a number of optional practical expedients in transition. The Company elected the package of practical expedients.
As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; and did not
have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases.
The new lease standard also provides practical expedients for an entity's ongoing accounting. The Company
elected the short-term lease recognition exemption under which the Company will not recognize right of use, or ROUassets
or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The
Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (office
buildings).
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating
lease ROU assets, other current liabilities, and operating lease liabilities on the Company’s consolidated balance sheet.
Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum
lease payments over the remaining lease term. Since none of the Company’s lease agreements provide an implicit rate, the
Company estimated an incremental borrowing rate over the lease term based on the information available at January 1,
2020 in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis
over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as
operating costs and property taxes are expensed as incurred.
On January 1, 2019, the Company recognized ROU assets and lease liabilities of approximately $2.0 million on its
consolidated balance sheet using an estimated incremental borrowing rate of 9.8%. This ROU asset is recorded in property,
plant and equipment, net and the ROU liability is recorded in other non-current liabilities. With the early termination of the
King of Prussia lease agreement (see Note 17), the ROU asset and lease liabilities have decreased by $1.1 million as of
December 31, 2020.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences
between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in
which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is
recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not
to be realized. In making such a determination, the Company considers all available positive and negative evidence,
including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning
strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets
in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset
valuation allowance, which would reduce the provision for income taxes.
In recognizing the benefit of tax positions, the Company has taken or expects to take, the Company determines
whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position
and for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest
amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax
authority.
The Company’s policy is to record interest and penalties related to tax matters in income tax expense.
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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.
Adopted as of the current period:
In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Cost Incurred
in a Cloud Computing Arrangement That Is a Service Contract”, or ASU 2018-15. Customers are required to apply the
same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The
impact of the adoption of ASU 2018-15 on the Company´s consolidated financial statements for the year ended December
31, 2020 was immaterial.
3. Short-term investments
The Company’s short-term investments were as follows:
(in thousands)
Term deposits
Total
(in thousands)
Term deposits
Total
As of December 31, 2020
Amortized Cost Unrealized Gains Unrealized Losses
Fair Value
$
$
16
16
$
$
— $
— $
— $
— $
16
16
As of December 31, 2019
Amortized Cost Unrealized Gains Unrealized Losses
Fair Value
$
175
175
$
—
— $
—
— $
175
175
As of December 31, 2020 and 2019, the Company’s short-term investments were classified as available-for-sale
and comprised of certain term deposits with maturities in excess of 90 days.
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.
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The following table presents the financial instruments measured at fair value and classified by level according to
the fair value measurement hierarchy:
(in thousands)
December 31, 2020
Assets:
Cash equivalent:
Money market fund
Short term investments:
Term deposits
Total Assets
(in thousands)
December 31, 2019
Assets:
Cash equivalent:
Money market fund
Short term investments:
Term deposits
Total Assets
Level 1 Level 2 Level 3 Total
$ 8,050
$ — $ — $ 8,050
16
$ 8,066
—
16
$ — $ — $ 8,066
—
Level 1 Level 2 Level 3
Total
$ 15,050
$ — $ — $ 15,050
175
$ 15,225
175
— —
$ — $ — $ 15,225
There were no transfers between Level 1 and 2 in the years ended December 31, 2020 and 2019. There were no
changes in valuation techniques during the years ended December 31, 2020 and 2019.
As of December 31, 2020 and 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. Accounts receivable, net and other receivables
Accounts receivable, net and other receivables include the following:
(in thousands)
Receivables from collaborative arrangments
Research premium
Other receivables
Total accounts receivable, net and other receivables
As of December 31
2019
2020
$
$
— $
1,530
1,214
2,744
$
2,426
1,308
175
3,909
6. Property, Plant and Equipment
Property, plant and equipment was comprised of the following:
(in thousands)
IT equipment
Laboratory equipment
ROU asset
Other equipment
Less: Accumulated depreciation
Property, plant and equipment, net
As of December 31
2019
2020
$
$
1,060
3,375
1,647
165
6,247
(3,773)
2,474
$
$
1,077
3,392
226
204
4,899
(4,131)
768
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7. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities include the following:
(in thousands)
Research and development related costs
Payroll and related costs
Accounting, tax and audit services
Manufacturing and inventory
Accrued gross to net
Other
Total other current liabilities
8. Debt
As of December 31,
2020
2019
$
$
1,347
6,327
420
639
534
2,699
11,966
$
$
1,055
4,049
470
4,779
662
1,829
12,844
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., or 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 (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 December 31, 2020.
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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 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 during 2019 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 December 31, 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 2020 consisted of the following:
(in thousands)
Term loan payable
End of term fee
Unamortized debt issuance costs
Carrying value of term loan
Other long-term debt
Less: Amounts due within one year
Total long-term debt
As of December 31,
2019
2020
$
$
35,000
443
(1,742)
33,701
801
—
34,502
$
$
5,000
2,048
(206)
6,842
885
(2,041)
5,686
2,041
2,493
4,084
As of December 31, 2020, the maturities of our long-term debt were as follows:
(in thousands)
2021
2022
2023
9. Stockholders’ Equity
$
In December 2020, the Company completed a registered public offering in which it sold 6,000,000 ordinary shares
at a public offering price of $2.50. The proceeds to the Company from the offering were $15.0 million gross and $13.3
million net, after deducting the placement agent’s fees and other offering expenses.
In May 2020, the Company sold to certain institutional investors, including Fidelity Management & Research
Company, LLC, in a registered direct offering an aggregate of 4,144,537 ordinary shares and accompanying warrants to
purchase up to an aggregate of 4,144,537 ordinary shares at a combined price of $9.1686 per security. The proceeds to the
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Company from the offering were $38.0 million gross and $35.2 million net, after deducting the placement agent’s fees and
other offering expenses. As of December 31, 2020, there were 4,059,532 warrants outstanding, where each warrant has an
exercise price of $7.92 per share and is immediately exercisable and will expire on the two-year anniversary of the issuance
date.
In December 2019, the Company sold to certain institutional investors in a registered direct offering an aggregate
of 1,379,310 ordinary shares, and accompanying warrants to purchase up to an aggregate of 1,379,310 ordinary shares.
Each share was issued and sold together with an accompanying warrant at a combined price of $14.50 per security. The
proceeds to the Company from the offering were $20.0 million gross and $18.3 million net, after deducting the placement
agent’s fees and other offering expenses. As of December 31, 2020, there were 1,379,310 warrants outstanding, where each
warrant has an exercise price of $19.00 per share and is initially exercisable six months following the date of issuance, or
the Initial Exercise Date, and will expire on the three-year anniversary of the Initial Exercise Date.
In June 2019, the Company entered into an Open Market Sale AgreementSM (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. As of December 31, 2020, the
Company has issued and sold an aggregate of 1,992,390 ordinary shares pursuant to the Jefferies ATM Agreement and
received gross proceeds of $21.9 million and net proceeds of $20.4 million, after deducting commissions to Jefferies and
other offering expenses. From January 1, 2021 and through the date of this filing, the Company sold and issued 3,933,350
ordinary shares pursuant to the Jefferies ATM Agreement for net proceeds of approximately $11.5 million. As of the date
of this filing, the Company may issue and sell ordinary shares for gross proceeds of up to $16.3 million.
In July 2018, the Company completed an underwritten public offering and issued 1,818,181 ordinary shares at a
public offering price of $27.50 per share, resulting in gross proceeds of $50.0 million and net proceeds to the Company of
$46.3 million, after deducting underwriting discounts and commissions and offering expenses.
In March 2018, the Company entered into a Controlled Equity OfferingSM Sales Agreement, or the ATM
Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which, from time to time, the Company was able to offer
and sell its ordinary shares having aggregate gross proceeds of up to $50.0 million through Cantor. The Company
terminated the Cantor ATM Agreement effective as of June 24, 2019. The Company did not incur any penalties as a result
of the termination of the Cantor ATM Agreement. As of the effective date of the termination of the Cantor ATM
Agreement, the Company had issued and sold an aggregate of 1,031,619 of our ordinary shares pursuant to the Cantor
ATM Agreement for aggregate gross proceeds of $37.8 million and net proceeds of $36.3 million, after deducting
commissions and offering expenses. The $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.
10. Revenue
(in thousands)
Product revenue, net
Collaboration revenues
Research premium
Government grants
Total
2018
Year ended December 31,
2019
2020
$
$
— $
6,500
2,594
562
9,656
$
1,538
6,210
1,311
422
9,481
$
$
108
2,756
1,227
936
5,027
Collaboration revenues for the year ended December 31, 2019 includes a $1.0 million upfront payment under the
Sunovion License Agreement received in April 2019, and a $5.0 million milestone payment under the Sinovant License
Agreement (see Note 16). Collaboration revenues for the year ended December 31, 2020 includes a $0.5 million regulatory
milestone payment from Sunovion, $1.8 million for the Company´s share of revenues associated with the SIVEXTRO
distribution agreement with Merck & Co., Inc., as well as collaboration revenues associated with the
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restructuring of the Company´s license agreement with Sinovant. The Company will recognize the $1.0 million payment
received as collaboration revenue in the consolidated statements of operations over the estimated period the manufacturing
collaboration and regulatory support will be provided to Sinovant.
The Company sells its products to pharmaceutical wholesalers/distributors (i.e. the Company´s customers). The
Company´s wholesalers/distributors in turn sell the Company´s products directly to clinics, hospitals, and private practices.
Revenue from the Company´s product sales is recognized as physical delivery of product occurs (when the Company´s
customer obtains control of the product), in return for agreed-upon consideration.
For the year ended December 31, 2020 product revenues, gross were $0.5 million, respectively. The Company´s
product revenues, gross (i.e., delivered units multiplied by the contractual price per unit) are reduced by the corresponding
gross-to-net, or GTN, estimates, resulting in the Company´s reported “product revenues, net” in the accompanying
consolidated statements of operations. These GTN estimates are based upon information received from external sources
(such as written or oral information obtained from the Company´s 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 GTN adjustments for the periods presented:
(in thousands)
Product revenue, gross
GTN accruals
Chargebacks and cash discounts
Medicaid and Medicare rebates
Other returns, rebates, discounts and adjustments
Total GTN accruals
Product revenue
Adjustments to prior period accruals
Returns reserve (1)
GTN accrual adjustments
Product revenue, net
Year Ended December 31,
2020
2019
$
2,173 $
48
223
364
(635)
1,538
—
—
1,538 $
$
484
16
52
115
(183)
301
(421)
228
108
(1) As of December 31, 2020, the Company recorded a returns reserve adjustment for slow-moving inventory,
representing 50% of XENLETA IV inventory held at its Specialty Distributors, as well as an adjustment for returns from a
single mail order specialty pharmacy.
11. 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, or the SOP 2015, as amended. With the approval of the 2017 Share Incentive Plan, there were no further
options are available for grant 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.
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
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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.
The following table summarizes information regarding the Company´s stock option awards under the SOP 2015:
2018
2019
2020
Stock Option Plan 2015
Outstanding as of January 1,
Granted
Exercised
Forfeited
Outstanding as of December 31,
Vested and exercisable as of December 31,
Weighted
average
exercise
price in
Weighted
average
exercise
price in
$ per share Options
Options
304,489
—
—
(20,198)
284,291
184,459
$ per share Options
229,060
—
—
—
—
83.54 284,291
—
—
84.07 (55,231)
83.41 229,060
80.97 198,491
83.41
—
—
84.01
83.27
81.98
Weighted
average
exercise
price in
$ per share
83.27
Aggregate
intrinsic
value
—
—
(26,686)
202,374
198,574
87.46
82.71
82.51
$ —
$ —
The Company has 202,374 option grants outstanding at December 31, 2020 with exercise prices ranging from
$40.60 per share to $110.00 per share and a weighted average remaining contractual life of 5.4 years. Stock-based
compensation expense under the SOP 2015 was $3.2 million, $4.0 million and $1.1 million for the years ended December
31, 2018, 2019 and 2020, respectively.
As of December 31, 2020, there was $0.2 million of unrecognized compensation expense, related to unvested
options granted under the SOP 2015 Plan, which will be recognized over the weighted average remaining vesting period of
0.2 years.
2017 Share Incentive Plan
On July 26, 2017, the Company’s board of directors adopted the 2017 Share Incentive Plan, or 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. The
2017 Plan permited the award of share options (both incentive and nonstatutory options), share appreciation rights, or
SARs, restricted shares, restricted share units, or 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. With the
approval of the 2020 Share Incentive Plan, there were no further options are available for grant under the 2017 Plan.
The following table summarizes information regarding our stock option awards under the 2017 Plan at December
31, 2020:
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Table of Contents
2017 Plan
Outstanding as of January 1,
Granted
Exercised
Forfeited
Outstanding as of December 31,
Vested and exercisable as of
December 31,
2018
Weighted
average
exercise
price in $
per share
69.17
52.71
—
67.52
54.14
Options
29,410
219,922
—
(9,490)
239,842
2019
Weighted
average
exercise
price in $
2020
Weighted
average
exercise
price in $
per share
Options
239,842
246,330
—
(43,906)
442,266
per share Options
442,266
129,050
—
(128,472)
442,844
54.14
19.51
—
47.87
35.48
35.48
13.50
—
29.39
30.89
11,928
68.77
112,028
55.33
228,731
39.02
Aggregate
intrinsic
value
$
$
—
—
The Company has 442,844 option grants outstanding at December 31, 2020 with exercise prices ranging from
$13.50 per share to $81.90 per share and a weighted average remaining contractual life of 8.2 years.
Stock-based compensation expense for stock options granted under the 2017 Plan was $1.8 million, $2.6 million
and $2.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. The weighted average fair value of
the options granted during years ended December 31, 2018, 2019 and 2020 was $30.64, $11.38 and $7.97 per share,
respectively, based on a Black Scholes option pricing model using the following assumptions:
Input parameters
Range of expected volatility
Expected term of options (in years)
Range of risk-free interest rate
Dividend yield
2018
2019
59.8% - 61.4% 61.4% - 63.1% 63.8% - 64.0%
6.0
1.9% - 2.6%
–
6.1
2.6% - 3.0%
—
6.1
0.8% - 1.5%
—
2020
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.
As of December 31, 2020, there was $2.6 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 0.9
years.
Restricted Stock Units, or 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
December 31, 2020:
2017 Plan
Outstanding as of January 1,
Granted
Vested and issued
Forfeited
Outstanding as of December 31,
2019
2020
Weighted
average fair
value in $ per share
33.10
19.00
31.80
27.87
27.37
RSUs
122,210
47,900
(65,758)
(14,183)
90,169
Weighted
average fair
RSUs
value in $ per share
90,169
155,730
(51,671)
(42,959)
151,269
27.37
13.50
30.95
17.23
14.56
Stock-based compensation expense for RSUs granted under the 2017 Plan was $0.2 million, $2.7 million and $1.4
million for the years ended December 31, 2018, 2019 and 2020, respectively.
As of December 31, 2020, there was unrecognized compensation costs of $1.3 million associated with RSUs
which are expected to be recognized over the awards average remaining vesting period of 1.1 years. The fair value of
RSU’s that vested during the years ended December 31, 2019 and 2020 was $2.1 million and $1.7 million, respectively.
2019 Inducement Share Incentive Plan
On March 12, 2019, the Company’s board of directors adopted the 2019 Inducement Share Incentive Plan, or the
2019 Inducement Plan and, subject to the adjustment provisions of the 2019 Inducement Plan, reserved 200,000 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 years ended December 31, 2019 and 2020:
2019 Inducement Plan
Outstanding as of January 1
Granted
Exercised
Forfeited
Outstanding as of December 31
Vested and exercisable as of December
31
2019
2020
Weighted
average
exercise
price in $
per share
Options
—
70,315
—
(9,750)
60,565
—
22.20
—
26.92
21.45
Weighted
average
exercise
price in $
per share
21.45
13.50
—
19.59
19.04
Options
60,565
18,200
—
(52,950)
25,815
—
—
4,396
26.96
Aggregate
intrinsic
value
—
—
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Table of Contents
Stock-based compensation expense under the 2019 Inducement Plan was $77,000 and $38,000 for the years ended
December 31, 2019 and 2020, respectively. The weighted average fair value of the options granted during the years ended
December 31, 2019 and 2020 was $13.04 and $7.93 per share, respectively. The options granted during the year ended
December 31, 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
Expected term of options (in years)
Range of risk-free interest rate
Dividend yield
2019
59.8% - 61.4%
6.1
2.55% - 3.03%
–
2020
63.7% - 64.0%
6.1
0.96% - 1.37%
–
The Company has 25,815 option grants outstanding at December 31, 2020 with exercise prices ranging from
$13.50 per share to $29.90 per share and a weighted average remaining contractual life of 8.7 years.
As of December 31, 2020, there was $0.2 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 1.2 years.
Inducement Awards Outside of the 2019 Inducement Plan
In July 2018, the Company granted a non-statutory option to purchase 85,000 of its ordinary shares and 15,000
performance-based RSUs to the Company’s newly appointed Chief Executive Officer, or the CEO. These equity awards
were granted outside of the 2017 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 $35.30 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 RSUs 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. If the FDA does
not approve an NDA for both lefamulin and CONTEPO by January 31, 2020, the performance-based RSUs will terminate
in full. Since CONTEPO was not approved by this date the award was forfeited. The Company also issues non-statutory
options to new employees upon the commencement of their employment.
Stock-based compensation expense was $0.4 million and $0.4 million for the year ended December 31, 2019 and
December 31, 2020. The performance-based RSUs granted to our CEO, had a grant date fair value of $35.30 per share
(although no expense was recognized as FDA approval was not considered probable) and the options granted to our CEO
had a grant date fair value of $20.50 per share based on a Black Scholes option pricing model using the following
assumptions.
Input parameters
Expected volatility
Expected term of options (in years)
Range of risk-free interest rate
Dividend yield
59.8 %
6.1
2.9 %
—
The weighted average remaining contractual life of the options as of December 31, 2020 is 7.6 years.
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As of December 31, 2020, there was $0.7 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 0.8
years.
2020 Share Incentive Plan
On March 4, 2020, the Company´s board of directors adopted the 2020 Share Incentive Plan, or the 2020 Plan,
which was approved by the Company´s shareholders at the 2020 Annual General Meeting of Shareholders in July 2020, or
2020 AGM. As of the date of the 2020 AGM, the total number of ordinary shares reserved for issuance under the 2020
Plan was for the sum of 930,000 ordinary shares, plus the number of the Company´s 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 the Company´s 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, non-statutory share options, share appreciation
rights, restricted share awards, restricted share units, other share-based and cash-based awards and performance awards.
At December 31, 2020, 820,022 ordinary shares were available for future issuance under the 2020 Plan.
The following table summarizes information regarding the Company’s stock option awards under the 2020 Plan
for the year ended December 31, 2020:
2020 Plan
Outstanding as of January 1,
Granted
Exercised
Forfeited
Outstanding as of December 31,
Vested and exercisable as of December 31,
2020
Weighted
average
exercise
price in $
per share
—
10.24
—
7.88
10.18
—
Options
—
317,805
—
(21,000)
296,805
—
Aggregate
intrinsic
value
—
—
Stock-based compensation expense under the 2020 Plan was $144,000 for the year ended December 31, 2020. The
weighted average fair value of the options granted during the year ended December 31, 2020 was $4.40 per share. The
options granted in the year ended December 31, 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
Expected term of options (in years)
Risk-free interest rate
Dividend yield
2020
73.0% - 74.4%
5.5 - 6.1
0.34% - 0.51%
—
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Table of Contents
The Company has 296,805 option grants outstanding at December 31, 2020 with exercise prices ranging from
$2.42 per share to $13.50 per share and a weighted average remaining contractual life of 9.6 years.
As of December 31, 2020, there was $1.3 million of total unrecognized compensation expense related to unvested
options granted under the 2020 Plan, which will be recognized over the weighted-average remaining vesting period of 1.6
years.
Restricted Stock Units, or RSUs
During 2020, the Company granted 45,977 RSUs to certain employees that vest in three six-month increments
beginning in January 2021 and ending in January 2022, with a grant date fair value of $7.88 per share. Also during 2020,
the Company granted 43,125 RSUs to certain employees with a grant date fair value of $5.30 per share, where vesting of
the RSUs was subject to individual performance goals. For the year ended December 31, 2020, stock-based compensation
expense of $111,000 was recognized for these RSUs. As of December 31, 2020, there was $0.5 million of unrecognized
compensation expense related to unvested RSUs, which will be recognized over the weighted-average remaining vesting
period of 1.0 years.
Our share-based compensation expense has been allocated to research and development and selling, general and
administrative expenses in the consolidated statement of operations as follows:
(in thousands)
Research and development
Selling, general and administrative
Total
2018
Year ended December 31,
2019
2020
$
$
1,406
3,748
5,154
$
$
2,138
7,610
9,748
$
$
1,280
3,939
5,219
The Company recognizes the impact of forfeitures as they occur and issues new shares to satisfy share based
compensation arrangements upon the exercise of stock options or vesting of restricted shares.
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, or the 2018 ESPP. The maximum aggregate number of shares of ordinary shares that may
be purchased under the 2018 ESPP is 50,000 shares, or the ESPP Share Pool, subject to adjustment as provided for in the
2018 ESPP. The ESPP Share Pool available as of December 31, 2020, represented less than 0.1% of the total number of
shares of ordinary shares outstanding as of December 31, 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.
12. Post-employment benefit obligations
As required under Austrian labor law, the Company makes contributions to a state plan classified as defined
contribution plan (Mitarbeitervorsorgekasse) for its employees in Austria. Monthly contributions to the plan are 1.53% of
salary with respect to each employee and are recognized as expense in the period incurred. For the years ended
December 31, 2018, 2019 and 2020, contributions costs were $68,000, $68,000 and $57,000, respectively.
For employees of Nabriva Therapeutics US, Inc., the Company makes contributions to a defined contribution plan
as defined in subsection 401(k) of the Internal Revenue Code. The Company matches 100% of the first 3% of the
employee’s voluntary contribution to the plan and 50% of the next 2% contributed by the employee. Contributions are
recognized as expense in the period incurred. In the years ended December 31, 2018, 2019 and 2020, contributions were
$448,000, $710,000 and $396,000, respectively.
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13. Income tax expense
Income (loss) before income taxes attributable to domestic and international operations, consists of the following:
(in thousands)
Domestic
Foreign
Loss before income taxes
Income tax expense consists of the following:
2018
$ (113,699)
(1,032)
$ (114,731)
Year ended December 31
2019
(78,761)
(3,902)
(82,663)
$
$
$
$
2020
(71,344)
1,999
(69,345)
(in thousands)
Current tax
Domestic
Foreign
Deferred tax
Domestic
Foreign
Total income tax expense
2018
Year ended December 31
2019
2020
$
$
— $
(49)
—
—
$
(49)
— $
(101)
—
—
$
(101)
—
(139)
—
—
(139)
The reconciliation to our effective tax rate from the Irish statutory income tax rate of 12.5% for the years ended
December 31, 2018, 2019 and 2020 is as follows:
(% of pre-tax income)
Statutory income tax rate
Non-deductible expenses
Income not subject to tax
Tax credits
Foreign rate differential
In-process research and development
Tax audit assessments
Other
Valuation allowance
Effective income tax rate
2018
Year ended December 31
2019
2020
12.5 %
(0.1)
0.3
0.1
(3.1)
(3.5)
—
0.2
(6.5)
(0.1)%
12.5 %
(0.1)
0.3
0.4
0.6
—
(11.8)
0.8
(2.8)
(0.1)%
12.5 %
—
0.2
0.6
3.0
—
—
2.3
(18.8)
(0.2)%
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The following table summarizes the components of deferred income tax balances:
(in thousands)
Deferred tax assets:
Net operating loss carryforwards
Tax loss on liquidation of subsidiary
Equity compensation
Non-deductible reserves
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Financial liabilities
Property, plant and equipment
Total deferred tax liability
Deferred tax, net
As of December 31,
2019
2020
$
$
$
94,014
5,024
4,182
395
103,615
(103,185)
430
48
382
430
— $
108,095
4,029
4,449
447
117,020
(116,200)
820
757
63
820
—
The table below summarizes changes in the deferred tax valuation allowance:
(in thousands)
Balance at beginning of year
Tax benefit
Acquired tax attributes
Balance at end of year
$
Year ended December 31,
2019
2018
(80,087) $ (100,832) $ (103,185)
(13,015)
(2,353)
(7,301)
—
—
(13,444)
$ (100,832) $ (103,185) $ (116,200)
2020
The following table summarizes carryforwards of net operating losses as of December 31, 2020.
(in thousands)
Ireland
Austria
United States
United States
Amount
251,775
248,563
10,401
35,516
$
$
$
$
Expiration
Indefinite
Indefinite
Indefinite
2033
Due to uncertainty regarding the ability to realize the benefit of deferred tax assets primarily relating to net
operating loss carryforwards and the fact that the Company is in a three year pretax cumulative loss position, a full
valuation allowance has been established.
On the basis of this evaluation, as of December 31, 2018, 2019 and 2020, the Company has recorded a valuation
allowance of $100.8 million, $103.2 million and $116.2 million, respectively, to recognize only the portion of the deferred
tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however,
could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if
objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to
subjective evidence such as our projections for growth.
At December 31, 2020, the Company had no uncertain tax positions and did not expect any material increase or
decrease in income tax expense related to examinations or changes in uncertain tax positions. At December 31, 2019, the
Company received a tax assessment from the government in Austria resulting in a change of deferred tax assets. The
assessment does not result in a cash settlement. The Company’s U.S. subsidiary, Nabriva Therapeutics US, Inc., is
currently under examination for tax year 2018 with the Internal Revenue Service.
The Company files income tax returns in Ireland. In addition, the Company’s foreign subsidiaries file separate
income tax returns in Austria and the United States and state jurisdictions in which they are located. Tax years 2017 and
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forward remain open for examination for Ireland tax purposes and 2016 and forward remain open for examination for
Austrian tax purposes and years 2016 and forward remain open for examination for United States tax purposes.
The Company’s policy is to record interest and penalties related to tax matters in income tax expense.
14. Earnings (Loss) per Share
Basic and diluted loss per share
Basic and diluted loss per share is calculated by dividing the net loss attributable to shareholders by the weighted
average number of shares outstanding during the year. Diluted net loss per share is the same as basic net loss per share
during the periods presented as the effects of the Company’s common stock equivalents are antidilutive and thus not
included in the calculation.
(in thousands, except per share data)
Net loss for the period
Weighted average number of shares outstanding
Basic and diluted loss per share
Year ended December 31,
2019
(82,764) $
7,419,948
2018
$ (114,780) $
5,079,576
$
(22.60) $
(11.15) $
2020
(69,484)
12,845,089
(5.41)
The following ordinary share equivalents were excluded from the calculations of diluted loss per share as their
effect would be anti-dilutive:
Stock option awards
Restricted stock units
Warrants
15. Acquisition of Zavante
2018
609,134
137,210
—
Year ended December 31
2019
816,891
105,169
1,379,310
2020
1,052,838
239,384
5,438,842
On July 24, 2018, the Company acquired Zavante. The acquisition was completed on July 24, 2018, or the
Closing. In connection with the Closing, the Company issued 733,690 Company ordinary shares to former Zavante
stockholders, which together with the 81,518 ordinary shares that were issued in July 2019 upon release of the Holdback
Shares (as defined below) constitute approximately 19.9% of the Company ordinary shares outstanding as of immediately
prior to the Closing, or the Upfront Shares.
Pursuant to the Merger Agreement, former Zavante stockholders and other equity holders, in the aggregate and
subject to the terms and conditions of the Merger Agreement, will also be entitled to receive from the Company up to $97.5
million in contingent consideration, of which $25.0 million would become payable upon the first approval of a NDA 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 sales milestones, or theNet Sales Milestone Payments.
At the Company’s Extraordinary General Meeting of Shareholders held in October 2018, the shareholders
approved the issuance of the Company’s 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 Company ordinary shares. The Company also now has the right to settle the Net Sales Milestone Payments in
Company ordinary shares, except as otherwise provided in the Merger Agreement.
In addition, upon the Closing, the Company assumed certain liabilities and obligations, including contractual
liabilities and obligations. Prior to the Acquisition, Zavante was obligated to make milestone payments to the former
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stockholders of $3.0 million payable in cash upon marketing approval by the FDA with respect to any oral, intravenous or
other form of fosfomycin, or the Zavante Products, and milestone payments of up to $26.0 million that may be settled in
ordinary shares 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 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. Zavante will also pay a mid-single-digit percentage of transaction revenue in connection with the
consummation of the grant, sale, license or transfer of market exclusivity rights for a qualified infectious disease product
(within the meaning of the 21st Century Cures Act, or the Cures Act) related to a Zavante Product.
The Company accounted for the acquisition of Zavante as an asset acquisition as the arrangement did not meet the
definition of a business pursuant to the guidance prescribed in ASC Topic 805, Business Combinations because the
transaction resulted in the acquisition of the exclusive rights to IV fosfomycin in the U.S. which is a single identifiable
asset and represented substantially all the fair value of the assets acquired.
The Company expensed the acquired intellectual property as of the acquisition date as in- process research and
development with no alternative future uses. The Company recorded an in-process research and development expense of
$32.0 million which represents $26.9 million for the fair value of the Upfront Shares, $4.8 million of transaction costs and
$0.2 million of net liabilities assumed.
In addition, the Company assumed certain liabilities and obligations, including contractual liabilities and
obligations, that were assumed by the Company upon closing of the acquisition. See “Item 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations Acquisition of Zavante” for further information regarding
the agreements that were assumed by the Company.
16. Significant Arrangements and License Agreements
Sinovant License Agreement
In March 2018, the Company entered into the Sinovant License Agreement, with Sinovant Sciences, Ltd., or
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, or 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, or 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, or
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 $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. In December 2020, the Company announced the restructuring of its license
agreement with Sinovant Sciences for XENLETA in the greater China region. The restructured agreement provides for
additional manufacturing collaboration and regulatory support to be provided to Sinovant by the Company that is expected
to help expedite the delivery of XENLETA to patients in greater China. The restructured agreement also accelerates a
portion of the $5.0 million milestone payment to the Company that was previously payable upon regulatory approval of
XENLETA in China, including a non-refundable upfront payment of $1.0 million which was received in the fourth quarter
of 2020. The Company will recognize the $1.0 million payment
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received as collaboration revenue in the consolidated statements of operations over the estimated period the manufacturing
collaboration and regulatory support will be provided to Sinovant. The future regulatory and commercial milestone
payments will be recorded during the period the milestones become probable of achievement.
Except for the manufacturing collaboration and regulatory support discussed above, 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 lefamulin
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 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, the Company has received a regulatory milestone payment of $0.5 million .
Any future regulatory and commercial milestone payments under the Sunovion License Agreement will be recorded during
the period the milestones become probable of achievement.
Sales Promotion and Distribution Agreement with Merck & Co.
On July 15, 2020, the Company entered into a Sales Promotion and Distribution Agreement, or the Distribution
Agreement, with MSD International GmbH, or MSD, and Merck Sharp & Dohme Corp., or 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
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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, or the Products, in final
packaged form labeled with the Company’s National Drug Code numbers in the United States and its territories, or the
Territory. The Company expects to begin selling and reporting product revenue of its own brand of SIVEXTRO early in the
second quarter of 2021. SIVEXTRO is an oxazolidinone-class antibacterial indicated in adults and 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 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. In September 2020,
the Company began a small and focused sales effort, by utilizing 15 sales representatives in a virtual and in-person
community-based sales effort with Amplity Health. The Company expanded this effort to 60 sales representatives in
November 2020 and the Company may expand it further in 2021.
Named Patient Program Agreement with WE Pharma Ltd.
On June 30, 2020 the Company announced that WE Pharma Ltd., or WEP Clinical, a specialist pharmaceutical
services company, had signed an exclusive agreement with the Company to supply XENLETA on a named patient or
expanded access basis in certain countries outside of the US, China and Canada. The Named Patient Program, or 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.
17. 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.
In October 2020, the Company provided a notice of termination of our lease of approximately 15,000 square feet
of office space in King of Prussia, Pennsylvania. The Company is obligated to pay the rent in King of Prussia through April
2021. In February 2021, the Company signed a sublease for approximately 8,000 square feet of office space in Fort
Washington, Pennsylvania which became effective on March 1, 2021 and continues through July 2023, subject to certain
early termination terms.
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
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such, the Company has classified the agreement as a short-term lease. During the third quarter of 2019, the Company
subleased certain space at its leased cost.
In March 2019, the Company entered into a lease agreement for office space in Dublin, Ireland which has been
extended in January 2021 and expires on September 30, 2022. 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.
Lease expense was $1.4 million, $1.5 million and $1.4 million for the years ended December 31, 2018, 2019 and
2020, respectively.
As of December 31, 2020, the lease term of the King of Prussia operating leases was 0.3 years and the discount
rate was 9.8%.
As of December 31, 2020, other information related to the operating leases were as follows:
Operating Cash Flow Supplemental Information:
(in thousands)
Cash paid for amounts included in the measurement of the operating lease
liabilities
Right-of-use assets obtained in exchange for operating lease obligations
Years ended December 31,
2019
2020
$
$
515
1,647
$
$
507
226
The following table sets forth by year the required future payments of operating lease liabilities:
(in thousands)
2021
2022
2023
Total lease payments
Less imputed interest and amortization differences
Present value of operating lease liabilities
$
December 31, 2020
171
—
—
171
(3)
168
Future minimum contractual obligations and commitments at December 31, 2020 are as follows:
Year ending December 31,
(in thousands)
Operating lease obligations
Other contractual commitments
Total
Total
743
$
58,166
$ 58,909
2021
743
$
14,059
$ 14,802
— $
2022
$
12,569
$ 12,569
2023
2024
2025
Thereafter
— $ — $ — $ —
—
$ —
9,350
$ 9,350
9,350
$ 9,350
12,838
$ 12,838
In addition to the agreements described above, the Company has other contractual commitments related primarily
to contracts entered into with contract manufacturing organizations and contract research organizations in connection with
the commercial manufacturing of XENLETA and other research and development activities. The estimated payments to the
service providers included in the table above are based on the achievement of milestones included within the agreements.
Also, some of these contracts are subject to early termination clauses exercisable at the discretion of the Company.
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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.
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.
On October 21, 2020, the parties mediated this case and reached a settlement. On January 28, 2021, the court
preliminarily approved the settlement, subject to further consideration at the final approval hearing, which is scheduled to
be held on May 14, 2021. The settlement will be covered in full by our directors’ and officers’ insurance.
The Company has no other contingent liabilities in respect of legal claims arising in the ordinary course of
business.
18. Subsequent Events
On March 1, 2021, the Company entered into a securities purchase agreement with certain institutional investors
pursuant to which the Company agreed to issue and sell in a registered direct offering (1) an aggregate of 9,761,010
ordinary shares, $0.01 nominal value per share, and accompanying warrants to purchase up to an aggregate of 4,880,505
ordinary shares and (2) pre-funded warrants to purchase up to an aggregate of 600,000 ordinary shares and accompanying
ordinary share warrants to purchase up to an aggregate of 300,000 ordinary shares. Each share was issued and sold together
with an accompanying ordinary share warrant at a combined price of $2.4525, and each pre-funded warrant was issued and
sold together with an accompanying ordinary share warrant at a combined price of $2.4425. The proceeds to the Company
from the offering were $25.4 million gross and $23.4 million net after deducting the placement agent’s fees and other
estimated offering expenses. Each pre-funded warrant had an exercise price per ordinary share equal to $0.01 and each pre-
funded warrant was exercised in full on the issuance date. Each ordinary share warrant has an exercise price per ordinary
share equal to $2.39, was exercisable on the date of issuance and will expire on the five-year anniversary of the date of
issuance.
F-37
DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT
The following description of registered securities of Nabriva Therapeutics plc (“us,” “our,” “we” or the “Company”) is intended
as a summary only and therefore is not a complete description. This description is based upon, and is qualified by reference to, our
memorandum and articles of association and applicable provisions of the Irish Companies Act. You should read our memorandum and
articles of association, which are filed as Exhibit 3.1 to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part, for the
provisions that are important to you.
Exhibit 4.1
Capital Structure
Authorized Share Capital
Our authorized share capital consists of 100,000,000 ordinary shares of $0.01 each and 100,000,000 preferred shares of $0.01,
each with a liquidation preference per preferred share as determined by the directors.
We may issue shares subject to the maximum authorized share capital contained in our memorandum and articles of association.
The authorized share capital may be increased or reduced (but not below the number of issued ordinary shares or preferred shares, as
applicable) by a resolution approved by a simple majority of the votes of our shareholders cast at a general meeting (referred to under
Irish law as an "ordinary resolution") (unless otherwise determined by the directors). The shares comprising our authorized share capital
may be divided into shares of any nominal value.
The rights and restrictions to which the ordinary shares are subject are prescribed in our articles of association. Our articles of
association entitle our board of directors, without shareholder approval, to determine the terms of our preferred shares. Preferred shares
may be preferred as to dividends, rights upon liquidation or voting in such manner as our board of directors may resolve. The preferred
shares may also be redeemable at the option of the holder of the preferred shares or at our option, and may be convertible into or
exchangeable for shares of any of our other class or classes, depending on the terms of such preferred shares.
Irish law does not recognize fractional shares held of record. Accordingly, our articles of association do not provide for the
issuance of fractional shares, and our official Irish register will not reflect any fractional shares.
Whenever an alteration or reorganization of our share capital would result in any of our shareholders becoming entitled to
fractions of a share, our board of directors may, on behalf of those shareholders that would become entitled to fractions of a share,
arrange for the sale of the shares representing fractions and the distribution of the net proceeds of sale in due proportion among the
shareholders who would have been entitled to the fractions.
Pre-emption Rights, Share Warrants and Share Options
Under Irish law certain statutory pre-emption rights apply automatically in favor of shareholders where shares are to be issued
for cash. However, we have opted out of these pre-emption rights in our articles of association as permitted under Irish company law.
Irish law requires this opt-out to be renewed every five years by a resolution approved by not less than 75% of the votes of our
shareholders cast at a general meeting (referred to under Irish law as a "special resolution"). If the opt-out is not renewed, shares issued
for cash must be offered to our existing shareholders on a pro rata basis to their existing shareholding before the shares can be issued to
any new shareholders. The statutory pre-emption rights do not apply where shares are issued for non-cash consideration (such as in a
share-for-share acquisition) and do not apply to the issue of non-equity shares (that is, shares that have the right to participate only up to
a specified amount in any income or capital distribution) or where shares are issued pursuant to an employee share option or similar
equity plan.
Our memorandum and articles of association provide that, subject to any shareholder approval requirement under any laws,
regulations or the rules of any stock exchange to which we are subject, our board of directors is authorized, from time to time, in its
discretion, to grant such persons, for such periods and upon such terms as our board of directors deems advisable, options to purchase
such number of shares of any class or classes or of any series of any class as our board of directors may deem advisable, and to cause
warrants or other appropriate instruments evidencing such options to be issued. The Irish Companies Act provides that directors may
issue share warrants or options without shareholder approval once authorized to do so by the articles of association. We are subject to the
rules of the Nasdaq Global Market that require shareholder approval of certain equity plans and share issuances. Our board of directors
may authorize the issuance of shares upon exercise of warrants or options without shareholder approval or authorization (up to the
relevant authorized share capital limit).
Under Irish law, we are prohibited from allotting shares without consideration. Accordingly, at least the nominal value of the
shares issued underlying any restricted share award, restricted share unit, performance share award, bonus share or any other share based
grant must be paid pursuant to the Irish Companies Act.
Dividends
Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves generally
means accumulated realized profits, so far as not previously utilized by distribution or capitalization, less accumulated realized losses, so
far as not previously written off in a reduction or reorganization of capital, and includes reserves created by way of capital reduction, on a
standalone basis. In addition, no distribution or dividend may be made unless our net assets are equal to, or in excess of, the aggregate of
our called up share capital plus undistributable reserves and the distribution does not reduce our net assets below such aggregate.
Undistributable reserves include the undenominated capital, the amount by which our accumulated unrealized profits, so far as not
previously utilized by any capitalization, exceed our accumulated unrealized losses, so far as not previously written off in a reduction or
reorganization of capital and any other reserve that we are prohibited from distributing by applicable law.
The determination as to whether or not we have sufficient distributable reserves to fund a dividend must be made by reference
to our "relevant financial statements." The "relevant financial statements" are either the last set of unconsolidated annual audited
financial statements or other unaudited financial statements properly prepared in accordance with the Irish Companies Act, which give a
“true and fair view” of the company’s unconsolidated financial position in accordance with accepted accounting practice in Ireland. The
relevant financial statements must be filed in the Companies Registration Office (the official public registry for companies in Ireland)
prior to the making of the distribution.
Consistent with Irish law, our articles of association authorize our board of directors to declare interim dividends without
shareholder approval out of funds lawfully available for the purpose, to the extent they appear justified by profits and subject always to
the requirement to have distributable reserves at least equal to the amount of the proposed dividend. Our board of directors may also
recommend a dividend to be approved and declared by our shareholders at a general meeting. Our board of directors may direct that the
payment be made by distribution of assets, shares or cash and no dividend declared or paid may exceed the amount recommended by the
directors. Dividends may be paid in U.S. dollars or any other currency.
Our board of directors may deduct from any dividend payable to any shareholder any amounts payable by such shareholder to
us in relation to our shares.
Our board of directors may also authorize the issuance of shares with preferred rights to participate in our declared dividends.
The holders of preferred shares may, depending on their terms, rank senior to our ordinary shares in terms of dividend rights and/or be
entitled to claim arrears of a declared dividend out of subsequently declared dividends in priority to ordinary shareholders.
Share Repurchases, Redemptions and Conversions
Overview
Our memorandum and articles of association provide that, in general, any ordinary shares which we have agreed to acquire shall
be deemed to be a redeemable share. Accordingly, for Irish company law purposes, the repurchase of ordinary shares by us may
technically be effected as a redemption of those shares as described below under "—Repurchases and Redemptions by Nabriva." If our
articles of association did not contain such provision, all repurchases by us would be subject to many of the same rules that apply to
purchases of our shares by subsidiaries described below under "—Purchases by Subsidiaries of Nabriva," including the shareholder
approval requirements described below and the requirement that any on-market purchases be effected on a "recognized stock exchange."
Repurchases and Redemptions by Nabriva
Under Irish law, a company may issue redeemable shares and redeem them out of distributable reserves or, if the company
proposes to cancel the shares on redemption, the proceeds of a new issue of shares for that purpose. We may only issue redeemable
shares if the nominal value of the issued share capital that is not redeemable is not less than 10% of the nominal value of our total issued
share capital. All redeemable shares must also be fully-paid and the terms of redemption of the shares must provide for payment on
redemption. Redeemable shares may, upon redemption, be cancelled or held in treasury. Based on the provision of our articles described
above, shareholder approval will not be required to redeem our shares.
We may also be given an additional general authority by our shareholders to purchase our own shares on-market, which would
take effect on the same terms and be subject to the same conditions as applicable to purchases by our subsidiaries as described below.
Our board of directors may also issue preferred shares which may be redeemed at either our option or the option of the
shareholder, depending on the terms of such preferred shares. Please see "—Authorized Share Capital."
Repurchased and redeemed shares may be cancelled or held as treasury shares. The nominal value of treasury shares held by us
at any time must not exceed 10% of the nominal value of our issued share capital. We may not exercise any voting rights in respect of
any shares held as treasury shares. Treasury shares may be cancelled by us or re-issued subject to certain conditions.
Purchases by Subsidiaries of Nabriva
Under Irish law, an Irish or non-Irish subsidiary may purchase our shares either as overseas market purchases on a recognized
stock exchange such as the Nasdaq or off-market. For a subsidiary of ours to make market purchases of our shares, our shareholders must
provide general authorization for such purchase by way of ordinary resolution. However, as long as this general authority has been
granted, no specific shareholder authority for a particular market purchase by a subsidiary of our shares is required.
For an off-market purchase by a subsidiary of ours, the proposed purchase contract must be authorized by special resolution of
the shareholders before the contract is entered into. The person whose shares are to be bought back cannot vote in favor of the special
resolution and, from the date of the notice of the meeting at which the resolution is to be proposed, the purchase contract must be on
display or must be available for inspection by shareholders at our registered office from the date of the notice of the meeting at which the
resolution approving the contract is to be proposed.
In order for a subsidiary of ours to make an on-market purchase of our shares, such shares must be purchased on a "recognized
stock exchange." The Nasdaq Global Market, on which our ordinary shares are listed, is specified as a recognized stock exchange for this
purpose by Irish company law.
The number of shares held by our subsidiaries at any time will count as treasury shares and will be included in any calculation
of the permitted treasury share threshold of 10% of the nominal value of our issued share capital. While a subsidiary holds shares of ours,
it cannot exercise any voting rights in respect of those shares. The acquisition of our shares by a subsidiary of ours must be funded out of
distributable reserves of the subsidiary.
Lien on Shares, Calls on Shares and Forfeiture of Shares
Our articles of association provide that we will have a first and paramount lien on every share for all debts and liabilities of any
shareholder to the company, whether presently due or not, payable in respect of such share. Subject to the terms of their allotment, our
board of directors may call for any unpaid amounts in respect of any shares to be paid, and if payment is not made within 14 days after
notice demanding payment, we may sell the shares. These provisions are standard inclusions in the articles of association of an Irish
company limited by shares and will only be applicable to our shares that have not been fully paid up.
Consolidation and Division; Subdivision
Under our articles of association, we may, by ordinary resolution (unless our board of directors determines otherwise),
consolidate and divide all or any of our issued share capital into a smaller number of shares of larger nominal value than our existing
shares or subdivide all or any of our issued share capital into a larger number of shares of smaller nominal value than is fixed by our
memorandum of association, provided that the proportion between the amount paid for such share and the amount, if any, unpaid on each
reduced share after the subdivision remains the same.
Reduction of Share Capital
We may, by ordinary resolution (unless our board of directors determines otherwise), reduce our authorized but unissued share
capital in any way. We also may, by special resolution and subject to confirmation by the Irish High Court, reduce or cancel our issued
share capital in any manner permitted by the Irish Companies Act.
Annual Meetings of Shareholders
We are required to hold an annual general meeting within 18 months of incorporation and at intervals of no more than
15 months thereafter, provided that an annual general meeting is held in each calendar year following the first annual general meeting
and no more than nine months after our fiscal year-end. Subject to Section 176 of the Irish Companies Act, all general meetings may be
held outside of Ireland.
Notice of an annual general meeting must be given to all of our shareholders and to our auditors. Our articles of association
provide for a minimum notice period of 21 clear days (i.e. 21 days excluding the day when the notice is given or deemed to be given and
the day of the event for which it is given or on which it is to take effect), which is the minimum permitted under Irish law.
The only matters which must, as a matter of Irish company law, be transacted at an annual general meeting are the consideration
of the statutory financial statements, report of the directors, report of the statutory auditors, review by the members of the company's
affairs and the appointment or re-appointment of the statutory auditors.
At any annual general meeting, only such business may be conducted as has been brought before the meeting:
· in the notice of the meeting;
· by or at the direction of our board of directors;
· in certain circumstances, at the direction of the Irish High Court;
· as required by law; or
· that the chairman of the meeting determines is properly within the scope of the meeting.
In addition, and subject to compliance with our articles of association, shareholders entitled to vote at an annual general meeting
may propose business in advance of the meeting to be considered thereat.
Extraordinary General Meetings of Shareholders
Our extraordinary general meetings may be convened by (i) our board of directors, (ii) on requisition of the shareholders
holding not less than 10% of our paid up share capital carrying voting rights, (iii) on requisition of our auditors; or (iv) in exceptional
cases, by order of the Irish High Court. Extraordinary general meetings are generally held for the purpose of approving shareholder
resolutions as may be required from time to time. At any extraordinary general meeting, only such business will be conducted as is set
forth in the notice thereof or is proposed pursuant to and in accordance with the procedures and requirements set out in the articles of
association.
Notice of an extraordinary general meeting must be given to all of our shareholders and to our auditors. Under Irish law and our
articles of association, the minimum notice periods are 21 clear days' notice in writing for an extraordinary general meeting to approve a
special resolution and 14 clear days' notice in writing for any other extraordinary general meeting.
In the case of an extraordinary general meeting convened by our shareholders, the proposed purpose of the meeting must be set
out in the requisition notice. Upon receipt of any such valid requisition notice, our board of directors has 21 days to convene a meeting of
our shareholders to vote on the matters set out in the requisition notice. This meeting must be held within two months of the receipt of
the requisition notice. If our board of directors does not convene the meeting within such 21-day period, the requisitioning shareholders,
or any of them representing more than one half of the total voting rights of all of them, may themselves convene a meeting, which
meeting must be held within three months of our receipt of the requisition notice.
If our board of directors becomes aware that our net assets are not greater than half of the amount of our called-up share capital,
our directors must convene an extraordinary general meeting of our shareholders not later than 28 days from the date that the fact is
known to a director to be held not later than 56 days from such date. This meeting must be convened for the purposes of considering
whether any, and if so what, measures should be taken to address the situation.
Quorum for General Meetings
Our articles of association provide that no business shall be transacted at any general meeting unless a quorum is present. One or
more shareholders present in person or by proxy at any meeting of shareholders holding not less than a majority of the issued and
outstanding shares entitled to vote at the meeting in question will constitute a quorum for such meeting.
Voting
Our articles of association provide that all votes will be decided on a poll and that our board of directors or the chairman may
determine the manner in which the poll is to be taken and the manner in which the votes are to be counted.
Every shareholder is entitled to one vote for each ordinary share that he or she holds as of the record date for the general
meeting. Voting rights may be exercised by shareholders registered in our share register as of the record date for the general meeting or
by a duly appointed proxy, which proxy need not be a shareholder. Where interests in shares are held by a nominee trust company, this
company may exercise the rights of the beneficial holders on their behalf as their proxy. All proxies must be appointed in the manner
prescribed by our articles of association, which provide that our board of directors may permit shareholders to notify us of their proxy
appointments electronically.
In accordance with our articles of association, our directors may from time to time authorize the issuance of preferred shares.
These preferred shares may have such voting rights as may be specified in the terms of such preferred shares (e.g., they may carry more
votes per share than ordinary shares). Treasury shares or shares of ours that are held by our subsidiaries will not be entitled to be voted at
general meetings of shareholders.
Irish company law requires special resolutions of the shareholders at a general meeting to approve certain matters. Examples of
matters requiring special resolutions include:
· amending the objects or memorandum of association;
· amending the articles of association;
· approving a change of name;
· authorizing the entering into of a guarantee or provision of security in connection with a loan, quasi-loan or credit
transaction to a director or connected person;
· opting out of pre-emption rights on the issuance of new shares;
· re-registration from a public limited company to a private company;
· purchase of own shares off-market;
· reduction of issued share capital;
· sanctioning a compromise/scheme of arrangement;
· resolving that the company be wound up by the Irish courts;
· resolving in favor of a shareholders' voluntary winding-up;
· re-designation of shares into different share classes;
· setting the re-issue price of treasury shares; and
· variation of class rights attaching to classes of shares (where our articles of association do not provide otherwise).
Neither Irish law nor any of our constituent documents places limitations on the right of non-resident or foreign owners to vote
or hold our shares.
Variation of Rights Attaching to a Class or Series of Shares
Under our articles of association and the Irish Companies Act, any variation of class rights attaching to our issued shares must
be approved by an ordinary resolution passed at a general meeting of the shareholders of the affected class or with the consent in writing
of the holders of a majority of the issued shares of that class of shares entitled to vote on such variation. The rights conferred upon the
holder of any pre-existing issued shares shall not be deemed to be varied by the issuance of any preferred shares.
The provisions of our articles of association relating to general meetings apply to general meetings of the holders of any class of
shares except that the necessary quorum is determined in reference to the shares of the holders of the class. Accordingly, for general
meetings of holders of a particular class of shares, a quorum consists of one or more shareholders present in person or by proxy holding
not less than a majority of the issued and outstanding shares of the class entitled to vote at the meeting in question.
Inspection of Books and Records
Under Irish law, shareholders have the right to: (i) receive a copy of our memorandum and articles of association and any act of
the Irish Government which alters our memorandum; (ii) inspect and obtain copies of the minutes of general meetings and any
resolutions; (iii) inspect and receive a copy of the register of shareholders, register of directors and secretaries, register of directors'
interests and other statutory registers maintained by us; (iv) receive copies of statutory financial statements and directors' and auditors'
reports which have previously been sent to shareholders prior to an annual general meeting; and (v) receive statements of financial
position of any subsidiary of ours which have previously been sent to shareholders prior to an annual general meeting for the preceding
ten years. Our auditors will also have the right to inspect all of our books, records and vouchers. The auditors' report must be circulated
to the shareholders with our financial statements prepared in accordance with Irish law, 21 clear days before the annual general meeting
and must be read to the shareholders at our annual general meeting.
Acquisitions
An Irish public limited company may be acquired in a number of ways, including:
· a court-approved scheme of arrangement under the Irish Companies Act. A scheme of arrangement with shareholders
requires a court order from the Irish High Court and the approval of a majority in number representing 75% in value of the
shareholders present and voting in person or by proxy at a meeting called to approve the scheme;
· through a tender or takeover offer by a third party, in accordance with the Irish Takeover Rules and the Irish Companies
Act, for all of our shares. Where the holders of 80% or more of our shares (excluding any shares already beneficially
owned by the bidder) have accepted an offer for their shares, the remaining shareholders may also be statutorily required
to transfer their shares, unless, within one month, the non-tendering shareholders can obtain an Irish court order otherwise
providing. If the bidder does not exercise its "squeeze-out" right, then the non-accepting shareholders also have a statutory
right to require the bidder to acquire their shares on the same terms as the original offer, or such other terms as the bidder
and the non-tendering shareholders may agree or on such term as an
Irish court, on application of the bidder or non-tendering shareholder, may order. If our shares were to be listed on
Euronext Dublin or another regulated stock exchange in the European Union, the aforementioned 80% threshold would be
increased to 90%;
· by way of a transaction with an EU-incorporated company under the EU Cross-Border Mergers Directive 2019/2121. Such
a transaction must be approved by a special resolution and by the Irish High Court. If we are being merged with another
EU company under the EU Cross-Border Mergers Directive 2019/2121 and the consideration payable to our
shareholders is not all in the form of cash, our shareholders may be entitled to require their shares to be acquired at fair
value; and
· by way of a merger with another Irish company under the Irish Companies Act which must be approved by a special
resolution and by the Irish High Court.
Appraisal Rights
Generally, under Irish law, shareholders of an Irish company do not have dissenters' or appraisal rights. Under the European
Communities (Cross-Border Merger) Regulations 2008, as amended, governing the merger of an Irish company limited by shares and a
company incorporated in the European Economic Area (the European Economic Area includes all member states of the European Union
and Norway, Iceland and Liechtenstein) and the other company is the surviving entity, a shareholder (i) who voted against the special
resolution approving the transaction or (ii) of a company in which 90% of the shares are held by the other party to the transaction has the
right to request that the company acquire its shares for cash at a price determined in accordance with the share exchange ratio set out in
the acquisition agreement. In addition, a dissenting shareholder in a successful tender offer for an Irish company may, by application to
the Irish High Court, object to the compulsory squeeze-out provisions.
Disclosure of Interests in Shares
Under the Irish Companies Act, our shareholders must notify us if, as a result of a transaction, the shareholder will become
interested in 3% or more of our shares or if, as a result of a transaction, a shareholder who was interested in 3% or more of our shares
ceases to be so interested. Where a shareholder is interested in 3% or more of our shares, the shareholder must notify us of any alteration
of his or her interest that brings his or her total holding through the nearest whole percentage number, whether an increase or a reduction.
The relevant percentage figure is calculated by reference to the aggregate nominal value of the shares in which the shareholder is
interested as a proportion of the entire nominal value of our issued share capital (or any such class of share capital in issue). Where the
percentage level of the shareholder's interest does not amount to a whole percentage, this figure may be rounded down to the next whole
number. We must be notified within five business days of the transaction or alteration of the shareholder's interests that gave rise to the
notification requirement. If a shareholder fails to comply with these notification requirements, the shareholder's rights in respect of any of
our shares it holds will not be enforceable, either directly or indirectly. However, such person may apply to the court to have the rights
attaching to such shares reinstated.
In addition to these disclosure requirements, we, under the Irish Companies Act, may, by notice in writing, require a person
whom we know or have reasonable cause to believe to be, or at any time during the three years immediately preceding the date on which
such notice is issued to have been, interested in shares comprised in our relevant share capital to: (i) indicate whether or not it is the case
and (ii) where such person holds or has during that time held an interest in our ordinary shares, to provide additional information,
including the person's own past or present interests in our shares. If the recipient of the notice fails to respond within the reasonable time
period specified in the notice, we may apply to court for an order directing that the affected shares be subject to certain restrictions, as
prescribed by the Irish Companies Act, as follows:
· any transfer of those shares, or in the case of unissued shares any transfer of the right to be issued with shares and any issue
of shares, will be void;
· no voting rights will be exercisable in respect of those shares;
· no further shares will be issued in right of those shares or in pursuance of any offer made to the holder of those shares; and
· no payment will be made of any sums due from us on those shares, whether in respect of capital or otherwise.
The court may also order that shares subject to any of these restrictions be sold with the restrictions terminating upon the
completion of the sale.
In the event we are in an offer period pursuant to the Irish Takeover Rules, accelerated disclosure provisions apply for persons
holding an interest in our securities of 1.0% or more.
Irish Takeover Rules
A transaction in which a third party seeks to acquire 30% or more of our voting rights will be governed by the Irish Takeover
Panel Act 1997 and the Irish Takeover Rules made thereunder and will be regulated by the Irish Takeover Panel. The "General
Principles" of the Irish Takeover Rules and certain important aspects of the Irish Takeover Rules are described below.
General Principles
The Irish Takeover Rules are built on the following General Principles, which will apply to any transaction regulated by the
Irish Takeover Panel:
· in the event of an offer, all holders of securities of the target company should be afforded equivalent treatment and, if a
person acquires control of a company, the other holders of securities must be protected;
· the holders of the securities in the target company must have sufficient time and information to enable them to reach a
properly informed decision on the offer;
· where it advises the holders of securities, the board of the target company must give its views on the effects of
implementation of the offer on employment, conditions of employment and the locations of the target company's places of
business;
· the board of the target company must act in the interests of the company as a whole and must not deny the holders of
securities the opportunity to decide on the merits of the offer;
· false markets must not be created in the securities of the target company, the bidder or of any other company concerned by
the offer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of
the markets is distorted;
· a bidder must announce an offer only after ensuring that he or she can fulfil in full, any cash consideration, if such is
offered, and after taking all reasonable measures to secure the implementation of any other type of consideration;
· a target company must not be hindered in the conduct of its affairs for longer than is reasonable by an offer for its
securities; and
· a substantial acquisition of securities (whether such acquisition is to be effected by one transaction or a series of
transactions) shall take place only at an acceptable speed and shall be subject to adequate and timely disclosure.
Mandatory Bid
Under certain circumstances, a person who acquires shares or other voting rights in us may be required under the Irish Takeover
Rules to make a mandatory cash offer for our remaining outstanding shares at a price not less than the highest price paid for the shares by
the acquirer (or any parties acting in concert with the acquirer) during the previous 12 months. This mandatory bid requirement is
triggered if an acquisition of shares would increase the aggregate holding of an acquirer (including the holdings of any parties acting in
concert with the acquirer) to shares representing 30% or more of our voting rights, unless the Irish Takeover Panel otherwise consents.
An acquisition of shares by a person holding (together with its concert parties) shares representing between 30% or more of our voting
rights would also trigger the mandatory bid requirement if, after giving effect to the acquisition, the percentage of the voting rights held
by that person (together with its concert parties) would increase by 0.05% within a 12-month period. Any person (excluding any parties
acting in concert with the holder) holding shares representing more than 50% of the voting rights of a company is not subject to these
mandatory offer requirements in purchasing additional securities.
Voluntary Bid; Requirements to Make a Cash Offer and Minimum Price Requirements
If a person makes a voluntary offer to acquire outstanding ordinary shares of ours, the offer price must be no less than the
highest price paid for our shares by the bidder or its concert parties during the three-month period prior to the commencement of the offer
period. The Irish Takeover Panel has the power to extend the "look back" period to 12 months if the Irish Takeover Panel, taking into
account the General Principles, believes it is appropriate to do so.
If the bidder or any party acting in concert with it has acquired our ordinary shares (i) during the period of 12 months prior to
the commencement of the offer period which represent more than 10% of our total ordinary shares or (ii) at any time after the
commencement of the offer period, the offer must be in cash (or accompanied by a full cash alternative) and the price per ordinary share
must not be less than the highest price paid by the bidder or any party acting in concert with it during, in the case of (i), the 12-month
period prior to the commencement of the offer period and, in the case of (ii), the offer period. The Irish Takeover Panel may apply this
rule to a bidder who, together with any party acting in concert with it, has acquired less than 10% of our total ordinary shares in the 12-
month period prior to the commencement of the offer period if the Irish Takeover Panel, taking into account the General Principles,
considers it just and proper to do so.
An offer period will generally commence from the date of the first announcement of the offer or proposed offer.
Substantial Acquisition Rules
The Irish Takeover Rules also contain rules governing substantial acquisitions of shares which restrict the speed at which a
person may increase his or her holding of shares and rights over shares to an aggregate of between 15% and 30% of our voting rights.
Except in certain circumstances, an acquisition or series of acquisitions of shares or rights over shares representing 10% or more of our
voting rights is prohibited if such acquisition(s), when aggregated with shares or rights already held, would result in the acquirer holding
15% or more but less than 30% of our voting rights and such acquisitions are made within a period of seven days. These rules also
require accelerated disclosure of acquisitions of shares or rights over shares relating to such holdings.
Anti-Takeover Provisions
Shareholder Rights Plan
Our articles of association expressly authorize our board of directors to adopt a shareholder rights plan, subject to applicable
law.
Frustrating Action
Under the Irish Takeover Rules, our board of directors is not permitted to take any action which might frustrate an offer for our
shares once our board of directors has received an approach which may lead to an offer or has reason to believe an offer is imminent,
subject to certain exceptions. Potentially frustrating actions such as (i) the issue of 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 time during which our
board of directors has reason to believe an offer is imminent. Exceptions to this prohibition are available where:
· the action is approved by our shareholders at a general meeting; or
· the Irish Takeover Panel has given its consent, where:
· it is satisfied the action would not constitute frustrating action;
· our shareholders that hold 50% of the voting rights state in writing that they approve the proposed action and would
vote in favor of it at a general meeting;
· the action is taken in accordance with a contract entered into prior to the announcement of the offer; or
· the decision to take such action was made before the announcement of the offer and either has been at least partially
implemented or is in the ordinary course of business.
Further Provisions
Our articles of association provide that, subject to certain exceptions, we may not engage in certain business combinations with
any person that acquires beneficial ownership of 15% or more of our outstanding voting shares for a period of three years following the
date on which the person became a 15% shareholder unless: (i) a committee of our disinterested directors approved the business
combination; and (ii) in certain circumstances, the business combination is authorized by a special resolution of disinterested
shareholders.
Certain other provisions of Irish law or our memorandum and articles of association may be considered to have anti-takeover
effects, including those described under the following captions: "—Capital Structure—Authorized Share Capital," "—Pre-emption
Rights, Share Warrants and Share Options" and "—Disclosure of Interests in Shares."
Insider Dealing
The Irish Takeover Rules also provide that no person, other than the bidder, who is privy to confidential price-sensitive
information concerning an offer made in respect of the acquisition of a company (or a class of its securities) or a contemplated offer shall
deal in relevant securities of the target during the period from the time at which such person first has reason to suppose that such an offer,
or an approach with a view to such an offer being made, is contemplated to the time of (i) the announcement of such offer or approach or
(ii) the termination of discussions relating to such offer, whichever is earlier.
Corporate Governance
Our articles of association allocate authority over the day-to-day management of the company to our board of directors. Our
board of directors may delegate any of its powers, authorities and discretions (with power to sub-delegate) to any committee, or delegate
to any director, officer or member of management of ours or any of our subsidiaries such of its powers as it considers desirable to be
exercised by him or her, but regardless, the directors will remain responsible, as a matter of Irish law, for the proper management of the
affairs of the company. Committees may meet and adjourn as they determine proper. Unless otherwise determined our board of directors,
the quorum necessary for the transaction of business at any committee meeting shall be a majority of the members of the committee.
Appointment of Directors
The Irish Companies Act provides for a minimum of two directors. Our articles of association provide that the number of
directors will be not less than two and not more than 12. The authorized number of directors within the prescribed range will be
determined solely by our board of directors and does not require approval or ratification by the shareholders in a general meeting. Our
directors will be elected by way of an ordinary resolution at a general meeting save that directors in contested elections will be elected by
a plurality of the votes of the shares present in person or represented by proxy at the relevant general meeting and entitled to vote on the
election of directors. If the number of the directors is reduced below the fixed minimum number, the remaining director or directors may
appoint an additional director or additional directors to make up such minimum or may convene a general meeting for the purpose of
making such appointment. Casual vacancies may be filled by our board of directors.
No person may be appointed director unless nominated in accordance with our articles of association. Our articles of association
provide that, with respect to an annual or extraordinary general meeting of shareholders, nominations of persons for election to our board
of directors may be made by (i) the affirmative vote our board of directors or a committee thereof, (ii) any shareholder who is entitled to
vote at the meeting and who has complied with the advance notice procedures provided for in our articles of association, or (iii) with
respect to election at an extraordinary general meeting requisitioned in accordance with section 178 of the Irish Companies Act, by a
shareholder who holds ordinary shares or other shares carrying the general right to vote at general meetings of the
company and who makes such nomination in the written requisition of the extraordinary general meeting in accordance with our articles
of association and the Irish Companies Act relating to nominations of directors and the proper bringing of special business before an
extraordinary general meeting.
Removal of Directors
Under the Irish Companies Act, the shareholders may, by an ordinary resolution, remove a director from office before the
expiration of his or her term at a meeting held on no less than 28 days' notice and at which the director is entitled to be heard. The power
of removal is without prejudice to any claim for damages for breach of contract (e.g., employment contract) that the director may have
against the company in respect of his or her removal.
Our board of directors may fill any vacancy occurring on the board of directors. If our board of directors fills a vacancy, the
director shall hold office until the next election of directors and until his or her successor shall be elected. A vacancy on our board of
directors created by the removal of a director may be filled by our board of directors.
Director Interested Transactions
Under the Irish Companies Act and our articles of association, a director who has an interest in a proposal, arrangement or
contract is required to declare the nature of his or her interest at the first opportunity either (i) at a meeting of the board at which such
proposal, arrangement or contract is first considered (provided such director knows this interest then exists, or in any other case, at the
first meeting of the board after learning that he or she is or has become so interested) or (ii) by providing a general notice to the directors
declaring that he or she is to be regarded as interested in any proposal, arrangement or contract with a particular person, and after giving
such general notice will not be required to give special notice relating to any particular transaction. Provided the interested director
makes such required disclosure, he or she shall be counted in determining the presence of a quorum at a meeting regarding the relevant
proposal, arrangement or contract and will be permitted to vote on such proposal, arrangement or contract.
Pursuant to our articles of association, it is within the directors' sole discretion to determine their compensation.
Duration; Dissolution; Rights upon Liquidation
Our duration will be unlimited. We may be dissolved and wound up at any time by way of a shareholders' voluntary winding up
or a creditors' winding up. In the case of a shareholders' voluntary winding-up, a special resolution of shareholders is required. We may
also be dissolved by way of court order on the application of a creditor, or by the Companies Registration Office as an enforcement
measure where we have failed to file certain returns. We may also be dissolved by the Director of Corporate Enforcement in Ireland
where the affairs of the company have been investigated by an inspector and it appears from the report or any information obtained by
the Director of Corporate Enforcement that we should be wound up.
The rights of the shareholders to a return of our assets on dissolution or winding up, following the settlement of all claims of
creditors, are prescribed in our articles of association or the terms of any preferred shares issued by the directors from time to time. The
holders of preferred shares in particular may have the right to priority in a dissolution or winding up. Pursuant to our articles of
association, subject to the priorities of any creditors, the assets will be distributed to ordinary shareholders in proportion to the paid-up
nominal value or credited as paid up value of the shares held at the commencement of the winding up. Our articles of association provide
that our ordinary shareholders are entitled to participate pro rata in a winding up, but their right to do so may be subject to the rights of
any preferred shareholders to participate under the terms of any series or class of preferred shares.
Uncertificated Shares
Unless otherwise provided for by our board of directors or the rights attaching to or by the terms of issue of any particular
shares, or to the extent required by any exchange, depositary or any operator of any clearance or
settlement system or by law, holders of our ordinary shares will not have the right to require us to issue certificates for their shares.
No Sinking Fund
Our shares have no sinking fund provisions.
Transfer and Registration of Shares
The transfer agent maintains our share register, and registration in the share register will be determinative of membership in us.
A shareholder of ours who only holds shares beneficially will not be the holder of record of such shares. Instead, the depositary or other
nominee will be the holder of record of those shares. Accordingly, a transfer of shares from a person who holds such shares beneficially
to a person who also holds such shares beneficially through a depositary or other nominee will not be registered in our official share
register, as the depositary or other nominee will remain the record holder of any such shares.
A written instrument of transfer is required under Irish law in order to register on our official share register any transfer of
shares (i) from a person who holds such shares directly to any other person, (ii) from a person who holds such shares beneficially to a
person who holds such shares directly or (iii) from a person who holds such shares beneficially to another person who holds such shares
beneficially where the transfer involves a change in the depositary or other nominee that is the record owner of the transferred shares. An
instrument of transfer is also required for a shareholder who directly holds shares to transfer those shares into his or her own broker
account (or vice versa). Such instruments of transfer may give rise to Irish stamp duty, which must be paid prior to registration of the
transfer on our official Irish share register. However, a shareholder who directly holds shares may transfer those shares into his or her
own broker account (or vice versa) without giving rise to Irish stamp duty provided there is no change in the ultimate beneficial
ownership of the shares as a result of the transfer and the transfer is not made in contemplation of a sale of the shares.
Any transfer of our shares that is subject to Irish stamp duty will not be registered in the name of the buyer unless an instrument
of transfer is duly stamped and provided to our transfer agent. Our articles of association allow us, in our absolute discretion, to create an
instrument of transfer and pay (or procure the payment of) any stamp duty, which is the legal obligation of a buyer. In the event of any
such payment, we are (on behalf of ourselves or our affiliates) entitled to (i) seek reimbursement from the buyer or seller (at its
discretion), (ii) set-off the amount of the stamp duty against future dividends payable to the buyer or seller (at its discretion) and
(iii) claim a lien against the shares on which it has paid stamp duty. Parties to a share transfer may assume that any stamp duty arising in
respect of a transaction in our shares has been paid unless one or both of such parties is otherwise notified by us.
Our memorandum and articles of association delegate to our secretary (or such other person as may be nominated by the
secretary for this purpose) the authority to execute an instrument of transfer on behalf of a transferring party.
In order to help ensure that the official share register is regularly updated to reflect trading of our shares occurring through
normal electronic systems, we intend to regularly produce any required instruments of transfer in connection with any transactions for
which we pay stamp duty (subject to the reimbursement and set-off rights described above). In the event that we notify one or both of the
parties to a share transfer that we believe stamp duty is required to be paid in connection with the transfer and that we will not pay the
stamp duty, the parties may either themselves arrange for the execution of the required instrument of transfer (and may request a form of
instrument of transfer from us for this purpose) or request that we execute an instrument of transfer on behalf of the transferring party in
a form determined by us. In either event, if the parties to the share transfer have the instrument of transfer duly stamped (to the extent
required) and then provide it to our transfer agent, the buyer will be registered as the legal owner of the relevant shares on our official
Irish share register (subject to the matters described below).
The directors may suspend registration of transfers from time to time, not exceeding 30 days in aggregate each year.
Exhibit 10.8
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made as of March 10,
2021 by and between Nabriva Therapeutics US, Inc. (the “Company”), and Robert Crotty (the “Executive”) (together, the
“Parties”).
RECITALS
WHEREAS, the Company and the Executive are parties to that certain Employment Agreement effective as of June
14, 2017 (the “Prior Agreement”); and
WHEREAS, the Company desires to continue to employ the Executive as its General Counsel and as General
Counsel of its group of companies, and the Executive desires to continue employment with the Company and its group of
companies, and to amend and restate the Prior Agreement, on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the
Parties herein contained, the Parties hereto agree as follows:
1.
Agreement. This Agreement shall be effective as of the date first set forth above (the “Effective
Date”). Following the Effective Date, the Executive shall continue to be an employee of the Company until such
employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).
2.
Position. During the Term of Employment, the Executive shall serve as the General Counsel of the
Company and Nabriva Therapeutics plc (“Parent”), working out of the Company’s office in King of Prussia, Pennsylvania,
and travelling as reasonably required by the Executive’s job duties.
3.
Scope of Employment. During the Term of Employment, the Executive shall be responsible for the
performance of those duties consistent with the Executive’s position as General Counsel, and shall report to the Chief
Executive Officer of the Company. In the event of the Chief Executive Officer’s unavailability or incapacity, the Executive
shall report to the Board of Directors of Parent (the “Parent Board”), and shall perform and discharge faithfully, diligently,
and to the best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote
substantially all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company,
Parent, and their affiliates. Membership on boards of directors of any additional companies will be permitted only with the
express approval of the Parent Board. Notwithstanding the previous sentence, the Executive may engage in community and
charitable activities or participate in industry associations and serve on the boards of community, charitable or industry
organizations, with the approval of the Chief Executive Officer. The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and Parent and any changes therein that may be adopted from
time to time by the Company and/or Parent.
4.
Compensation. As full compensation for all services rendered by the Executive to the Company and Parent,
and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:
(a)
Base Salary. The Executive shall receive a base salary at the annualized rate of $403,966 (the “Base
Salary”), paid in equal semi-monthly installments in accordance with the Company’s regularly established payroll
procedure. Such Base Salary shall be reviewed by the compensation committee of the Parent Board or the full Parent Board
in the first quarter of each fiscal year.
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(b)
Annual Bonus. Following the end of each fiscal year and subject to the approval of the Parent
Board, the Executive may be eligible to receive an annual retention and performance bonus based on the Executive’s
performance and the performance of the Company and Parent during the applicable fiscal year, as determined by the Parent
Board in its sole discretion. The Executive’s target annual bonus for each fiscal year shall be 40% of the Executive’s then
current Base Salary (the “Target Bonus”). All annual bonuses, if any, will be payable no later than March 15 of the year
following the year in which they are earned. The Executive must be employed on the date of payment in order to be eligible
for any annual bonus, except as specifically set forth below.
(c)
Equity Award. The Executive will be eligible to receive additional equity awards, if any, at such
times and on such terms and conditions as the Parent Board shall, in its sole discretion, determine.
(d)
Vacation or Paid Time Off. The Executive shall be eligible for paid vacation or paid time off and
holidays in accordance with the Company’s vacation or paid time off and holiday policies for senior executive employees.
(e)
Benefits. The Executive may participate in any and all benefit programs that the Company
establishes and makes available to its senior executive employees from time to time, provided that the Executive is eligible
under (and subject to all provisions of) the plan documents governing those programs. Benefits are subject to change at any
time in the Company’s sole discretion.
5.
Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable business and
travel expenses incurred by the Executive on the Company’s behalf during the course of the Executive’s employment, upon
the presentation by the Executive of documentation itemizing such expenditures and attaching all supporting vouchers and
receipts. Reimbursement will be made no later than thirty (30) calendar days after the expense is substantiated (which must
occur within thirty (30) calendar days after the expense is incurred).
6.
Restrictive Covenants Agreement. The Executive has previously executed the Company’s standard form of
Proprietary Rights, Non-Disclosure, Inventions, and Non-Solicitation Agreement or similar agreement, a copy of which is
attached hereto as Exhibit A (the “Restrictive Covenants Agreement”).
7.
Employment Termination. This Agreement and the employment of the Executive shall terminate upon the
occurrence of any of the following:
(a)
Upon the death or “Disability” of the Executive. As used in this Agreement, the term “Disability”
shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the
Executive’s position for a period of more than any three (3) consecutive months or for periods aggregating more than
twenty-six (26) weeks. The Company shall determine in good faith and in its sole discretion whether the Executive is unable
to perform the services provided for herein.
(b)
At the election of the Company, with or without “Cause” (as defined below), immediately upon
written notice by the Company to the Executive (subject to the cure period requirements set forth below). As used in this
Agreement, “Cause” shall mean a finding by the Parent Board that the Executive:
(i)
repeatedly failed or refused to perform (other than by reason of physical or mental illness or
disability for a period of less than three (3) consecutive months or in aggregate
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less than twenty-six (26) weeks) the Executive’s assigned duties under this Agreement or was negligent in the
performance of these duties; provided that it is understood that this clause (i) shall not permit the Company to
terminate the Executive’s employment for Cause solely because of (A) the Executive’s failure to meet specified
performance objectives or achieve a specific result or outcome, or (B) the Company’s dissatisfaction with the quality
of services provided by the Executive in the good faith performance of his or her duties to the Company;
(ii)
materially breached this Agreement;
(iii)
materially breached the Executive’s Restrictive Covenants Agreement, or any similar
written agreement between the Executive and the Company;
(iv)
engaged in willful misconduct, fraud, embezzlement, harassment, discrimination, assault or
other acts of violence in connection with his employment with the Company;
(v)
engaged in any conduct that is materially harmful to the business, interests or reputation of
the Company, unless the Executive had a reasonable and good faith belief that such conduct was in the best interest
of the Company; or
(vi)
was convicted of, or pleaded guilty or nolo contendere to a crime involving moral turpitude
or any felony (other than a vehicular offense not committed in the course of Executive’s duties to the Company).
To the extent any of the above grounds, other than the grounds set forth in Section 7(b)(iv) and 7(b)(vi), is
capable of being cured, the Company shall provide Executive with written notice of the grounds for the Executive’s
termination for Cause, and thirty (30) days within which to cure such grounds.
(c)
At the election of the Executive, with or without “Good Reason” (as defined below), immediately
upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in
the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean:
(i)
the Company’s failure to pay or provide in a timely manner any material amounts owed to
Executive in accordance with this Agreement;
(ii)
a material diminution in the Executive’s base compensation, unless such a reduction is
imposed across-the-board to senior management of the Company;
(iii)
a material diminution in the nature or scope of Executive’s duties, responsibilities, or
authority;
(iv)
the Company requiring Executive (without Executive’s consent) to be based at any place
outside a fifty (50)-mile radius of his then-current place of employment with the Company prior to any such
relocation, except for reasonably required travel on the Company’s business; or
(v)
any material breach of this Agreement by the Company not otherwise covered by this
paragraph;
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provided, however, that in each case, the Company shall have a period of not less than thirty (30) days to cure any act
constituting Good Reason following the Executive’s delivery to the Company of written notice within sixty (60) days of the
action or omission constituting Good Reason. Any resignation by the Executive for Good Reason shall occur within six (6)
months following the expiration of such cure period.
8.
Effect of Termination.
(a)
All Terminations Other Than by the Company Without Cause or by the Executive With Good
Reason. If the Executive’s employment is terminated under any circumstances other than a Qualifying Termination (as
defined below) (including a voluntary termination by the Executive without Good Reason pursuant to Section 7(c), a
termination by the Company for Cause pursuant to Section 7(b) or due to the Executive’s death or Disability pursuant to
Section 7(a)), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be
entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such
termination, accrued but unused paid time off through and including the effective date of such termination, to be paid in
accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly
scheduled pay period (or such earlier date as is required by applicable law), (ii) unreimbursed business expenses for which
expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any
amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the
Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the
Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued
Obligations”). The Executive shall not be entitled to any other compensation or consideration that the Executive may have
received had the Executive’s Term of Employment not ceased, except that if Executive’s employment terminated because of
his death or Disability, he or his estate, as the case may be, shall, subject to Section 8(d) hereof, be paid on the later of the
Payment Date (as defined below) and the date on which annual bonuses are paid to all other employees, any earned but
unpaid annual bonus from any previously completed calendar year notwithstanding the requirement that the individual be
employed on the payment date of such annual bonus (such payment, the “Earned but Unpaid Bonus”).
(b)
Termination by the Company Without Cause or by the Executive With Good Reason Prior to or
More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company
without Cause pursuant to Section 7(b) or by the Executive with Good Reason pursuant to Section 7(c) (in either case, a
“Qualifying Termination”) prior to or more than twelve (12) months following a Change in Control (as defined below), the
Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the
Company shall: (i) continue to pay to the Executive, in accordance with the Company’s regularly established payroll
procedure, the Executive’s Base Salary for a period of twelve (12) months; (ii) for a period of twelve (12) months following
the date of the Executive’s termination of employment (or, if earlier, the date on which the applicable continuation period
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) expires) (such period, the
“COBRA Coverage Period”), provided the Executive is eligible for and timely elects to continue receiving group medical
insurance pursuant to COBRA, continue to pay the Company’s share of the premium the Executive and/or his eligible
dependents are required to pay for continuation coverage pursuant to COBRA based on the cost sharing levels in effect on
the date of the Executive’s termination of employment, unless the Company’s provision of such COBRA payments will
violate the nondiscrimination requirements of applicable law, in which case, instead of providing the benefits as set forth
above, the Company shall instead pay to the Executive the foregoing monthly amount as a taxable monthly payment for the
COBRA Coverage Period (or any remaining portion thereof), unless the Company determines that such payments would not
comply with applicable law in a manner that causes the Company to incur additional taxes, penalties, fines or charges as a
result of such payments (other than employer-side employment taxes payable on such payments); (iii) pay the Executive any
earned but unpaid
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annual bonus from a previously completed calendar year on the Payment Date, notwithstanding the requirement that the
individual be employed on the payment date of such annual bonus (but in no event later than March 15 of the calendar year
following the calendar year to which such annual bonus relates); and (iv) pay the Executive a prorated annual bonus for the
year in which the Qualifying Termination occurs, calculated by multiplying 100% of the Target Bonus by a fraction, the
numerator of which is equal to the number of days in the calendar year during which Executive was employed and the
denominator of which equals three hundred sixty-five (365) (the “Pro-Rated Bonus Payment”), which Pro-Rated Bonus
Payment shall be paid in a single lump-sum on the Payment Date (but in no event more than seventy-five (75) days
following the termination date) (collectively, the “Severance Benefits”).
(c)
Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve
Months Following a Change in Control. If a Qualifying Termination occurs within twelve (12) months following a Change
in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of
Section 8(d): (i) the Executive will be eligible to receive the Severance Benefits as set forth in Section 8(b) other than the
Pro-Rated Bonus Payment, subject to the same terms, conditions and limitations described therein; (ii) in lieu of the Pro-
Rated Bonus Payment, the Executive will be eligible to receive a lump sum payment equal to 100% of the Executive’s
Target Bonus for the year in which the Qualifying Termination occurs without regard to whether the performance goals
applicable to such Target Bonus had been established or satisfied at the date of termination of employment, payable in a
lump sum on the Payment Date (but in no event more than seventy-five (75) days following the termination date); and (iii)
all of the Executive’s then-unvested equity awards shall vest and become fully exercisable or non-forfeitable effective as of
the termination date, with the same treatment applying to any then-unvested equity awards granted by the Company to the
Executive under any successor equity incentive plan (provided, however, that the accelerated vesting of any equity awards
the vesting of which is subject to performance-based vesting conditions (and excluding, for the avoidance of doubt,
performance-based awards that are subject to time-based vesting following the achievement of the applicable performance
metric) shall be governed by the individual award agreement and the equity plan under which such awards were granted to
the extent such award agreement specifically provides that such awards will not be eligible for accelerated vesting under this
Agreement) (provided that, with respect to any equity award that is a restricted stock unit, in no event shall such restricted
stock unit be settled later than the March 15 of the calendar year following the year in which the termination date occurs)
(collectively, the “Change in Control Severance Benefits”). For the avoidance of doubt, a Qualifying Termination occurring
within twelve (12) months following a Change in Control shall also constitute a Good Leaver Event (as such term is defined
in the Nabriva Therapeutics AG Amended and Restated Stock Option Plan 2015).
(d)
Release. As a condition of the Executive’s receipt of the Earned but Unpaid Bonus, the Severance
Benefits or the Change in Control Severance Benefits, as applicable, the Executive or his estate, as applicable, must execute
and deliver to the Company a severance and release of claims agreement in substantially the form attached hereto as Exhibit
B (the “Severance Agreement”), which Severance Agreement must become irrevocable within sixty (60) days following the
date of the Executive’s termination of employment (or such shorter period as may be directed by the Company). Subject to
any earlier payment deadline set forth in Section 8(b) or 8(c) above, the Earned but Unpaid Bonus, the Severance Benefits or
the Change in Control Severance Benefits, as applicable, will be paid or commence to be paid in the first regular payroll
beginning after the Severance Agreement becomes effective, provided that if the foregoing sixty (60) day period would end
in a calendar year subsequent to the year in which the Executive’s employment ends, the Earned but Unpaid Bonus, the
Severance Benefits or Change in Control Severance Benefits, as applicable, will not be paid or begin to be paid before the
first payroll of the subsequent calendar year (the date the Earned but Unpaid Bonus, the Severance Benefits or Change in
Control Severance Benefits, as applicable, are paid or commence pursuant to this sentence, the “Payment Date”). The
Executive must continue to comply with the Restrictive Covenants Agreement in order to be
5
eligible to continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.
(e)
Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean:
(i) an exclusive license of or the sale, the lease or other disposal of all or substantially all of the assets of the Company or
Parent; (ii) a sale or other disposal (for the avoidance of doubt, the term disposal shall not include a pledge) in any
transaction or series of transactions to which the Company is a party of 50% or more of the voting power of the Company
(other than a sale or other disposal to the Company, Parent or any of their respective subsidiaries), other than any transaction
or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or
indebtedness of the Company is cancelled or converted, or a combination thereof; (iii) a sale or other disposal (for the
avoidance of doubt, the term disposal shall not include a pledge) in any transaction or series of transactions to which Parent
is a party of 50% or more of the voting power of Parent (other than a sale or other disposal to the Company, Parent or any of
their respective subsidiaries), other than any transaction or series of transactions principally for bona fide equity financing
purposes in which cash is received by Parent or indebtedness of Parent is cancelled or converted, or a combination thereof;
(iv) a merger or consolidation of the Company or Parent with or into any third party, other than any merger or consolidation
in which the shares of the Company or Parent, respectively, immediately preceding such merger or consolidation continue to
represent a majority of the voting power of the surviving entity immediately after the closing of such merger or
consolidation; (v) during any period of two (2) consecutive years, individuals who, at the beginning of such period,
constitute the Parent Board together with any new director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv)) whose election by the
Parent Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the two (2) year period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof; and (vi) a
liquidation, winding up or any other form of dissolution of the Company or Parent. For the avoidance of doubt, any one or
more of the above events with respect to Parent may be effected pursuant to (A) a compromise or arrangement sanctioned by
the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of Ireland or (B) otherwise under Part 9 of
the Companies Act 2014 of the Republic of Ireland or (C) otherwise under the Companies Act 2014 of the Republic of
Ireland.
9.
Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth
in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the
following provisions shall apply:
(a)
The Company shall not be obligated to provide to the Executive any portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the minimum
extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the
Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1,
Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Amount.”
(b)
Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation
Payments shall be made if (1) the net amount of such Contingent Compensation Payments, as so reduced by the Eliminated
Amount (computed without regard to this sentence) (but after subtracting the amount of any taxes that would be incurred by
the Executive on such reduced Contingent Compensation Payments (including state and federal income taxes on the reduced
Contingent Compensation Payments and any withholding taxes)) is less than (2) the net amount of such Contingent
Compensation Payments
6
without such reduction (but after subtracting the amount of any taxes that would be incurred by the Executive on the
Contingent Compensation Payments if the Eliminated Payments (determined without regard to this sentence) were paid to
the Executive (including state and federal income taxes on the Contingent Compensation Payments, the excise tax imposed
by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the
Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes)). The override of
such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a
“Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the
receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax rate provided by law.
(c)
For purposes of this Section 9 the following terms shall have the following respective meanings:
(i)
“Change in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii)
“Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a
“disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.
(d)
the highest Contingent Compensation Payment Ratio; provided
The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined
by the Company in a manner that results in the maximum economic benefit to the Executive on an after-tax basis
(considering maximum statutory tax rates). Except to the extent that an alternative reduction order would result in a greater
economic benefit to the Executive on an after-tax basis, the Parties intend that such reduction be determined by the 280G
Firm (as defined below) by determining the “Contingent Compensation Payment Ratio” (as defined below) for each
Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the
Contingent Compensation Payment with
that,
notwithstanding the foregoing, any such reduction shall be undertaken in a manner that complies with and does not result in
the imposition of additional taxes on the Executive under Section 409A of the Code. For Contingent Compensation
Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be
reduced based on the time of payment of such Contingent Compensation Payments with amounts having later payment dates
being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and
the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below
zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term
“Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the value of the applicable
Contingent Compensation Payment for purposes of Section 4999(a) of the Code, and the denominator of which is the actual
amount received by the Executive in respect of the applicable Contingent Compensation Payment. For example, in the case
of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the
payment is made or the payment vests is accelerated, the denominator shall be determined by reference to the fair market
value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of
accelerated payments set forth in Treasury Regulation Section 1.280G-1 Q/A-24(b) or (c).
7
(e)
All determinations regarding the application of this Section 9 shall be made by an accounting firm,
law firm or consulting group with nationally recognized standing and substantial expertise and experience in performing
calculations regarding the applicability of Section 280G of the Code and the excise tax retained by the Company prior to the
date of the applicable change in control (the “280G Firm”). The 280G Firm will be directed to submit its determination and
detailed supporting calculations to both the Executive and the Company within thirty (30) days after notification from either
the Company or the Executive that the Executive may receive payments which may be Contingent Compensation Payments
(or such earlier or later date as the Company and Executive may agree). The Executive and the Company will each provide
the 280G Firm access to and copies of any books, records, and documents in their possession as may be reasonably
requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of
the determinations and calculations contemplated by this letter agreement. The fees and expenses of the 280G Firm for its
services in connection with the determinations and calculations contemplated by this Section 9 will be borne by the
Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses
incurred in any later audit) shall be borne by the Company.
(f)
The provisions of this Section 9 are intended to apply to any and all payments or benefits available
to the Executive under this Agreement or any other agreement or plan under which the Executive receives Contingent
Compensation Payments.
10.
Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any
employment contracts, restrictive covenants or other restrictions that prevent the Executive from entering into employment
with, or carrying out the Executive’s responsibilities for, the Company, Parent or their affiliates, or which are in any way
inconsistent with any of the terms of this Agreement.
11.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for
next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each
case addressed to the Company at its principal executive offices and to the Executive at his or her most recent address set
forth in the Company’s personnel records. Either Party may change the address to which notices are to be delivered by
giving notice of such change to the other Party in the manner set forth in this Section 11.
12.
Arbitration. Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action,
in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be
resolved solely and exclusively by final and binding arbitration held in King of Prussia, Pennsylvania, before a single,
mutually-agreed neutral arbitrator, through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) under the then
existing JAMS arbitration rules. The rules may be found online at www.jamsadr.com or upon written request to the
Company. This paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each
other relating to Executive’s employment; provided that Executive will retain the right to file administrative charges with or
seek relief through any government agency of competent jurisdiction, and to participate in any government investigation,
including but not limited to (a) claims for workers’ compensation, state disability insurance or unemployment insurance; (b)
administrative claims brought before any state or federal governmental authority (provided that any appeal from an award or
from denial of an award of wages and/or waiting time penalties shall be arbitrated pursuant to the terms of this Section 12);
and (c) claims for administrative relief from the United States Equal Employment Opportunity Commission (or any similar
agency in any applicable jurisdiction) (provided, that, except as otherwise provided by law, Executive will not be entitled to
obtain any monetary relief through such agencies other than workers’ compensation benefits or unemployment insurance
benefits). Further, nothing in this Section 12 is intended to prevent either party from obtaining injunctive relief in court to
prevent irreparable harm
8
pending the conclusion of any such arbitration, including without limitation injunctive relief, in any court of competent
jurisdiction. Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel arbitration. In
resolving any matter submitted to arbitration, the arbitrator will strictly follow the substantive law applicable to the dispute,
claim or controversy and the arbitrator’s authority and jurisdiction will be limited to determining the dispute in conformity
with applicable law as to liability, damages and remedies, to the same extent as if the dispute was determined by a court
without a jury. The arbitrator will issue a written decision that contains the essential findings of fact and conclusions of law
on which the decision is based, which may be entered as a judgment in any court of competent jurisdiction. The Company
shall pay all costs of arbitration, including without limitation, arbitration administrative fees, arbitrator compensation and
expenses, and costs of any witnesses called by the arbitrator. Unless otherwise ordered by the arbitrator under applicable law,
each party shall each bear its or his or her own expenses, such as attorneys’ fees, costs and disbursements; provided,
however, the Company and Executive agree that, to the extent permitted by law, the arbitrator may, in his or her discretion,
award reasonable attorneys’ fees to the prevailing party. Each party warrants that it has had the opportunity to be represented
by counsel in the negotiation and execution of this Agreement, including the attorneys’ fees provision herein.
13.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the
Executive each hereby irrevocably waives any right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.
14.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
15.
Effect of Section 409A of the Code.
(a)
Six Month Delay. If and to the extent any portion of any payment, compensation or other benefit
provided to the Executive in connection with the Executive’s employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified
employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its
procedures, by which determination Executive hereby agrees that the Executive is bound, such portion of the payment,
compensation or other benefit shall not be paid before the earlier of (i) the expiration of the six (6) month period measured
from the date of the Executive’s “separation from service” (as determined under Section 409A of the Code) and (ii) the tenth
day following the date of the Executive’s death following such separation from service (the “New Payment Date”). The
aggregate of any payments that otherwise would have been paid to the Executive during the period between the date of
separation from service and the New Payment Date shall be paid to the Executive in a lump sum in the first payroll period
beginning after such New Payment Date, and any remaining payments will be paid on their original schedule.
9
(b)
General 409A Principles. For purposes of this Agreement, a termination of employment will mean a
“separation from service” as defined in Section 409A of the Code, each amount to be paid or benefit to be provided will be
construed as a separate identified payment for purposes of Section 409A of the Code, and any payments that are due within
the “short term deferral period” as defined in Section 409A of the Code or are paid in a manner covered by Treas. Reg.
Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless applicable law requires otherwise. Neither
the Company nor the Executive will have the right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A of the Code. This Agreement is intended to comply
with the provisions of Section 409A of the Code and this Agreement shall, to the extent practicable, be construed in
accordance therewith. Terms defined in this Agreement will have the meanings given such terms under Section 409A of the
Code if and to the extent required to comply with Section 409A of the Code. In any event, the Company makes no
representations or warranty and will have no liability to the Executive or any other person if any provisions of or payments
under this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but not to
satisfy the conditions of that section.
(c)
Reimbursements. To the extent that any payments or reimbursements provided to the Executive
under this Agreement are deemed to constitute compensation to the Executive to which Treasury Regulation Section
1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed reasonably promptly, but not later than December
31 of the year following the year in which the expense was incurred. The amount of any such payments eligible for
reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any
other taxable year, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to
liquidation or exchange for any other benefit.
16.
Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully
discuss and review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive
further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
17.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by
the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of
any right on any other occasion.
18.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
19.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
20.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or
10
invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Moreover, if
a court of competent jurisdiction determines any of the provisions contained in this Agreement to be unenforceable because
the provision is excessively broad in scope, whether as to duration, activity, geographic application, subject or otherwise, it
will be construed, by limiting or reducing it to the extent legally permitted, so as to be enforceable to the extent compatible
with then applicable law to achieve the intent of the Parties.
21.
Entire Agreement. This Agreement, together with the Restrictive Covenants Agreement, constitutes the
entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter hereof and thereof, including, without limitation, the Prior Agreement.
22.
Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and
withholdings.
23.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
11
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the day and year set forth
above.
NABRIVA THERAPEUTICS US, INC.
/s/ Michele Porreca
By:
Name: Michele Porreca
Title: Chief HR Officer
Date: March 10, 2021
EXECUTIVE
/s/ Robert Crotty
Name: Robert Crotty
Date: March 10, 2021
[SIGNATURE PAGE TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT]
EXHIBIT A
RESTRICTIVE COVENANTS AGREEMENT
[Attached]
EXHIBIT B
SEPARATION AND RELEASE OF CLAIMS AGREEMENT1
This SEPARATION AND RELEASE OF CLAIMS AGREEMENT (the “Agreement”) is made as of the Agreement
Effective Date (as defined below) between Nabriva Therapeutics US, Inc. (the “Company”) and Robert Crotty
(“Executive”) (together, the “Parties”).
RECITALS
WHEREAS, the Company and Executive are parties to the Amended and Restated Employment Agreement dated
as of March 10, 2021 (the “Employment Agreement”);
WHEREAS, the Parties are ending their employment relationship and wish to establish mutually agreeable terms
for Executive’s orderly transition and separation from the Company effective on the Separation Date (as defined below); and
WHEREAS, the Parties agree that the payments, benefits and rights set forth in this Agreement shall be the
exclusive payments, benefits and rights due Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Separation Date. Executive’s effective date of separation from employment with the Company and, as
may be applicable, any and all of its parents, affiliates and subsidiaries, including, without limitation, Nabriva Therapeutics
GMBH and Nabriva Therapeutics plc (“Parent”) (together, the “Affiliates”), will be [__________] (the “Separation Date”).
Executive hereby resigns, as of the Separation Date, from any and all of his or her positions as an officer and employee of
the Company and each of its Affiliates, and Executive further agrees to execute and deliver any documents reasonably
necessary to effectuate such resignations, provided that nothing in any such document is inconsistent with any terms set forth
in this Agreement. As of the Separation Date, all salary payments from the Company will cease and any benefits Executive
had as of such date under Company-provided benefit plans, programs, or practices will terminate, except as required by
applicable law or as otherwise specifically set forth in this Agreement.
2.
Severance Benefits. In return for Executive’s timely signing and not revoking this Agreement as set forth in
Section 13 below, and subject to Executive’s compliance with all terms hereof, the Company will provide Executive with
[INSERT PER EMPLOYMENT AGREEMENT, AS MAY BE APPLICABLE] (the “Severance Benefits”). Other than the
Severance Benefits, Executive will not be eligible for, nor shall he or she have a right to receive, any payments or benefits
from the Company or any of its Affiliates following the Separation Date, other than reimbursement for any outstanding
business expenses in accordance with Company policy.
1 NOTE: The Parties agree that the Company may revise this release agreement to reflect changes in law, additional
statutes or claims, benefits, or your circumstances, so that the Company receives the benefit of the most complete release
of claims that is legally permissible and may also change the timing, if required to obtain such release. This footnote
and any other footnotes are part of the form of release agreement and are to be removed only when the Company
finalizes the Separation and Release of Claims Agreement for execution. If the release is as a result of Executive’s
death, the Company will revise and provide for a comparable release by the Executive’s estate or beneficiaries.
1
3.
Release of Claims. In exchange for the consideration set forth in this Agreement, which Executive
acknowledges he or she would not otherwise be entitled to receive, Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its Affiliates (including, without limitation, the Parent),
subsidiaries, parent companies, predecessors, and successors, and all of its and their respective past and present officers,
directors, stockholders, investors, partners, members, managers, employees, agents, representatives, plan administrators,
attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”)
from any and all claims, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts,
reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys’ fees and costs), of every kind and nature that Executive ever had or now has against any or all
of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or
relating to Executive’s employment with and/or separation from the Company, including, but not limited to, all claims under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information
Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the
Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et
seq., the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the False Claims Act, 31
U.S.C. § 3729 et seq., 38 U.S.C. § 4301 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., all as amended; all claims arising out of the Pennsylvania Human Relations Act, 43 Pa. Stat. § 951 et
seq., the Pennsylvania Equal Pay Law, 43 Pa. Stat. § 336.1 et seq., and the Pennsylvania Whistleblower Law, 43 Pa.
Stat. § 1421 et seq., all as amended; all claims arising out of the California Fair Employment and Housing Act, Cal. Gov’t.
Code § 12900 et seq., Cal. Labor Code § 201 et seq. (California payment of wages law), the California Equal Pay Act, Cal.
Lab. Code § 1197.5 et seq., the California Family Rights Act, Cal. Gov’t. Code § 12945.2 and § 19702.3, the Cal-WARN
Act, Cal. Lab. Code §§ 1400-1408, Cal. Lab. Code § 233 (California’s kin care law), Cal. Lab. Code § 230.8 (California
leave for school activities law), Cal. Lab. Code § 245.5 (California paid sick leave law), Cal. Lab. Code §§ 230 and 230.1
(California domestic violence leave law), Cal. Mil. And Vet. Code § 395.10 (California military family leave law), Cal. Code
Regs. tit. 2, §§ 11035-11051 (California’s pregnancy leave law), California Unruh Civil Rights Act, Cal. Civ. Code § 51 et
seq., and Cal. Lab. Code §§ 98.6 and 1102.5 (California whistleblower protection laws), all as amended; all common law
claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation,
fraud, wrongful discharge, and breach of contract (including, without limitation, all claims arising out of or related to the
Employment Agreement); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state
and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of
Executive’s employment with and/or separation from the Company and/or its Affiliates (including a claim for retaliation)
under any common law theory or any federal, state or local statute or ordinance not expressly referenced above.
Notwithstanding the foregoing, nothing in this release of claims prevents Executive from filing a charge with,
cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity
Commission or a state fair employment practices agency (except that Executive acknowledges that he may not recover any
monetary benefits in connection with any such charge, investigation, or proceeding, and Executive further waives any rights
or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation
or proceeding). Further, nothing herein shall prevent Executive from bringing claims to enforce this Agreement, or release
(i) any rights Executive may have under the Company’s certificate of incorporation, by-laws, insurance and/or any
indemnification agreement between him or her and the Company (and/or
2
otherwise under law) for indemnification and/or defense as an employee, officer or director of the Company for his or her
service to the Company (recognizing that such indemnification and/or defense is not guaranteed by this Agreement and shall
be governed by the instrument or law, if any, providing for such indemnification and/or defense), (ii) any rights Executive
may have to vested or earned compensation or benefits, including pension or 401(k) benefits or interests under any ERISA-
Covered benefit plan (excluding severance) provided by the Company, (iii) Executive’s right to communicate or cooperate
with any government agency, (iv) claims for unemployment compensation or any state disability insurance benefits pursuant
to the terms of applicable state law; (v) claims for workers’ compensation insurance benefits under the terms of any worker’s
compensation insurance policy or fund of the Company; and (vi) any rights or claims that cannot be waived by law,
including claims for unemployment benefits.
4.
Section 1542 Waiver. Executive understands and agree that the claims released in Section 3 above include
not only claims presently known to Executive, but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope
of the released claims as described in Section 3. Executive understands that he may hereafter discover facts different from
what he now believes to be true, which if known, could have materially affected this Agreement, but Executive nevertheless
waives any claims or rights based on different or additional facts. Executive knowingly and voluntarily waive any and all
rights or benefits that he may now have, or in the future may have, under the terms of Section 1542 of the Civil Code of the
State of California, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED
PARTY.”
5.
Continuing Obligations. Executive acknowledges and reaffirms his or her obligation, to the extent permitted
by law and except as otherwise permitted by Section 9 below, to keep confidential and not to use or disclose any and all non-
public information concerning the Company and/or its Affiliates that Executive acquired during the course of his or her
employment with the Company and/or its Affiliates, including, but not limited to, any non-public information concerning the
Company’s and/or its Affiliates’ business affairs, business prospects, and financial condition. Executive further
acknowledges and reaffirms his or her obligations set forth in the Proprietary Rights, Non-Disclosure, Inventions, and Non-
Solicitation Agreement or similar agreement that he previously executed for the benefit of the Company (the “Restrictive
Covenants Agreement”), which remain in full force and effect and which survive his or her separation from employment
with the Company.
6.
Non-Disparagement. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, he or she will not, in public or private, make any disparaging, derogatory or
defamatory statements to any person or entity, including, but not limited to, any media outlet, industry group, financial
institution or current or former employee, board member, consultant, client or customer of the Company, regarding the
Company or its Affiliates (including, without limitation, Parent), and all of its and their respective officers, directors or
employees or regarding the Company’s business affairs, business prospects, or financial condition. The Company agrees
that, to the extent permitted by law, none of their respective officers or directors will, in public or private, make any
disparaging, derogatory or defamatory statements to any person or entity, including, but not limited to, any media outlet,
industry group, financial institution or current or former employee, board member, consultant, client or customer of the
Company, regarding Executive. Notwithstanding the foregoing, nothing herein shall be construed as preventing any Party
from making truthful disclosures in any litigation or arbitration.
3
7.
Return of Company Property. Executive confirms that he or she has returned to the Company or, with the
written permission of the Company, destroyed, all keys, files, records (and copies thereof), equipment (including, but not
limited to, computer hardware, software and printers, flash drives and other storage devices, wireless handheld devices,
cellular phones, tablets, etc.), Company identification and any other tangible or intangible Company-owned property in his
or her possession or control and, other than with the written permission of the Company, has left intact, and has otherwise
not destroyed, deleted or made inaccessible to the Company, all electronic Company documents, including but not limited to
those that he developed or helped to develop during his or her employment or service with the Company. Executive further
confirms that, to the extent requested by the Company, he has canceled all accounts for his or her benefit, if any, in the
Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or wireless data
accounts and computer accounts.
8.
Confidentiality. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, the contents of the negotiations and discussions resulting in this Agreement shall be
maintained as confidential by Executive and his or her agents and representatives and shall not be disclosed except as
otherwise agreed to in writing by the Company; provided, however, that nothing herein shall be construed as preventing
Executive from making truthful disclosures in any litigation or arbitration or from having confidential conversations with his
or her agents and representatives and family members on the condition that any individuals so informed must hold the above
information in strict confidence.
9.
Scope of Disclosure Restrictions. Nothing in this Agreement or elsewhere prohibits Executive from
communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing
information to government agencies, filing a complaint with government agencies, or participating in government agency
investigations or proceedings. Executive is not required to notify the Company of any such communications; provided,
however, that nothing herein authorizes the disclosure of information Executive obtained through a communication that was
subject to the attorney-client privilege. Further, notwithstanding Executive’s confidentiality and nondisclosure obligations,
Executive is hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally
or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in
confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for
the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an
employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under
seal; and (B) does not disclose the trade secret, except pursuant to court order.”
10.
Cooperation. Executive agrees that, to the extent permitted by law, he or she shall cooperate fully with the
Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are
currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the
Company against any third party, whether before a state or federal court, any state or federal government agency, or a
mediator or arbitrator, that relate in any manner to Executive’s conduct or duties at the Company or that are based on facts
about which Executive obtained personal knowledge while employed at or providing services to the Company. Executive’s
full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with
the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the
Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other
proceeding and to act as a witness when requested by the Company. Any reasonable out-of-pocket expenses incurred by
Employee associated with such
4
cooperation will be paid for or reimbursed by the Company. Executive further agrees that, to the extent permitted by law, he
will notify the Company promptly in the event that he is served with a subpoena (other than a subpoena issued by a
government agency), or in the event that he is asked to provide a third party (other than a government agency) with
information concerning any actual or potential complaint or claim against the Company.
11.
Business Expenses and Final Compensation. Executive acknowledges that he has been reimbursed by the
Company for all business expenses incurred in conjunction with the performance of his or her employment and that no other
reimbursements are owed to him or her. Executive acknowledges that he has received all compensation due to him or her
from the Company, including, but not limited to, all wages, bonuses and accrued, unused vacation time, and that he or she is
not eligible or entitled to receive any additional payments or consideration from the Company beyond that provided for in
Section 2 of this Agreement.
12.
Modified Section 280G Cutback. Section 9 of the Employment Agreement is hereby incorporated by
reference and shall continue to apply to Executive as if fully set forth herein.
13.
2Time for Consideration and Revocation. Executive acknowledges that he or she was initially presented
with this Agreement on [________] (the “Receipt Date”). Executive understands that this Agreement shall be of no force or
effect, and that he or she shall not be eligible for the consideration described herein, unless he or she signs and returns this
Agreement no later than the [twenty-second (22nd) day] [forty-sixth (46th) day] after the Receipt Date and does not revoke
his or her acceptance in the subsequent seven (7) day period (the day immediately following expiration of such revocation
period, the “Agreement Effective Date”). Executive acknowledges that he or she will not be entitled to the Severance
Benefits unless the Agreement Effective Date occurs within sixty (60) days following the Separation Date (or such shorter
period as may be directed by the Company at the time of separation).
14.
Acknowledgments. Executive acknowledges that he or she has been given at least [twenty-one (21)][forty-
five (45)] days to consider this Agreement, and that the Company is hereby advising him or her to consult with an attorney
of his or her own choosing prior to signing this Agreement. Executive further acknowledges and agrees that any changes
made to this Agreement following his or her initial receipt of this Agreement, whether material or immaterial, shall not
restart or affect in any manner the [twenty-one (21)][forty-five (45)] day consideration period. Executive understands that
he or she may revoke this Agreement for a period of seven (7) days after he or she signs it by notifying the Company in
writing, and the Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.
Executive understands and agrees that by entering into this Agreement he or she will be waiving any and all rights or claims
he or she might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, and that he or she has received or will receive consideration beyond that to which he was previously entitled.
15.
Voluntary Assent. Executive states and represents that Executive has had an opportunity to fully discuss and
review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive further states and
represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
16.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid,
2 NOTE: Sections 13 and 14 to be included if Executive is age 40 or older on the Separation Date.
5
one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or
immediately upon hand delivery, in each case addressed to the Company at its principal executive offices and to the
Executive at his or her most recent address set forth in the Company’s personnel records. Either Party may change the
address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this
Section 16.
17.
Arbitration. The parties agree that any and all disputes, claims and causes of action, in law or equity, arising
from or relating to this Agreement, the Employment Agreement or their enforcement, performance, breach, or interpretation,
or the Executive’s termination of employment or service, shall be subject to arbitration in accordance with the provisions of
Section 12 of the Employment Agreement, which is incorporated herein by reference.
18.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Parties each consent to the jurisdiction of such a court. The Parties each hereby irrevocably waives
any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this
Agreement.
19.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
20.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by each Party. No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other
occasion.
21.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
22.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
23.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this
6
Agreement. Moreover, if a court of competent jurisdiction determines any of the provisions contained in this Agreement to
be unenforceable because the provision is excessively broad in scope, whether as to duration, activity, geographic
application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so as to be
enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.
24.
Entire Agreement. This Agreement and the Restrictive Covenant Agreement contain and constitute the entire
understanding and agreement between the Parties hereto with respect to Executive’s separation from the Company,
severance benefits and the settlement of claims against the Company, and cancels all previous oral and written negotiations,
agreements, commitments and writings in connection therewith, including without limitation, the Employment Agreement;
provided, however, that nothing in this Section shall modify, cancel or supersede Executive’s obligations set forth in
Section 5 above or under the Restrictive Covenants Agreement; provided, further, that notwithstanding this Section 24,
Sections 9, 12 and 15 of the Employment Agreement shall survive and shall continue to be binding on the Parties and to
govern the payment of the Severance Benefits.
25.
Tax Acknowledgement. In connection with the Severance Benefits provided to Executive pursuant to this
Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and
Executive shall be responsible for all applicable taxes owed by him or her with respect to such Severance Benefits under
applicable law. Executive acknowledges that he is not relying upon the advice or representation of the Company with
respect to the tax treatment of any of the Severance Benefits.
26.
Section 409A. Section 15 of the Employment Agreement is hereby incorporated by reference and shall
apply to this Agreement as if set forth herein in full.
27.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
7
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date(s) written below.
NABRIVA THERAPEUTICS US, INC.
By:
Name:
Title:
Date:
EXECUTIVE
I hereby agree to the terms and conditions set forth above. I have been given at least [twenty-one (21)][forty-five
(45)] days to consider this Agreement and I have chosen to execute this on the date below. I intend that this
Agreement will become a binding agreement if I do not revoke my acceptance within seven (7) days.
Name: Robert Crotty
Date:
[SIGNATURE PAGE TO SEPARATION AND RELEASE OF CLAIMS AGREEMENT]
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made as of March 10,
2021 by and between Nabriva Therapeutics US, Inc. (the “Company”), and Theodore R. Schroeder (the “Executive”)
(together, the “Parties”).
Exhibit 10.18
RECITALS
WHEREAS, the Company and the Executive are parties to that certain Employment Agreement effective as of July
23, 2018 (the “Prior Agreement”); and
WHEREAS, the Company desires to continue to employ the Executive as its Chief Executive Officer and as Chief
Executive Officer of its group of companies, and the Executive desires to continue employment with the Company and its
group of companies, and to amend and restate the Prior Agreement, on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the
Parties herein contained, the Parties hereto agree as follows:
1.
Agreement. This Agreement shall be effective as of the date first set forth above (the “Effective
Date”). Following the Effective Date, the Executive shall continue to be an employee of the Company until such
employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).
2.
Position. During the Term of Employment, the Executive shall serve as the Chief Executive Officer of the
Company and Nabriva Therapeutics plc (“Parent”), working out of the Company’s office in San Diego, California, and
travelling as reasonably required by the Executive’s job duties. Following the Effective Date, the Executive shall continue to
serve as a member of the Board of Directors of the Company (the “Company Board”) and the Board of Directors of Parent
(the “Parent Board”). The Executive shall not receive any additional compensation for serving as a director of the Company,
Parent or any other subsidiary of Parent. The Executive must resign from any office held in the Company, Parent and/or any
other subsidiary of Parent if requested in writing to do so by the Company (or, with respect to the Executive’s position as a
member of the Parent Board, by the Parent Board) on the termination of his employment. If the Executive does not do so on
being requested to do so, the Company is hereby irrevocably authorized to appoint a person in his name to sign and deliver
any required letter(s) of resignation to the Company and/or Parent, as applicable.
3.
Scope of Employment. During the Term of Employment, the Executive shall be responsible for the
performance of those duties consistent with the Executive’s position as Chief Executive Officer, and shall report to the
Company Board and the Parent Board, and shall perform and discharge faithfully, diligently, and to the best of the
Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote substantially all of the
Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company, Parent, and their
affiliates. Membership on boards of directors of any additional companies (other than those companies affiliated with the
Company and Parent) will be permitted only with the express approval of the Parent Board; provided, however, that the
Company acknowledges that the Executive serves as a member of the board of directors of each of Cidara Therapeutics, Inc.,
Otonomy, Inc. and Collegium Pharmaceutical, Inc. as of the Effective Date and agrees that his continued service on such
boards is permitted and shall not constitute a violation of this Section 3. In addition, the Executive may engage in
community and charitable activities or participate in industry associations and serve on the boards of up to three
(3) community, charitable or industry organizations, without the approval of the Parent Board, provided such activities do
not create a conflict of interest or
1
otherwise interfere with the Executive’s performance of the Executive’s duties hereunder. The Executive agrees to abide by
the rules, regulations, instructions, personnel practices and policies of the Company and Parent and any changes therein that
may be adopted from time to time by the Company and/or Parent.
4.
Compensation. As full compensation for all services rendered by the Executive to the Company and Parent,
and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:
(a)
Base Salary. The Executive shall receive a base salary at the annualized rate of $594,104 (the “Base
Salary”), paid in equal bi-monthly installments in accordance with the Company’s regularly established payroll procedure.
Such Base Salary shall be reviewed by the compensation committee of the Parent Board or the full Parent Board in the first
quarter of each fiscal year.
(b)
Annual Bonus. Following the end of each fiscal year and subject to the approval of the Parent
Board, the Executive may be eligible to receive an annual retention and performance bonus based on the Executive’s
performance and the performance of the Company and Parent during the applicable fiscal year, as determined by the Parent
Board in its sole discretion. The Executive’s target annual bonus for each fiscal year shall be 60% of the Executive’s then
current Base Salary (the “Target Bonus”). All annual bonuses, if any, will be payable no later than March 15 of the year
following the year in which they are earned. The Executive must be employed on the date of payment in order to be eligible
for any annual bonus, except as specifically set forth below.
(c)
Equity Award. The Executive will be eligible to receive additional equity awards, if any, at such
times and on such terms and conditions as the Parent Board shall, in its sole discretion, determine.
(d)
Vacation or Paid Time Off. The Executive shall be eligible for paid vacation or paid time off and
holidays in accordance with the Company’s vacation or paid time off and holiday policies for senior executive employees.
(e)
Benefits. The Executive may participate in any and all benefit programs that the Company
establishes and makes available to its senior executive employees from time to time, provided that the Executive is eligible
under (and subject to all provisions of) the plan documents governing those programs. Benefits are subject to change at any
time in the Company’s sole discretion.
5.
Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable business and
travel expenses incurred by the Executive on the Company’s behalf during the course of the Executive’s employment, upon
the presentation by the Executive of documentation itemizing such expenditures and attaching all supporting vouchers and
receipts. Reimbursement will be made no later than thirty (30) calendar days after the expense is substantiated (which must
occur within thirty (30) calendar days after the expense is incurred).
6.
Restrictive Covenants Agreement. The Executive has previously executed the Company’s standard form of
Proprietary Rights, Non-Disclosure, Inventions, and Non-Solicitation Agreement or similar agreement, a copy of which is
attached hereto as Exhibit A (the “Restrictive Covenants Agreement”).
7.
Employment Termination. This Agreement and the employment of the Executive shall terminate upon the
occurrence of any of the following:
2
(a)
Upon the death or “Disability” of the Executive. As used in this Agreement, the term “Disability”
shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the
Executive’s position for a period of more than any three (3) consecutive months or for periods aggregating more than
twenty-six (26) weeks. The Company shall determine in good faith and in its sole discretion whether the Executive is unable
to perform the services provided for herein.
(b)
At the election of the Company, with or without “Cause” (as defined below), immediately upon
written notice by the Company to the Executive (subject to the cure period requirements set forth below). As used in this
Agreement, “Cause” shall mean a finding by the Parent Board that the Executive:
(i)
repeatedly failed or refused to perform (other than by reason of physical or mental illness or
disability for a period of less than three (3) consecutive months or in aggregate less than twenty-six (26) weeks) the
Executive’s assigned duties under this Agreement or was negligent in the performance of these duties; provided that
it is understood that this clause (i) shall not permit the Company to terminate the Executive’s employment for Cause
solely because of (A) the Executive’s failure to meet specified performance objectives or achieve a specific result or
outcome, or (B) the Company’s dissatisfaction with the quality of services provided by the Executive in the good
faith performance of his or her duties to the Company;
(ii)
materially breached this Agreement;
(iii)
materially breached the Executive’s Restrictive Covenants Agreement, or any similar
written agreement between the Executive and the Company;
(iv)
engaged in willful misconduct, fraud, embezzlement, harassment, discrimination, assault or
other acts of violence in connection with his employment with the Company;
(v)
engaged in any conduct that is materially harmful to the business, interests or reputation of
the Company, unless the Executive had a reasonable and good faith belief that such conduct was in the best interest
of the Company; or
(vi)
was convicted of, or pleaded guilty or nolo contendere to a crime involving moral turpitude
or any felony (other than a vehicular offense not committed in the course of Executive’s duties to the Company).
To the extent any of the above grounds, other than the grounds set forth in Section 7(b)(iv) and 7(b)(vi), is
capable of being cured, the Company shall provide Executive with written notice of the grounds for the Executive’s
termination for Cause, and thirty (30) days within which to cure such grounds.
(c)
At the election of the Executive, with or without “Good Reason” (as defined below), immediately
upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in
the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean:
(i)
the Company’s failure to pay or provide in a timely manner any material amounts owed to
Executive in accordance with this Agreement;
3
(ii)
a material diminution in the Executive’s base compensation, unless such a reduction is
imposed across-the-board to senior management of the Company;
(iii)
a material diminution in the nature or scope of Executive’s duties, responsibilities, or
authority;
(iv)
the Company requiring Executive (without Executive’s consent) to be based at any place
outside a fifty (50)-mile radius of his then-current place of employment with the Company prior to any such
relocation, except for reasonably required travel on the Company’s business; or
(v)
any material breach of this Agreement by the Company not otherwise covered by this
paragraph;
provided, however, that in each case, the Company shall have a period of not less than thirty (30) days to cure any act
constituting Good Reason following the Executive’s delivery to the Company of written notice within sixty (60) days of the
action or omission constituting Good Reason. Any resignation by the Executive for Good Reason shall occur within six (6)
months following the expiration of such cure period.
8.
Effect of Termination.
(a)
All Terminations Other Than by the Company Without Cause or by the Executive With Good
Reason. If the Executive’s employment is terminated under any circumstances other than a Qualifying Termination (as
defined below) (including a voluntary termination by the Executive without Good Reason pursuant to Section 7(c), a
termination by the Company for Cause pursuant to Section 7(b) or due to the Executive’s death or Disability pursuant to
Section 7(a)), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be
entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such
termination, accrued but unused paid time off through and including the effective date of such termination, to be paid in
accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly
scheduled pay period (or such earlier date as is required by applicable law), (ii) unreimbursed business expenses for which
expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any
amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the
Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the
Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued
Obligations”). The Executive shall not be entitled to any other compensation or consideration that the Executive may have
received had the Executive’s Term of Employment not ceased, except that if Executive’s employment terminated because of
his death or Disability, he or his estate, as the case may be, shall, subject to Section 8(d) hereof, be paid on the later of the
Payment Date (as defined below) and the date on which annual bonuses are paid to all other employees, any earned but
unpaid annual bonus from any previously completed calendar year notwithstanding the requirement that the individual be
employed on the payment date of such annual bonus (such payment, the “Earned but Unpaid Bonus”).
(b)
Termination by the Company Without Cause or by the Executive With Good Reason Prior to or
More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company
without Cause pursuant to Section 7(b) or by the Executive with Good Reason pursuant to Section 7(c) (in either case, a
“Qualifying Termination”) prior to or more than twelve (12) months following a Change in Control (as defined below), the
Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the
Company shall: (i) continue to pay to the Executive, in accordance with the Company’s regularly established payroll
4
procedure, the Executive’s Base Salary for a period of eighteen (18) months; (ii) for a period of eighteen (18) months
following the date of the Executive’s termination of employment (or, if earlier, the date on which the applicable continuation
period under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) expires) (such period,
the “COBRA Coverage Period”), provided the Executive is eligible for and timely elects to continue receiving group
medical insurance pursuant to COBRA, continue to pay the Company’s share of the premium the Executive and/or his
eligible dependents are required to pay for continuation coverage pursuant to COBRA based on the cost sharing levels in
effect on the date of the Executive’s termination of employment, unless the Company’s provision of such COBRA payments
will violate the nondiscrimination requirements of applicable law, in which case, instead of providing the benefits as set forth
above, the Company shall instead pay to the Executive the foregoing monthly amount as a taxable monthly payment for the
COBRA Coverage Period (or any remaining portion thereof), unless the Company determines that such payments would not
comply with applicable law in a manner that causes the Company to incur additional taxes, penalties, fines or charges as a
result of such payments (other than employer-side employment taxes payable on such payments); (iii) pay the Executive any
earned but unpaid annual bonus from a previously completed calendar year on the Payment Date, notwithstanding the
requirement that the individual be employed on the payment date of such annual bonus (but in no event later than March 15
of the calendar year following the calendar year to which such annual bonus relates); (iv) pay the Executive a prorated
annual bonus for the year in which the Qualifying Termination occurs, calculated by multiplying 100% of the Target Bonus
by a fraction, the numerator of which is equal to the number of days in the calendar year during which Executive was
employed and the denominator of which equals three hundred sixty-five (365) (the “Pro-Rated Bonus Payment”), which
Pro-Rated Bonus Payment shall be paid in a single lump-sum on the Payment Date (but in no event more than seventy-five
(75) days following the termination date); and (v) such portion of the Executive’s equity awards that vest based solely on his
continued provision of services to the Company, Parent or any of their affiliates (and including, for the avoidance of doubt,
any performance-based awards that are subject to time-based vesting following the achievement of the applicable
performance metric; provided that, at the time of his termination of employment, the applicable performance metric has been
achieved) as would have vested during the twelve (12) month period following the date of the Executive’s termination of
employment had the Executive remained employed by the Company through such date shall vest and become fully
exercisable or non-forfeitable effective as of the termination date, with the same treatment applying to any then-unvested
equity awards granted by the Company to the Executive under any successor equity incentive plan (provided that, with
respect to any equity award that is a restricted stock unit, in no event shall such restricted stock unit be settled later than the
March 15 of the calendar year following the year in which the termination date occurs) (the “Partial Equity Acceleration”
and collectively, the “Severance Benefits”).
(c)
Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve
Months Following a Change in Control. If a Qualifying Termination occurs within twelve (12) months following a Change
in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of
Section 8(d): (i) the Executive will be eligible to receive the Severance Benefits as set forth in Section 8(b) other than the
Pro-Rated Bonus Payment and the Partial Equity Acceleration, subject to the same terms, conditions and limitations
described therein; (ii) in lieu of the Pro-Rated Bonus Payment, the Executive will be eligible to receive a lump sum payment
equal to 100% of the Executive’s Target Bonus for the year in which the Qualifying Termination occurs without regard to
whether the performance goals applicable to such Target Bonus had been established or satisfied at the date of termination of
employment, payable in a lump sum on the Payment Date (but in no event more than seventy-five (75) days following the
termination date); and (iii) in lieu of the Partial Equity Acceleration, all of the Executive’s then-unvested equity awards shall
vest and become fully exercisable or non-forfeitable effective as of the termination date, with the same treatment applying to
any then-unvested equity awards granted by the Company to the Executive under any successor equity incentive plan
(provided, however, that the accelerated vesting of any equity awards the vesting of which is subject to
5
performance-based vesting conditions (and excluding, for the avoidance of doubt, performance-based awards that are subject
to time-based vesting following the achievement of the applicable performance metric) shall be governed by the individual
award agreement and the equity plan under which such awards were granted to the extent such award agreement specifically
provides that such awards will not be eligible for accelerated vesting under this Agreement) (provided that, with respect to
any equity award that is a restricted stock unit, in no event shall such restricted stock unit be settled later than the March 15
of the calendar year following the year in which the termination date occurs) (collectively, the “Change in Control
Severance Benefits”).
(d)
Release. As a condition of the Executive’s receipt of the Earned but Unpaid Bonus, the Severance
Benefits or the Change in Control Severance Benefits, as applicable, the Executive or his estate, as applicable, must execute
and deliver to the Company a severance and release of claims agreement in substantially the form attached hereto as Exhibit
B (the “Severance Agreement”), which Severance Agreement must become irrevocable within sixty (60) days following the
date of the Executive’s termination of employment (or such shorter period as may be directed by the Company). Subject to
any earlier payment deadline set forth in Section 8(b) or 8(c) above, the Earned but Unpaid Bonus, the Severance Benefits or
the Change in Control Severance Benefits, as applicable, will be paid or commence to be paid in the first regular payroll
beginning after the Severance Agreement becomes effective, provided that if the foregoing sixty (60) day period would end
in a calendar year subsequent to the year in which the Executive’s employment ends, the Earned but Unpaid Bonus, the
Severance Benefits or Change in Control Severance Benefits, as applicable, will not be paid or begin to be paid before the
first payroll of the subsequent calendar year (the date the Earned but Unpaid Bonus, the Severance Benefits or Change in
Control Severance Benefits, as applicable, are paid or commence pursuant to this sentence, the “Payment Date”). The
Executive must continue to comply with the Restrictive Covenants Agreement in order to be eligible to continue receiving
the Severance Benefits or Change in Control Severance Benefits, as applicable.
(e)
Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean:
(i) an exclusive license of or the sale, the lease or other disposal of all or substantially all of the assets of the Company or
Parent; (ii) a sale or other disposal (for the avoidance of doubt, the term disposal shall not include a pledge) in any
transaction or series of transactions to which the Company is a party of 50% or more of the voting power of the Company
(other than a sale or other disposal to the Company, Parent or any of their respective subsidiaries), other than any transaction
or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or
indebtedness of the Company is cancelled or converted, or a combination thereof; (iii) a sale or other disposal (for the
avoidance of doubt, the term disposal shall not include a pledge) in any transaction or series of transactions to which Parent
is a party of 50% or more of the voting power of Parent (other than a sale or other disposal to the Company, Parent or any of
their respective subsidiaries), other than any transaction or series of transactions principally for bona fide equity financing
purposes in which cash is received by Parent or indebtedness of Parent is cancelled or converted, or a combination thereof;
(iv) a merger or consolidation of the Company or Parent with or into any third party, other than any merger or consolidation
in which the shares of the Company or Parent, respectively, immediately preceding such merger or consolidation continue to
represent a majority of the voting power of the surviving entity immediately after the closing of such merger or
consolidation; (v) during any period of two (2) consecutive years, individuals who, at the beginning of such period,
constitute the Parent Board together with any new director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv)) whose election by the
Parent Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the two (2) year period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof; and (vi) a
liquidation, winding up or any other form of dissolution of the Company or Parent. For
6
the avoidance of doubt, any one or more of the above events with respect to Parent may be effected pursuant to (A) a
compromise or arrangement sanctioned by the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of
Ireland or (B) otherwise under Part 9 of the Companies Act 2014 of the Republic of Ireland or (C) otherwise under the
Companies Act 2014 of the Republic of Ireland.
9.
Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth
in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the
following provisions shall apply:
(a)
The Company shall not be obligated to provide to the Executive any portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the minimum
extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the
Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1,
Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Amount.”
(b)
Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation
Payments shall be made if (1) the net amount of such Contingent Compensation Payments, as so reduced by the Eliminated
Amount (computed without regard to this sentence) (but after subtracting the amount of any taxes that would be incurred by
the Executive on such reduced Contingent Compensation Payments (including state and federal income taxes on the reduced
Contingent Compensation Payments and any withholding taxes)) is less than (2) the net amount of such Contingent
Compensation Payments without such reduction (but after subtracting the amount of any taxes that would be incurred by the
Executive on the Contingent Compensation Payments if the Eliminated Payments (determined without regard to this
sentence) were paid to the Executive (including state and federal income taxes on the Contingent Compensation Payments,
the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in
excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes)). The
override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a
“Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the
receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax rate provided by law.
(c)
For purposes of this Section 9 the following terms shall have the following respective meanings:
(i)
“Change in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii)
“Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a
“disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.
(d)
The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined
by the Company in a manner that results in the maximum economic benefit to the
7
Executive on an after-tax basis (considering maximum statutory tax rates). Except to the extent that an alternative reduction
order would result in a greater economic benefit to the Executive on an after-tax basis, the Parties intend that such reduction
be determined by the 280G Firm (as defined below) by determining the “Contingent Compensation Payment Ratio” (as
defined below) for each Contingent Compensation Payment and then reducing the Contingent Compensation Payments in
order beginning with the Contingent Compensation Payment with the highest Contingent Compensation Payment Ratio;
provided that, notwithstanding the foregoing, any such reduction shall be undertaken in a manner that complies with and
does not result in the imposition of additional taxes on the Executive under Section 409A of the Code. For Contingent
Compensation Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment
shall be reduced based on the time of payment of such Contingent Compensation Payments with amounts having later
payment dates being reduced first. For Contingent Compensation Payments with the same Contingent Compensation
Payment Ratio and the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis
(but not below zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment
Ratio. The term “Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the value of the
applicable Contingent Compensation Payment for purposes of Section 4999(a) of the Code, and the denominator of which is
the actual amount received by the Executive in respect of the applicable Contingent Compensation Payment. For example, in
the case of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the
payment is made or the payment vests is accelerated, the denominator shall be determined by reference to the fair market
value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of
accelerated payments set forth in Treasury Regulation Section 1.280G-1 Q/A-24(b) or (c).
(e)
All determinations regarding the application of this Section 9 shall be made by an accounting firm,
law firm or consulting group with nationally recognized standing and substantial expertise and experience in performing
calculations regarding the applicability of Section 280G of the Code and the excise tax retained by the Company prior to the
date of the applicable change in control and reasonably acceptable to the Executive (the “280G Firm”). The 280G Firm will
be directed to submit its determination and detailed supporting calculations to both the Executive and the Company within
thirty (30) days after notification from either the Company or the Executive that the Executive may receive payments which
may be Contingent Compensation Payments (or such earlier or later date as the Company and Executive may agree). The
Executive and the Company will each provide the 280G Firm access to and copies of any books, records, and documents in
their possession as may be reasonably requested by the 280G Firm, and otherwise cooperate with the 280G Firm in
connection with the preparation and issuance of the determinations and calculations contemplated by this letter agreement.
The fees and expenses of the 280G Firm for its services in connection with the determinations and calculations contemplated
by this Section 9 will be borne by the Company. The costs of obtaining such determination and all related fees and expenses
(including related fees and expenses incurred in any later audit) shall be borne by the Company.
(f)
The provisions of this Section 9 are intended to apply to any and all payments or benefits available
to the Executive under this Agreement or any other agreement or plan under which the Executive receives Contingent
Compensation Payments.
10.
Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any
employment contracts, restrictive covenants or other restrictions that prevent the Executive from entering into employment
with, or carrying out the Executive’s responsibilities for, the Company, Parent or their affiliates, or which are in any way
inconsistent with any of the terms of this Agreement.
11.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for
next-business day delivery via a reputable nationwide overnight
8
courier service, or immediately upon hand delivery, in each case addressed to the Company at its principal executive offices
and to the Executive at his or her most recent address set forth in the Company’s personnel records. Either Party may change
the address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in
this Section 11.
12.
Arbitration. Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action,
in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be
resolved solely and exclusively by final and binding arbitration held in San Diego, California, before a single, mutually-
agreed neutral arbitrator, through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) under the then existing
JAMS arbitration rules. The rules may be found online at www.jamsadr.com or upon written request to the Company. This
paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each other relating to
Executive’s employment; provided that Executive will retain the right to file administrative charges with or seek relief
through any government agency of competent jurisdiction, and to participate in any government investigation, including but
not limited to (a) claims for workers’ compensation, state disability insurance or unemployment insurance; (b)
administrative claims brought before any state or federal governmental authority (provided that any appeal from an award or
from denial of an award of wages and/or waiting time penalties shall be arbitrated pursuant to the terms of this Section 12);
and (c) claims for administrative relief from the United States Equal Employment Opportunity Commission (or any similar
agency in any applicable jurisdiction) (provided, that, except as otherwise provided by law, Executive will not be entitled to
obtain any monetary relief through such agencies other than workers’ compensation benefits or unemployment insurance
benefits). Further, nothing in this Section 12 is intended to prevent either party from obtaining injunctive relief in court to
prevent irreparable harm pending the conclusion of any such arbitration, including without limitation injunctive relief, in any
court of competent jurisdiction. Seeking any such relief shall not be deemed to be a waiver of such party’s right to compel
arbitration. In resolving any matter submitted to arbitration, the arbitrator will strictly follow the substantive law applicable
to the dispute, claim or controversy and the arbitrator’s authority and jurisdiction will be limited to determining the dispute
in conformity with applicable law as to liability, damages and remedies, to the same extent as if the dispute was determined
by a court without a jury. The arbitrator will issue a written decision that contains the essential findings of fact and
conclusions of law on which the decision is based, which may be entered as a judgment in any court of competent
jurisdiction. The Company shall pay all costs of arbitration, including without limitation, arbitration administrative fees,
arbitrator compensation and expenses, and costs of any witnesses called by the arbitrator. Unless otherwise ordered by the
arbitrator under applicable law, each party shall each bear its or his or her own expenses, such as attorneys’ fees, costs and
disbursements; provided, however, the Company and Executive agree that, to the extent permitted by law, the arbitrator may,
in his or her discretion, award reasonable attorneys’ fees to the prevailing party. Each party warrants that it has had the
opportunity to be represented by counsel in the negotiation and execution of this Agreement, including the attorneys’ fees
provision herein.
13.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the State of California (without reference to the conflict of laws provisions thereof). Any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the State
of California (or, if appropriate, a federal court located within San Diego County, California), and the Company and the
Executive each consents to the jurisdiction of such a court. The Company and the Executive each hereby irrevocably waives
any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this
Agreement.
14.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the
9
obligations of the Executive are personal and shall not be assigned by the Executive. Notwithstanding the foregoing, in the
event of the Executive’s death, his rights to any payments or benefits hereunder to which he is or becomes entitled to at the
time of his death may be assigned or transferred by the laws of descent and distribution and any such payments or benefits
will be provided to the Executive’s beneficiaries or estate, as applicable.
15.
Effect of Section 409A of the Code.
(a)
Six Month Delay. If and to the extent any portion of any payment, compensation or other benefit
provided to the Executive in connection with the Executive’s employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified
employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its
procedures, by which determination Executive hereby agrees that the Executive is bound, such portion of the payment,
compensation or other benefit shall not be paid before the earlier of (i) the expiration of the six (6) month period measured
from the date of the Executive’s “separation from service” (as determined under Section 409A of the Code) and (ii) the tenth
day following the date of the Executive’s death following such separation from service (the “New Payment Date”). The
aggregate of any payments that otherwise would have been paid to the Executive during the period between the date of
separation from service and the New Payment Date shall be paid to the Executive in a lump sum in the first payroll period
beginning after such New Payment Date, and any remaining payments will be paid on their original schedule.
(b)
General 409A Principles. For purposes of this Agreement, a termination of employment will mean a
“separation from service” as defined in Section 409A of the Code, each amount to be paid or benefit to be provided will be
construed as a separate identified payment for purposes of Section 409A of the Code, and any payments that are due within
the “short term deferral period” as defined in Section 409A of the Code or are paid in a manner covered by Treas. Reg.
Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless applicable law requires otherwise. Neither
the Company nor the Executive will have the right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A of the Code. This Agreement is intended to comply
with the provisions of Section 409A of the Code and this Agreement shall, to the extent practicable, be construed in
accordance therewith. Terms defined in this Agreement will have the meanings given such terms under Section 409A of the
Code if and to the extent required to comply with Section 409A of the Code. In any event, the Company makes no
representations or warranty and will have no liability to the Executive or any other person if any provisions of or payments
under this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but not to
satisfy the conditions of that section.
(c)
Reimbursements. To the extent that any payments or reimbursements provided to the Executive
under this Agreement are deemed to constitute compensation to the Executive to which Treasury Regulation Section
1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed reasonably promptly, but not later than December
31 of the year following the year in which the expense was incurred. The amount of any such payments eligible for
reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any
other taxable year, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to
liquidation or exchange for any other benefit.
16.
Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully
discuss and review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive
further states and represents that the Executive has carefully read this
10
Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and
signs the Executive’s name of the Executive’s own free act.
17.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by
the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of
any right on any other occasion.
18.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
19.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
20.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any
of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope,
whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it
to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent
of the Parties.
21.
Entire Agreement. This Agreement, together with the Restrictive Covenants Agreement, constitutes the
entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter hereof and thereof, including, without limitation, the Prior Agreement.
22.
Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and
withholdings.
23.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the day and year set forth
above.
NABRIVA THERAPEUTICS US, INC.
/s/ Rob Crotty
By:
Name:Rob Crotty
Title: General Counsel
Date: March 10, 2021
EXECUTIVE
/s/ Theodore R. Schroeder
Name: Theodore R. Schroeder
Date: March 10, 2021
[SIGNATURE PAGE TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT]
EXHIBIT A
RESTRICTIVE COVENANTS AGREEMENT
[Attached]
EXHIBIT B
SEPARATION AND RELEASE OF CLAIMS AGREEMENT1
This SEPARATION AND RELEASE OF CLAIMS AGREEMENT (the “Agreement”) is made as of the Agreement
Effective Date (as defined below) between Nabriva Therapeutics US, Inc. (the “Company”) and Theodore R. Schroeder
(“Executive”) (together, the “Parties”).
RECITALS
WHEREAS, the Company and Executive are parties to the Amended and Restated Employment Agreement dated
as of March 10, 2021 (the “Employment Agreement”);
WHEREAS, the Parties are ending their employment relationship and wish to establish mutually agreeable terms
for Executive’s orderly transition and separation from the Company effective on the Separation Date (as defined below); and
WHEREAS, the Parties agree that the payments, benefits and rights set forth in this Agreement shall be the
exclusive payments, benefits and rights due Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Separation Date. Executive’s effective date of separation from employment with the Company and, as
may be applicable, any and all of its parents, affiliates and subsidiaries, including, without limitation, Nabriva Therapeutics
GMBH and Nabriva Therapeutics plc (“Parent”) (together, the “Affiliates”), will be [__________] (the “Separation Date”).
Executive hereby resigns, as of the Separation Date, from any and all of his or her positions as a member of the board of
directors and/or as an officer and employee of the Company and each of its Affiliates, and Executive further agrees to
execute and deliver any documents reasonably necessary to effectuate such resignations, provided that nothing in any such
document is inconsistent with any terms set forth in this Agreement. As of the Separation Date, all salary payments from the
Company will cease and any benefits Executive had as of such date under Company-provided benefit plans, programs, or
practices will terminate, except as required by applicable law or as otherwise specifically set forth in this Agreement.
2.
Severance Benefits. In return for Executive’s timely signing and not revoking this Agreement as set forth in
Section 13 below, and subject to Executive’s compliance with all terms hereof, the Company will provide Executive with
[INSERT PER EMPLOYMENT AGREEMENT, AS MAY BE APPLICABLE] (the “Severance Benefits”). Other than the
Severance Benefits, Executive will not be eligible for, nor shall he or she have a right to receive, any payments or benefits
from the Company or any of its Affiliates following the Separation Date, other than reimbursement for any outstanding
business expenses in accordance with Company policy.
1 NOTE: The Parties agree that the Company may revise this release agreement to reflect changes in law, additional
statutes or claims, benefits, or your circumstances, so that the Company receives the benefit of the most complete release
of claims that is legally permissible and may also change the timing, if required to obtain such release. This footnote
and any other footnotes are part of the form of release agreement and are to be removed only when the Company
finalizes the Separation and Release of Claims Agreement for execution. If the release is as a result of Executive’s
death, the Company will revise and provide for a comparable release by the Executive’s estate or beneficiaries.
1
3.
Release of Claims. In exchange for the consideration set forth in this Agreement, which Executive
acknowledges he or she would not otherwise be entitled to receive, Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its Affiliates (including, without limitation, the Parent),
subsidiaries, parent companies, predecessors, and successors, and all of its and their respective past and present officers,
directors, stockholders, investors, partners, members, managers, employees, agents, representatives, plan administrators,
attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”)
from any and all claims, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts,
reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys’ fees and costs), of every kind and nature that Executive ever had or now has against any or all
of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or
relating to Executive’s employment with and/or separation from the Company, including, but not limited to, all claims under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information
Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the
Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et
seq., the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the False Claims Act, 31
U.S.C. § 3729 et seq., 38 U.S.C. § 4301 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., all as amended; all claims arising out of the Pennsylvania Human Relations Act, 43 Pa. Stat. § 951 et
seq., the Pennsylvania Equal Pay Law, 43 Pa. Stat. § 336.1 et seq., and the Pennsylvania Whistleblower Law, 43 Pa.
Stat. § 1421 et seq., all as amended; all claims arising out of the California Fair Employment and Housing Act, Cal. Gov’t.
Code § 12900 et seq., Cal. Labor Code § 201 et seq. (California payment of wages law), the California Equal Pay Act, Cal.
Lab. Code § 1197.5 et seq., the California Family Rights Act, Cal. Gov’t. Code § 12945.2 and § 19702.3, the Cal-WARN
Act, Cal. Lab. Code §§ 1400-1408, Cal. Lab. Code § 233 (California’s kin care law), Cal. Lab. Code § 230.8 (California
leave for school activities law), Cal. Lab. Code § 245.5 (California paid sick leave law), Cal. Lab. Code §§ 230 and 230.1
(California domestic violence leave law), Cal. Mil. And Vet. Code § 395.10 (California military family leave law), Cal. Code
Regs. tit. 2, §§ 11035-11051 (California’s pregnancy leave law), California Unruh Civil Rights Act, Cal. Civ. Code § 51 et
seq., and Cal. Lab. Code §§ 98.6 and 1102.5 (California whistleblower protection laws), all as amended; all common law
claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation,
fraud, wrongful discharge, and breach of contract (including, without limitation, all claims arising out of or related to the
Employment Agreement); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state
and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of
Executive’s employment with and/or separation from the Company and/or its Affiliates (including a claim for retaliation)
under any common law theory or any federal, state or local statute or ordinance not expressly referenced above.
Notwithstanding the foregoing, nothing in this release of claims prevents Executive from filing a charge with,
cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity
Commission or a state fair employment practices agency (except that Executive acknowledges that he may not recover any
monetary benefits in connection with any such charge, investigation, or proceeding, and Executive further waives any rights
or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation
or proceeding). Further, nothing herein shall prevent Executive from bringing claims to enforce this Agreement, or release
(i) any rights Executive may have under the Company’s certificate of incorporation, by-laws, insurance and/or any
indemnification agreement between him or her and the Company (and/or
2
otherwise under law) for indemnification and/or defense as an employee, officer or director of the Company for his or her
service to the Company (recognizing that such indemnification and/or defense is not guaranteed by this Agreement and shall
be governed by the instrument or law, if any, providing for such indemnification and/or defense), (ii) any rights Executive
may have to vested or earned compensation or benefits, including pension or 401(k) benefits or interests under any ERISA-
Covered benefit plan (excluding severance) provided by the Company, (iii) Executive’s right to communicate or cooperate
with any government agency, (iv) claims for unemployment compensation or any state disability insurance benefits pursuant
to the terms of applicable state law; (v) claims for workers’ compensation insurance benefits under the terms of any worker’s
compensation insurance policy or fund of the Company; and (vi) any rights or claims that cannot be waived by law,
including claims for unemployment benefits.
4.
Section 1542 Waiver. Executive understands and agree that the claims released in Section 3 above include
not only claims presently known to Executive, but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope
of the released claims as described in Section 3. Executive understands that he may hereafter discover facts different from
what he now believes to be true, which if known, could have materially affected this Agreement, but Executive nevertheless
waives any claims or rights based on different or additional facts. Executive knowingly and voluntarily waive any and all
rights or benefits that he may now have, or in the future may have, under the terms of Section 1542 of the Civil Code of the
State of California, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED
PARTY.”
5.
Continuing Obligations. Executive acknowledges and reaffirms his or her obligation, to the extent permitted
by law and except as otherwise permitted by Section 9 below, to keep confidential and not to use or disclose any and all non-
public information concerning the Company and/or its Affiliates that Executive acquired during the course of his or her
employment with the Company and/or its Affiliates, including, but not limited to, any non-public information concerning the
Company’s and/or its Affiliates’ business affairs, business prospects, and financial condition. Executive further
acknowledges and reaffirms his or her obligations set forth in the Proprietary Rights, Non-Disclosure, Inventions, and Non-
Solicitation Agreement or similar agreement that he previously executed for the benefit of the Company (the “Restrictive
Covenants Agreement”), which remain in full force and effect and which survive his or her separation from employment
with the Company.
6.
Non-Disparagement. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, he or she will not, in public or private, make any disparaging, derogatory or
defamatory statements to any person or entity, including, but not limited to, any media outlet, industry group, financial
institution or current or former employee, board member, consultant, client or customer of the Company, regarding the
Company or its Affiliates (including, without limitation, Parent), and all of its and their respective officers, directors or
employees or regarding the Company’s business affairs, business prospects, or financial condition. The Company agrees
that, to the extent permitted by law, none of their respective officers or directors will, in public or private, make any
disparaging, derogatory or defamatory statements to any person or entity, including, but not limited to, any media outlet,
industry group, financial institution or current or former employee, board member, consultant, client or customer of the
Company, regarding Executive. Notwithstanding the foregoing, nothing herein shall be construed as preventing any Party
from making truthful disclosures in any litigation or arbitration.
3
7.
Return of Company Property. Executive confirms that he or she has returned to the Company or, with the
written permission of the Company, destroyed, all keys, files, records (and copies thereof), equipment (including, but not
limited to, computer hardware, software and printers, flash drives and other storage devices, wireless handheld devices,
cellular phones, tablets, etc.), Company identification and any other tangible or intangible Company-owned property in his
or her possession or control and, other than with the written permission of the Company, has left intact, and has otherwise
not destroyed, deleted or made inaccessible to the Company, all electronic Company documents, including but not limited to
those that he developed or helped to develop during his or her employment or service with the Company. Executive further
confirms that, to the extent requested by the Company, he has canceled all accounts for his or her benefit, if any, in the
Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or wireless data
accounts and computer accounts.
8.
Confidentiality. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, the contents of the negotiations and discussions resulting in this Agreement shall be
maintained as confidential by Executive and his or her agents and representatives and shall not be disclosed except as
otherwise agreed to in writing by the Company; provided, however, that nothing herein shall be construed as preventing
Executive from making truthful disclosures in any litigation or arbitration or from having confidential conversations with his
or her agents and representatives and family members on the condition that any individuals so informed must hold the above
information in strict confidence.
9.
Scope of Disclosure Restrictions. Nothing in this Agreement or elsewhere prohibits Executive from
communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing
information to government agencies, filing a complaint with government agencies, or participating in government agency
investigations or proceedings. Executive is not required to notify the Company of any such communications; provided,
however, that nothing herein authorizes the disclosure of information Executive obtained through a communication that was
subject to the attorney-client privilege. Further, notwithstanding Executive’s confidentiality and nondisclosure obligations,
Executive is hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally
or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in
confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for
the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an
employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under
seal; and (B) does not disclose the trade secret, except pursuant to court order.”
10.
Cooperation. Executive agrees that, to the extent permitted by law, he or she shall cooperate fully with the
Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are
currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the
Company against any third party, whether before a state or federal court, any state or federal government agency, or a
mediator or arbitrator, that relate in any manner to Executive’s conduct or duties at the Company or that are based on facts
about which Executive obtained personal knowledge while employed at or providing services to the Company. Executive’s
full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with
the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the
Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other
proceeding and to act as a witness when requested by the Company. Any reasonable out-of-pocket expenses incurred by
Employee associated with such
4
cooperation will be paid for or reimbursed by the Company. Executive further agrees that, to the extent permitted by law, he
will notify the Company promptly in the event that he is served with a subpoena (other than a subpoena issued by a
government agency), or in the event that he is asked to provide a third party (other than a government agency) with
information concerning any actual or potential complaint or claim against the Company.
11.
Business Expenses and Final Compensation. Executive acknowledges that he has been reimbursed by the
Company for all business expenses incurred in conjunction with the performance of his or her employment and that no other
reimbursements are owed to him or her. Executive acknowledges that he has received all compensation due to him or her
from the Company, including, but not limited to, all wages, bonuses and accrued, unused vacation time, and that he or she is
not eligible or entitled to receive any additional payments or consideration from the Company beyond that provided for in
Section 2 of this Agreement.
12.
Modified Section 280G Cutback. Section 9 of the Employment Agreement is hereby incorporated by
reference and shall continue to apply to Executive as if fully set forth herein.
13.
2Time for Consideration and Revocation. Executive acknowledges that he or she was initially presented
with this Agreement on [________] (the “Receipt Date”). Executive understands that this Agreement shall be of no force or
effect, and that he or she shall not be eligible for the consideration described herein, unless he or she signs and returns this
Agreement no later than the [twenty-second (22nd) day] [forty-sixth (46th) day] after the Receipt Date and does not revoke
his or her acceptance in the subsequent seven (7) day period (the day immediately following expiration of such revocation
period, the “Agreement Effective Date”). Executive acknowledges that he or she will not be entitled to the Severance
Benefits unless the Agreement Effective Date occurs within sixty (60) days following the Separation Date (or such shorter
period as may be directed by the Company at the time of separation).
14.
Acknowledgments. Executive acknowledges that he or she has been given at least [twenty-one (21)][forty-
five (45)] days to consider this Agreement, and that the Company is hereby advising him or her to consult with an attorney
of his or her own choosing prior to signing this Agreement. Executive further acknowledges and agrees that any changes
made to this Agreement following his or her initial receipt of this Agreement, whether material or immaterial, shall not
restart or affect in any manner the [twenty-one (21)][forty-five (45)] day consideration period. Executive understands that
he or she may revoke this Agreement for a period of seven (7) days after he or she signs it by notifying the Company in
writing, and the Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.
Executive understands and agrees that by entering into this Agreement he or she will be waiving any and all rights or claims
he or she might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, and that he or she has received or will receive consideration beyond that to which he was previously entitled.
15.
Voluntary Assent. Executive states and represents that Executive has had an opportunity to fully discuss and
review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive further states and
represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
16.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid,
2 NOTE: Sections 13 and 14 to be included if Executive is age 40 or older on the Separation Date.
5
one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or
immediately upon hand delivery, in each case addressed to the Company at its principal executive offices and to the
Executive at his or her most recent address set forth in the Company’s personnel records. Either Party may change the
address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this
Section 16.
17.
Arbitration. The parties agree that any and all disputes, claims and causes of action, in law or equity, arising
from or relating to this Agreement, the Employment Agreement or their enforcement, performance, breach, or interpretation,
or the Executive’s termination of employment or service, shall be subject to arbitration in accordance with the provisions of
Section 12 of the Employment Agreement, which is incorporated herein by reference.
18.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the State of California (without reference to the conflict of laws provisions thereof). Any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the State
of California (or, if appropriate, a federal court located within San Diego County, California), and the Parties each consent to
the jurisdiction of such a court. The Parties each hereby irrevocably waives any right to a trial by jury in any action, suit or
other legal proceeding arising under or relating to any provision of this Agreement.
19.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
20.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by each Party. No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other
occasion.
21.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
22.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
23.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any
of the provisions contained in
6
this Agreement to be unenforceable because the provision is excessively broad in scope, whether as to duration, activity,
geographic application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so
as to be enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.
24.
Entire Agreement. This Agreement and the Restrictive Covenant Agreement contain and constitute the entire
understanding and agreement between the Parties hereto with respect to Executive’s separation from the Company,
severance benefits and the settlement of claims against the Company, and cancels all previous oral and written negotiations,
agreements, commitments and writings in connection therewith, including without limitation, the Employment Agreement;
provided, however, that nothing in this Section shall modify, cancel or supersede Executive’s obligations set forth in
Section 5 above or under the Restrictive Covenants Agreement; provided, further, that notwithstanding this Section 24,
Sections 9, 12 and 15 of the Employment Agreement shall survive and shall continue to be binding on the Parties and to
govern the payment of the Severance Benefits.
25.
Tax Acknowledgement. In connection with the Severance Benefits provided to Executive pursuant to this
Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and
Executive shall be responsible for all applicable taxes owed by him or her with respect to such Severance Benefits under
applicable law. Executive acknowledges that he is not relying upon the advice or representation of the Company with
respect to the tax treatment of any of the Severance Benefits.
26.
Section 409A. Section 15 of the Employment Agreement is hereby incorporated by reference and shall
apply to this Agreement as if set forth herein in full.
27.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date(s) written below.
NABRIVA THERAPEUTICS US, INC.
By:
Name:
Title:
Date:
EXECUTIVE
I hereby agree to the terms and conditions set forth above. I have been given at least [twenty-one (21)][forty-five
(45)] days to consider this Agreement and I have chosen to execute this on the date below. I intend that this
Agreement will become a binding agreement if I do not revoke my acceptance within seven (7) days.
Name: Theodore R. Schroeder
Date:
[SIGNATURE PAGE TO SEPARATION AND RELEASE OF CLAIMS AGREEMENT]
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made as of
March 10, 2021 by and between Nabriva Therapeutics US, Inc. (the “Company”), and Steven Gelone (the “Executive”)
(together, the “Parties”).
Exhibit 10.31
RECITALS
WHEREAS, the Company and the Executive are parties to that certain Second Amended and Restated Employment
Agreement effective as of July 24, 2018 (the “Prior Agreement”); and
WHEREAS, the Company desires to continue to employ the Executive as its President and Chief Operating Officer
and as President and Chief Operating Officer of its group of companies, and the Executive desires to continue employment
with the Company and its group of companies, and to amend and restate the Prior Agreement, on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the
Parties herein contained, the Parties hereto agree as follows:
1.
Agreement. This Agreement shall be effective as of the date first set forth above (the “Effective
Date”). Following the Effective Date, the Executive shall continue to be an employee of the Company until such
employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).
2.
Position. During the Term of Employment, the Executive shall serve as the President and Chief Operating
Officer of the Company and Nabriva Therapeutics plc (“Parent”), working out of the Company’s office in King of Prussia,
Pennsylvania, and travelling as reasonably required by the Executive’s job duties. The Executive shall be appointed to the
Board of Directors of the Company (and such other subsidiaries as the Board of Directors of Parent (the “Parent Board”)
may designate) and to the Parent Board. The Executive shall not receive any additional compensation for serving as a
director of the Company, Parent or any other subsidiary of Parent. The Executive must resign from any office held in the
Company, Parent and/or any other subsidiary of Parent if requested in writing to do so by the Company (or, with respect to
the Executive’s position as a member of the Parent Board, by the Parent Board) on the termination of his employment. If the
Executive does not do so on being requested to do so, the Company is hereby irrevocably authorized to appoint a person in
his name to sign and deliver any required letter(s) of resignation to the Company and/or Parent, as applicable.
3.
Scope of Employment. During the Term of Employment, the Executive shall be responsible for the
performance of those duties consistent with the Executive’s position as President and Chief Operating Officer, and shall
report to the Chief Executive Officer of the Company. In the event of the Chief Executive Officer’s unavailability or
incapacity, the Executive shall report to the Parent Board, and shall perform and discharge faithfully, diligently, and to the
best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote substantially
all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company, Parent, and
their affiliates. Membership on boards of directors of any additional companies (other than those companies affiliated with
the Company and Parent) will be permitted only with the express approval of the Parent Board. Notwithstanding the
previous sentence, the Executive may engage in community and charitable activities or participate in industry associations
and serve on the boards of community, charitable or industry organizations, with the approval of the Chief Executive Officer.
The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and
Parent and any changes therein that may be adopted from time to time by the Company and/or Parent.
1
4.
Compensation. As full compensation for all services rendered by the Executive to the Company and Parent,
and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:
(a)
Base Salary. The Executive shall receive a base salary at the annualized rate of $509,888 (the “Base
Salary”), paid in equal bi-monthly installments in accordance with the Company’s regularly established payroll procedure.
Such Base Salary shall be reviewed by the compensation committee of the Parent Board or the full Parent Board in the first
quarter of each fiscal year.
(b)
Annual Bonus. Following the end of each fiscal year and subject to the approval of the Parent
Board, the Executive may be eligible to receive an annual retention and performance bonus based on the Executive’s
performance and the performance of the Company and Parent during the applicable fiscal year, as determined by the Parent
Board in its sole discretion. The Executive’s target annual bonus for each fiscal year shall be 45% of the Executive’s then
current Base Salary (the “Target Bonus”). All annual bonuses, if any, will be payable no later than March 15 of the year
following the year in which they are earned. The Executive must be employed on the date of payment in order to be eligible
for any annual bonus, except as specifically set forth below.
(c)
Equity Award. The Executive will be eligible to receive additional equity awards, if any, at such
times and on such terms and conditions as the Parent Board shall, in its sole discretion, determine.
(d)
Vacation or Paid Time Off. The Executive shall be eligible for paid vacation or paid time off and
holidays in accordance with the Company’s vacation or paid time off and holiday policies for senior executive employees.
(e)
Benefits. The Executive may participate in any and all benefit programs that the Company
establishes and makes available to its senior executive employees from time to time, provided that the Executive is eligible
under (and subject to all provisions of) the plan documents governing those programs. Benefits are subject to change at any
time in the Company’s sole discretion.
5.
Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable business and
travel expenses incurred by the Executive on the Company’s behalf during the course of the Executive’s employment, upon
the presentation by the Executive of documentation itemizing such expenditures and attaching all supporting vouchers and
receipts. Reimbursement will be made no later than thirty (30) calendar days after the expense is substantiated (which must
occur within thirty (30) calendar days after the expense is incurred).
6.
Restrictive Covenants Agreement. The Executive has previously executed the Company’s standard form of
Proprietary Rights, Non-Disclosure, Inventions, and Non-Solicitation Agreement or similar agreement, a copy of which is
attached hereto as Exhibit A (the “Restrictive Covenants Agreement”).
7.
Employment Termination. This Agreement and the employment of the Executive shall terminate upon the
occurrence of any of the following:
(a)
Upon the death or “Disability” of the Executive. As used in this Agreement, the term “Disability”
shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the
Executive’s position for a period of more than any three (3) consecutive months
2
or for periods aggregating more than twenty-six (26) weeks. The Company shall determine in good faith and in its sole
discretion whether the Executive is unable to perform the services provided for herein.
(b)
At the election of the Company, with or without “Cause” (as defined below), immediately upon
written notice by the Company to the Executive (subject to the cure period requirements set forth below). As used in this
Agreement, “Cause” shall mean a finding by the Parent Board that the Executive:
(i)
repeatedly failed or refused to perform (other than by reason of physical or mental illness or
disability for a period of less than three (3) consecutive months or in aggregate less than twenty-six (26) weeks) the
Executive’s assigned duties under this Agreement or was negligent in the performance of these duties; provided that
it is understood that this clause (i) shall not permit the Company to terminate the Executive’s employment for Cause
solely because of (A) the Executive’s failure to meet specified performance objectives or achieve a specific result or
outcome, or (B) the Company’s dissatisfaction with the quality of services provided by the Executive in the good
faith performance of his or her duties to the Company;
(ii)
materially breached this Agreement;
(iii)
materially breached the Executive’s Restrictive Covenants Agreement, or any similar
written agreement between the Executive and the Company;
(iv)
engaged in willful misconduct, fraud, embezzlement, harassment, discrimination, assault or
other acts of violence in connection with his employment with the Company;
(v)
engaged in any conduct that is materially harmful to the business, interests or reputation of
the Company, unless the Executive had a reasonable and good faith belief that such conduct was in the best interest
of the Company; or
(vi)
was convicted of, or pleaded guilty or nolo contendere to a crime involving moral turpitude
or any felony (other than a vehicular offense not committed in the course of Executive’s duties to the Company).
To the extent any of the above grounds, other than the grounds set forth in Section 7(b)(iv) and 7(b)(vi), is
capable of being cured, the Company shall provide Executive with written notice of the grounds for the Executive’s
termination for Cause, and thirty (30) days within which to cure such grounds.
(c)
At the election of the Executive, with or without “Good Reason” (as defined below), immediately
upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in
the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean:
(i)
the Company’s failure to pay or provide in a timely manner any material amounts owed to
Executive in accordance with this Agreement;
(ii)
a material diminution in the Executive’s base compensation, unless such a reduction is
imposed across-the-board to senior management of the Company;
3
(iii)
a material diminution in the nature or scope of Executive’s duties, responsibilities, or
authority;
(iv)
the Company requiring Executive (without Executive’s consent) to be based at any place
outside a fifty (50)-mile radius of his then-current place of employment with the Company prior to any such
relocation, except for reasonably required travel on the Company’s business; or
(v)
any material breach of this Agreement by the Company not otherwise covered by this
paragraph;
provided, however, that in each case, the Company shall have a period of not less than thirty (30) days to cure any act
constituting Good Reason following the Executive’s delivery to the Company of written notice within sixty (60) days of the
action or omission constituting Good Reason. Any resignation by the Executive for Good Reason shall occur within six (6)
months following the expiration of such cure period.
8.
Effect of Termination.
(a)
All Terminations Other Than by the Company Without Cause or by the Executive With Good
Reason. If the Executive’s employment is terminated under any circumstances other than a Qualifying Termination (as
defined below) (including a voluntary termination by the Executive without Good Reason pursuant to Section 7(c), a
termination by the Company for Cause pursuant to Section 7(b) or due to the Executive’s death or Disability pursuant to
Section 7(a)), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be
entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such
termination, accrued but unused paid time off through and including the effective date of such termination, to be paid in
accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly
scheduled pay period (or such earlier date as is required by applicable law), (ii) unreimbursed business expenses for which
expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any
amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the
Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the
Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued
Obligations”). The Executive shall not be entitled to any other compensation or consideration that the Executive may have
received had the Executive’s Term of Employment not ceased, except that if Executive’s employment terminated because of
his death or Disability, he or his estate, as the case may be, shall, subject to Section 8(d) hereof, be paid on the later of the
Payment Date (as defined below) and the date on which annual bonuses are paid to all other employees, any earned but
unpaid annual bonus from any previously completed calendar year notwithstanding the requirement that the individual be
employed on the payment date of such annual bonus (such payment, the “Earned but Unpaid Bonus”).
(b)
Termination by the Company Without Cause or by the Executive With Good Reason Prior to or
More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company
without Cause pursuant to Section 7(b) or by the Executive with Good Reason pursuant to Section 7(c) (in either case, a
“Qualifying Termination”) prior to or more than twelve (12) months following a Change in Control (as defined below), the
Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the
Company shall: (i) continue to pay to the Executive, in accordance with the Company’s regularly established payroll
procedure, the Executive’s Base Salary for a period of fifteen (15) months; (ii) for a period of fifteen (15) months following
the date of the Executive’s termination of employment (or, if earlier, the date on which the applicable continuation period
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
4
amended (“COBRA”) expires) (such period, the “COBRA Coverage Period”), provided the Executive is eligible for and
timely elects to continue receiving group medical insurance pursuant to COBRA, continue to pay the Company’s share of
the premium the Executive and/or his eligible dependents are required to pay for continuation coverage pursuant to COBRA
based on the cost sharing levels in effect on the date of the Executive’s termination of employment, unless the Company’s
provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case,
instead of providing the benefits as set forth above, the Company shall instead pay to the Executive the foregoing monthly
amount as a taxable monthly payment for the COBRA Coverage Period (or any remaining portion thereof), unless the
Company determines that such payments would not comply with applicable law in a manner that causes the Company to
incur additional taxes, penalties, fines or charges as a result of such payments (other than employer-side employment taxes
payable on such payments); (iii) pay the Executive any earned but unpaid annual bonus from a previously completed
calendar year on the Payment Date, notwithstanding the requirement that the individual be employed on the payment date of
such annual bonus (but in no event later than March 15 of the calendar year following the calendar year to which such
annual bonus relates); and (iv) pay the Executive a prorated annual bonus for the year in which the Qualifying Termination
occurs, calculated by multiplying 100% of the Target Bonus by a fraction, the numerator of which is equal to the number of
days in the calendar year during which Executive was employed and the denominator of which equals three hundred sixty-
five (365) (the “Pro-Rated Bonus Payment”), which Pro-Rated Bonus Payment shall be paid in a single lump-sum on the
Payment Date (but in no event more than seventy-five (75) days following the termination date) (collectively, the
“Severance Benefits”).
(c)
Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve
Months Following a Change in Control. If a Qualifying Termination occurs within twelve (12) months following a Change
in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of
Section 8(d): (i) the Executive will be eligible to receive the Severance Benefits as set forth in Section 8(b) other than the
Pro-Rated Bonus Payment, subject to the same terms, conditions and limitations described therein; (ii) in lieu of the Pro-
Rated Bonus Payment, the Executive will be eligible to receive a lump sum payment equal to 100% of the Executive’s
Target Bonus for the year in which the Qualifying Termination occurs without regard to whether the performance goals
applicable to such Target Bonus had been established or satisfied at the date of termination of employment, payable in a
lump sum on the Payment Date (but in no event more than seventy-five (75) days following the termination date); and (iii)
all of the Executive’s then-unvested equity awards shall vest and become fully exercisable or non-forfeitable effective as of
the termination date, with the same treatment applying to any then-unvested equity awards granted by the Company to the
Executive under any successor equity incentive plan (provided, however, that the accelerated vesting of any equity awards
the vesting of which is subject to performance-based vesting conditions (and excluding, for the avoidance of doubt,
performance-based awards that are subject to time-based vesting following the achievement of the applicable performance
metric) shall be governed by the individual award agreement and the equity plan under which such awards were granted to
the extent such award agreement specifically provides that such awards will not be eligible for accelerated vesting under this
Agreement) (provided that, with respect to any equity award that is a restricted stock unit, in no event shall such restricted
stock unit be settled later than the March 15 of the calendar year following the year in which the termination date occurs)
(collectively, the “Change in Control Severance Benefits”).
(d)
Release. As a condition of the Executive’s receipt of the Earned but Unpaid Bonus, the Severance
Benefits or the Change in Control Severance Benefits, as applicable, the Executive or his estate, as applicable, must execute
and deliver to the Company a severance and release of claims agreement in substantially the form attached hereto as Exhibit
B (the “Severance Agreement”), which Severance Agreement must become irrevocable within sixty (60) days following the
date of the Executive’s termination of employment (or such shorter period as may be directed by the Company). Subject to
any earlier payment deadline set forth in Section 8(b) or 8(c) above, the Earned but Unpaid Bonus, the
5
Severance Benefits or the Change in Control Severance Benefits, as applicable, will be paid or commence to be paid in the
first regular payroll beginning after the Severance Agreement becomes effective, provided that if the foregoing sixty (60)
day period would end in a calendar year subsequent to the year in which the Executive’s employment ends, the Earned but
Unpaid Bonus, the Severance Benefits or Change in Control Severance Benefits, as applicable, will not be paid or begin to
be paid before the first payroll of the subsequent calendar year (the date the Earned but Unpaid Bonus, the Severance
Benefits or Change in Control Severance Benefits, as applicable, are paid or commence pursuant to this sentence, the
“Payment Date”). The Executive must continue to comply with the Restrictive Covenants Agreement in order to be eligible
to continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.
(e)
Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean:
(i) an exclusive license of or the sale, the lease or other disposal of all or substantially all of the assets of the Company or
Parent; (ii) a sale or other disposal (for the avoidance of doubt, the term disposal shall not include a pledge) in any
transaction or series of transactions to which the Company is a party of 50% or more of the voting power of the Company
(other than a sale or other disposal to the Company, Parent or any of their respective subsidiaries), other than any transaction
or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or
indebtedness of the Company is cancelled or converted, or a combination thereof; (iii) a sale or other disposal (for the
avoidance of doubt, the term disposal shall not include a pledge) in any transaction or series of transactions to which Parent
is a party of 50% or more of the voting power of Parent (other than a sale or other disposal to the Company, Parent or any of
their respective subsidiaries), other than any transaction or series of transactions principally for bona fide equity financing
purposes in which cash is received by Parent or indebtedness of Parent is cancelled or converted, or a combination thereof;
(iv) a merger or consolidation of the Company or Parent with or into any third party, other than any merger or consolidation
in which the shares of the Company or Parent, respectively, immediately preceding such merger or consolidation continue to
represent a majority of the voting power of the surviving entity immediately after the closing of such merger or
consolidation; (v) during any period of two (2) consecutive years, individuals who, at the beginning of such period,
constitute the Parent Board together with any new director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv)) whose election by the
Parent Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the two (2) year period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof; and (vi) a
liquidation, winding up or any other form of dissolution of the Company or Parent. For the avoidance of doubt, any one or
more of the above events with respect to Parent may be effected pursuant to (A) a compromise or arrangement sanctioned by
the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of Ireland or (B) otherwise under Part 9 of
the Companies Act 2014 of the Republic of Ireland or (C) otherwise under the Companies Act 2014 of the Republic of
Ireland.
9.
Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth
in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the
following provisions shall apply:
(a)
The Company shall not be obligated to provide to the Executive any portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the minimum
extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the
Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1,
Q/A-30 or any successor
6
provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”
(b)
Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation
Payments shall be made if (1) the net amount of such Contingent Compensation Payments, as so reduced by the Eliminated
Amount (computed without regard to this sentence) (but after subtracting the amount of any taxes that would be incurred by
the Executive on such reduced Contingent Compensation Payments (including state and federal income taxes on the reduced
Contingent Compensation Payments and any withholding taxes)) is less than (2) the net amount of such Contingent
Compensation Payments without such reduction (but after subtracting the amount of any taxes that would be incurred by the
Executive on the Contingent Compensation Payments if the Eliminated Payments (determined without regard to this
sentence) were paid to the Executive (including state and federal income taxes on the Contingent Compensation Payments,
the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in
excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes)). The
override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a
“Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the
receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax rate provided by law.
(c)
For purposes of this Section 9 the following terms shall have the following respective meanings:
(i)
“Change in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii)
“Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a
“disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.
(d)
The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined
by the Company in a manner that results in the maximum economic benefit to the Executive on an after-tax basis
(considering maximum statutory tax rates). Except to the extent that an alternative reduction order would result in a greater
economic benefit to the Executive on an after-tax basis, the Parties intend that such reduction be determined by the 280G
Firm (as defined below) by determining the “Contingent Compensation Payment Ratio” (as defined below) for each
Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the
Contingent Compensation Payment with
that,
notwithstanding the foregoing, any such reduction shall be undertaken in a manner that complies with and does not result in
the imposition of additional taxes on the Executive under Section 409A of the Code. For Contingent Compensation
Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be
reduced based on the time of payment of such Contingent Compensation Payments with amounts having later payment dates
being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and
the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below
zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term
“Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which
the highest Contingent Compensation Payment Ratio; provided
7
is the value of the applicable Contingent Compensation Payment for purposes of Section 4999(a) of the Code, and the
denominator of which is the actual amount received by the Executive in respect of the applicable Contingent Compensation
Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control
because the time at which the payment is made or the payment vests is accelerated, the denominator shall be determined by
reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for
determining the value of accelerated payments set forth in Treasury Regulation Section 1.280G-1 Q/A-24(b) or (c).
(e)
All determinations regarding the application of this Section 9 shall be made by an accounting firm,
law firm or consulting group with nationally recognized standing and substantial expertise and experience in performing
calculations regarding the applicability of Section 280G of the Code and the excise tax retained by the Company prior to the
date of the applicable change in control (the “280G Firm”). The 280G Firm will be directed to submit its determination and
detailed supporting calculations to both the Executive and the Company within thirty (30) days after notification from either
the Company or the Executive that the Executive may receive payments which may be Contingent Compensation Payments
(or such earlier or later date as the Company and Executive may agree). The Executive and the Company will each provide
the 280G Firm access to and copies of any books, records, and documents in their possession as may be reasonably
requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of
the determinations and calculations contemplated by this letter agreement. The fees and expenses of the 280G Firm for its
services in connection with the determinations and calculations contemplated by this Section 9 will be borne by the
Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses
incurred in any later audit) shall be borne by the Company.
(f)
The provisions of this Section 9 are intended to apply to any and all payments or benefits available
to the Executive under this Agreement or any other agreement or plan under which the Executive receives Contingent
Compensation Payments.
10.
Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any
employment contracts, restrictive covenants or other restrictions that prevent the Executive from entering into employment
with, or carrying out the Executive’s responsibilities for, the Company, Parent or their affiliates, or which are in any way
inconsistent with any of the terms of this Agreement.
11.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for
next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each
case addressed to the Company at its principal executive offices and to the Executive at his or her most recent address set
forth in the Company’s personnel records. Either Party may change the address to which notices are to be delivered by
giving notice of such change to the other Party in the manner set forth in this Section 11.
12.
Arbitration. Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action,
in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be
resolved solely and exclusively by final and binding arbitration held in King of Prussia, Pennsylvania, before a single,
mutually-agreed neutral arbitrator, through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) under the then
existing JAMS arbitration rules. The rules may be found online at www.jamsadr.com or upon written request to the
Company. This paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each
other relating to Executive’s employment; provided that Executive will retain the right to file administrative charges with or
seek relief through any government agency of competent jurisdiction, and to participate in any government investigation,
including but not limited to (a) claims for workers’
8
compensation, state disability insurance or unemployment insurance; (b) administrative claims brought before any state or
federal governmental authority (provided that any appeal from an award or from denial of an award of wages and/or waiting
time penalties shall be arbitrated pursuant to the terms of this Section 12); and (c) claims for administrative relief from the
United States Equal Employment Opportunity Commission (or any similar agency in any applicable jurisdiction) (provided,
that, except as otherwise provided by law, Executive will not be entitled to obtain any monetary relief through such agencies
other than workers’ compensation benefits or unemployment insurance benefits). Further, nothing in this Section 12 is
intended to prevent either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion
of any such arbitration, including without limitation injunctive relief, in any court of competent jurisdiction. Seeking any
such relief shall not be deemed to be a waiver of such party’s right to compel arbitration. In resolving any matter submitted
to arbitration, the arbitrator will strictly follow the substantive law applicable to the dispute, claim or controversy and the
arbitrator’s authority and jurisdiction will be limited to determining the dispute in conformity with applicable law as to
liability, damages and remedies, to the same extent as if the dispute was determined by a court without a jury. The arbitrator
will issue a written decision that contains the essential findings of fact and conclusions of law on which the decision is
based, which may be entered as a judgment in any court of competent jurisdiction. The Company shall pay all costs of
arbitration, including without limitation, arbitration administrative fees, arbitrator compensation and expenses, and costs of
any witnesses called by the arbitrator. Unless otherwise ordered by the arbitrator under applicable law, each party shall each
bear its or his or her own expenses, such as attorneys’ fees, costs and disbursements; provided, however, the Company and
Executive agree that, to the extent permitted by law, the arbitrator may, in his or her discretion, award reasonable attorneys’
fees to the prevailing party. Each party warrants that it has had the opportunity to be represented by counsel in the
negotiation and execution of this Agreement, including the attorneys’ fees provision herein.
13.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the
Executive each hereby irrevocably waives any right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.
14.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
15.
Effect of Section 409A of the Code.
(a)
Six Month Delay. If and to the extent any portion of any payment, compensation or other benefit
provided to the Executive in connection with the Executive’s employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified
employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its
procedures, by which determination Executive hereby agrees that the Executive is bound, such portion of the payment,
compensation or other benefit shall not be paid before the earlier of (i) the expiration of the six (6) month period measured
from the date of the
9
Executive’s “separation from service” (as determined under Section 409A of the Code) and (ii) the tenth day following the
date of the Executive’s death following such separation from service (the “New Payment Date”). The aggregate of any
payments that otherwise would have been paid to the Executive during the period between the date of separation from
service and the New Payment Date shall be paid to the Executive in a lump sum in the first payroll period beginning after
such New Payment Date, and any remaining payments will be paid on their original schedule.
(b)
General 409A Principles. For purposes of this Agreement, a termination of employment will mean a
“separation from service” as defined in Section 409A of the Code, each amount to be paid or benefit to be provided will be
construed as a separate identified payment for purposes of Section 409A of the Code, and any payments that are due within
the “short term deferral period” as defined in Section 409A of the Code or are paid in a manner covered by Treas. Reg.
Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless applicable law requires otherwise. Neither
the Company nor the Executive will have the right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A of the Code. This Agreement is intended to comply
with the provisions of Section 409A of the Code and this Agreement shall, to the extent practicable, be construed in
accordance therewith. Terms defined in this Agreement will have the meanings given such terms under Section 409A of the
Code if and to the extent required to comply with Section 409A of the Code. In any event, the Company makes no
representations or warranty and will have no liability to the Executive or any other person if any provisions of or payments
under this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but not to
satisfy the conditions of that section.
(c)
Reimbursements. To the extent that any payments or reimbursements provided to the Executive
under this Agreement are deemed to constitute compensation to the Executive to which Treasury Regulation Section
1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed reasonably promptly, but not later than December
31 of the year following the year in which the expense was incurred. The amount of any such payments eligible for
reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any
other taxable year, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to
liquidation or exchange for any other benefit.
16.
Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully
discuss and review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive
further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
17.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by
the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of
any right on any other occasion.
18.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
10
19.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
20.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any
of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope,
whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it
to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent
of the Parties.
21.
Entire Agreement. This Agreement, together with the Restrictive Covenants Agreement, constitutes the
entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter hereof and thereof, including, without limitation, the Prior Agreement.
22.
Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and
withholdings.
23.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
11
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the day and year set forth
above.
NABRIVA THERAPEUTICS US, INC.
/s/ Rob Crotty
By:
Name:Rob Crotty
Title: General Counsel
Date: March 10, 2021
EXECUTIVE
/s/ Steven Gelone
Name:Steven Gelone
Date: March 10, 2021
[SIGNATURE PAGE TO THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT]
EXHIBIT A
RESTRICTIVE COVENANTS AGREEMENT
[Attached]
EXHIBIT B
SEPARATION AND RELEASE OF CLAIMS AGREEMENT1
This SEPARATION AND RELEASE OF CLAIMS AGREEMENT (the “Agreement”) is made as of the Agreement
Effective Date (as defined below) between Nabriva Therapeutics US, Inc. (the “Company”) and Steven Gelone
(“Executive”) (together, the “Parties”).
RECITALS
WHEREAS, the Company and Executive are parties to the Third Amended and Restated Employment Agreement
dated as of March 10, 2021(the “Employment Agreement”);
WHEREAS, the Parties are ending their employment relationship and wish to establish mutually agreeable terms
for Executive’s orderly transition and separation from the Company effective on the Separation Date (as defined below); and
WHEREAS, the Parties agree that the payments, benefits and rights set forth in this Agreement shall be the
exclusive payments, benefits and rights due Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Separation Date. Executive’s effective date of separation from employment with the Company and, as
may be applicable, any and all of its parents, affiliates and subsidiaries, including, without limitation, Nabriva Therapeutics
GMBH and Nabriva Therapeutics plc (“Parent”) (together, the “Affiliates”), will be [__________] (the “Separation Date”).
Executive hereby resigns, as of the Separation Date, from any and all of his or her positions as a member of the board of
directors and/or as an officer and employee of the Company and each of its Affiliates, and Executive further agrees to
execute and deliver any documents reasonably necessary to effectuate such resignations, provided that nothing in any such
document is inconsistent with any terms set forth in this Agreement. As of the Separation Date, all salary payments from the
Company will cease and any benefits Executive had as of such date under Company-provided benefit plans, programs, or
practices will terminate, except as required by applicable law or as otherwise specifically set forth in this Agreement.
2.
Severance Benefits. In return for Executive’s timely signing and not revoking this Agreement as set forth in
Section 13 below, and subject to Executive’s compliance with all terms hereof, the Company will provide Executive with
[INSERT PER EMPLOYMENT AGREEMENT, AS MAY BE APPLICABLE] (the “Severance Benefits”). Other than the
Severance Benefits, Executive will not be eligible for, nor shall he or she have a right to receive, any payments or benefits
from the Company or any of its Affiliates following the Separation Date, other than reimbursement for any outstanding
business expenses in accordance with Company policy.
1 NOTE: The Parties agree that the Company may revise this release agreement to reflect changes in law, additional
statutes or claims, benefits, or your circumstances, so that the Company receives the benefit of the most complete release
of claims that is legally permissible and may also change the timing, if required to obtain such release. This footnote
and any other footnotes are part of the form of release agreement and are to be removed only when the Company
finalizes the Separation and Release of Claims Agreement for execution. If the release is as a result of Executive’s
death, the Company will revise and provide for a comparable release by the Executive’s estate or beneficiaries.
1
3.
Release of Claims. In exchange for the consideration set forth in this Agreement, which Executive
acknowledges he or she would not otherwise be entitled to receive, Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its Affiliates (including, without limitation, the Parent),
subsidiaries, parent companies, predecessors, and successors, and all of its and their respective past and present officers,
directors, stockholders, investors, partners, members, managers, employees, agents, representatives, plan administrators,
attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”)
from any and all claims, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts,
reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys’ fees and costs), of every kind and nature that Executive ever had or now has against any or all
of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or
relating to Executive’s employment with and/or separation from the Company, including, but not limited to, all claims under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information
Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the
Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et
seq., the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the False Claims Act, 31
U.S.C. § 3729 et seq., 38 U.S.C. § 4301 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., all as amended; all claims arising out of the Pennsylvania Human Relations Act, 43 Pa. Stat. § 951 et
seq., the Pennsylvania Equal Pay Law, 43 Pa. Stat. § 336.1 et seq., and the Pennsylvania Whistleblower Law, 43 Pa.
Stat. § 1421 et seq., all as amended; all claims arising out of the California Fair Employment and Housing Act, Cal. Gov’t.
Code § 12900 et seq., Cal. Labor Code § 201 et seq. (California payment of wages law), the California Equal Pay Act, Cal.
Lab. Code § 1197.5 et seq., the California Family Rights Act, Cal. Gov’t. Code § 12945.2 and § 19702.3, the Cal-WARN
Act, Cal. Lab. Code §§ 1400-1408, Cal. Lab. Code § 233 (California’s kin care law), Cal. Lab. Code § 230.8 (California
leave for school activities law), Cal. Lab. Code § 245.5 (California paid sick leave law), Cal. Lab. Code §§ 230 and 230.1
(California domestic violence leave law), Cal. Mil. And Vet. Code § 395.10 (California military family leave law), Cal. Code
Regs. tit. 2, §§ 11035-11051 (California’s pregnancy leave law), California Unruh Civil Rights Act, Cal. Civ. Code § 51 et
seq., and Cal. Lab. Code §§ 98.6 and 1102.5 (California whistleblower protection laws), all as amended; all common law
claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation,
fraud, wrongful discharge, and breach of contract (including, without limitation, all claims arising out of or related to the
Employment Agreement); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state
and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of
Executive’s employment with and/or separation from the Company and/or its Affiliates (including a claim for retaliation)
under any common law theory or any federal, state or local statute or ordinance not expressly referenced above.
Notwithstanding the foregoing, nothing in this release of claims prevents Executive from filing a charge with,
cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity
Commission or a state fair employment practices agency (except that Executive acknowledges that he may not recover any
monetary benefits in connection with any such charge, investigation, or proceeding, and Executive further waives any rights
or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation
or proceeding). Further, nothing herein shall prevent Executive from bringing claims to enforce this Agreement, or release
(i) any rights Executive may have under the Company’s certificate of incorporation, by-laws, insurance and/or any
indemnification agreement between him or her and the Company (and/or
2
otherwise under law) for indemnification and/or defense as an employee, officer or director of the Company for his or her
service to the Company (recognizing that such indemnification and/or defense is not guaranteed by this Agreement and shall
be governed by the instrument or law, if any, providing for such indemnification and/or defense), (ii) any rights Executive
may have to vested or earned compensation or benefits, including pension or 401(k) benefits or interests under any ERISA-
Covered benefit plan (excluding severance) provided by the Company, (iii) Executive’s right to communicate or cooperate
with any government agency, (iv) claims for unemployment compensation or any state disability insurance benefits pursuant
to the terms of applicable state law; (v) claims for workers’ compensation insurance benefits under the terms of any worker’s
compensation insurance policy or fund of the Company; and (vi) any rights or claims that cannot be waived by law,
including claims for unemployment benefits.
4.
Section 1542 Waiver. Executive understands and agree that the claims released in Section 3 above include
not only claims presently known to Executive, but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope
of the released claims as described in Section 3. Executive understands that he may hereafter discover facts different from
what he now believes to be true, which if known, could have materially affected this Agreement, but Executive nevertheless
waives any claims or rights based on different or additional facts. Executive knowingly and voluntarily waive any and all
rights or benefits that he may now have, or in the future may have, under the terms of Section 1542 of the Civil Code of the
State of California, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED
PARTY.”
5.
Continuing Obligations. Executive acknowledges and reaffirms his or her obligation, to the extent permitted
by law and except as otherwise permitted by Section 9 below, to keep confidential and not to use or disclose any and all non-
public information concerning the Company and/or its Affiliates that Executive acquired during the course of his or her
employment with the Company and/or its Affiliates, including, but not limited to, any non-public information concerning the
Company’s and/or its Affiliates’ business affairs, business prospects, and financial condition. Executive further
acknowledges and reaffirms his or her obligations set forth in the Proprietary Rights, Non-Disclosure, Inventions, and Non-
Solicitation Agreement or similar agreement that he previously executed for the benefit of the Company (the “Restrictive
Covenants Agreement”), which remain in full force and effect and which survive his or her separation from employment
with the Company.
6.
Non-Disparagement. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, he or she will not, in public or private, make any disparaging, derogatory or
defamatory statements to any person or entity, including, but not limited to, any media outlet, industry group, financial
institution or current or former employee, board member, consultant, client or customer of the Company, regarding the
Company or its Affiliates (including, without limitation, Parent), and all of its and their respective officers, directors or
employees or regarding the Company’s business affairs, business prospects, or financial condition. The Company agrees
that, to the extent permitted by law, none of their respective officers or directors will, in public or private, make any
disparaging, derogatory or defamatory statements to any person or entity, including, but not limited to, any media outlet,
industry group, financial institution or current or former employee, board member, consultant, client or customer of the
Company, regarding Executive. Notwithstanding the foregoing, nothing herein shall be construed as preventing any Party
from making truthful disclosures in any litigation or arbitration.
3
7.
Return of Company Property. Executive confirms that he or she has returned to the Company or, with the
written permission of the Company, destroyed, all keys, files, records (and copies thereof), equipment (including, but not
limited to, computer hardware, software and printers, flash drives and other storage devices, wireless handheld devices,
cellular phones, tablets, etc.), Company identification and any other tangible or intangible Company-owned property in his
or her possession or control and, other than with the written permission of the Company, has left intact, and has otherwise
not destroyed, deleted or made inaccessible to the Company, all electronic Company documents, including but not limited to
those that he developed or helped to develop during his or her employment or service with the Company. Executive further
confirms that, to the extent requested by the Company, he has canceled all accounts for his or her benefit, if any, in the
Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or wireless data
accounts and computer accounts.
8.
Confidentiality. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, the contents of the negotiations and discussions resulting in this Agreement shall be
maintained as confidential by Executive and his or her agents and representatives and shall not be disclosed except as
otherwise agreed to in writing by the Company; provided, however, that nothing herein shall be construed as preventing
Executive from making truthful disclosures in any litigation or arbitration or from having confidential conversations with his
or her agents and representatives and family members on the condition that any individuals so informed must hold the above
information in strict confidence.
9.
Scope of Disclosure Restrictions. Nothing in this Agreement or elsewhere prohibits Executive from
communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing
information to government agencies, filing a complaint with government agencies, or participating in government agency
investigations or proceedings. Executive is not required to notify the Company of any such communications; provided,
however, that nothing herein authorizes the disclosure of information Executive obtained through a communication that was
subject to the attorney-client privilege. Further, notwithstanding Executive’s confidentiality and nondisclosure obligations,
Executive is hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally
or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in
confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for
the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an
employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under
seal; and (B) does not disclose the trade secret, except pursuant to court order.”
10.
Cooperation. Executive agrees that, to the extent permitted by law, he or she shall cooperate fully with the
Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are
currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the
Company against any third party, whether before a state or federal court, any state or federal government agency, or a
mediator or arbitrator, that relate in any manner to Executive’s conduct or duties at the Company or that are based on facts
about which Executive obtained personal knowledge while employed at or providing services to the Company. Executive’s
full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with
the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the
Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other
proceeding and to act as a witness when requested by the Company. Any reasonable out-of-pocket expenses incurred by
Employee associated with such
4
cooperation will be paid for or reimbursed by the Company. Executive further agrees that, to the extent permitted by law, he
will notify the Company promptly in the event that he is served with a subpoena (other than a subpoena issued by a
government agency), or in the event that he is asked to provide a third party (other than a government agency) with
information concerning any actual or potential complaint or claim against the Company.
11.
Business Expenses and Final Compensation. Executive acknowledges that he has been reimbursed by the
Company for all business expenses incurred in conjunction with the performance of his or her employment and that no other
reimbursements are owed to him or her. Executive acknowledges that he has received all compensation due to him or her
from the Company, including, but not limited to, all wages, bonuses and accrued, unused vacation time, and that he or she is
not eligible or entitled to receive any additional payments or consideration from the Company beyond that provided for in
Section 2 of this Agreement.
12.
Modified Section 280G Cutback. Section 9 of the Employment Agreement is hereby incorporated by
reference and shall continue to apply to Executive as if fully set forth herein.
13.
2Time for Consideration and Revocation. Executive acknowledges that he or she was initially presented
with this Agreement on [________] (the “Receipt Date”). Executive understands that this Agreement shall be of no force or
effect, and that he or she shall not be eligible for the consideration described herein, unless he or she signs and returns this
Agreement no later than the [twenty-second (22nd) day] [forty-sixth (46th) day] after the Receipt Date and does not revoke
his or her acceptance in the subsequent seven (7) day period (the day immediately following expiration of such revocation
period, the “Agreement Effective Date”). Executive acknowledges that he or she will not be entitled to the Severance
Benefits unless the Agreement Effective Date occurs within sixty (60) days following the Separation Date (or such shorter
period as may be directed by the Company at the time of separation).
14.
Acknowledgments. Executive acknowledges that he or she has been given at least [twenty-one (21)][forty-
five (45)] days to consider this Agreement, and that the Company is hereby advising him or her to consult with an attorney
of his or her own choosing prior to signing this Agreement. Executive further acknowledges and agrees that any changes
made to this Agreement following his or her initial receipt of this Agreement, whether material or immaterial, shall not
restart or affect in any manner the [twenty-one (21)][forty-five (45)] day consideration period. Executive understands that
he or she may revoke this Agreement for a period of seven (7) days after he or she signs it by notifying the Company in
writing, and the Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.
Executive understands and agrees that by entering into this Agreement he or she will be waiving any and all rights or claims
he or she might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, and that he or she has received or will receive consideration beyond that to which he was previously entitled.
15.
Voluntary Assent. Executive states and represents that Executive has had an opportunity to fully discuss and
review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive further states and
represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
16.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid,
2 NOTE: Sections 13 and 14 to be included if Executive is age 40 or older on the Separation Date.
5
one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or
immediately upon hand delivery, in each case addressed to the Company at its principal executive offices and to the
Executive at his or her most recent address set forth in the Company’s personnel records. Either Party may change the
address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this
Section 16.
17.
Arbitration. The parties agree that any and all disputes, claims and causes of action, in law or equity, arising
from or relating to this Agreement, the Employment Agreement or their enforcement, performance, breach, or interpretation,
or the Executive’s termination of employment or service, shall be subject to arbitration in accordance with the provisions of
Section 12 of the Employment Agreement, which is incorporated herein by reference.
18.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Parties each consent to the jurisdiction of such a court. The Parties each hereby irrevocably waives
any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this
Agreement.
19.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
20.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by each Party. No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other
occasion.
21.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
22.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
23.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this
6
Agreement. Moreover, if a court of competent jurisdiction determines any of the provisions contained in this Agreement to
be unenforceable because the provision is excessively broad in scope, whether as to duration, activity, geographic
application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so as to be
enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.
24.
Entire Agreement. This Agreement and the Restrictive Covenant Agreement contain and constitute the entire
understanding and agreement between the Parties hereto with respect to Executive’s separation from the Company,
severance benefits and the settlement of claims against the Company, and cancels all previous oral and written negotiations,
agreements, commitments and writings in connection therewith, including without limitation, the Employment Agreement;
provided, however, that nothing in this Section shall modify, cancel or supersede Executive’s obligations set forth in
Section 5 above or under the Restrictive Covenants Agreement; provided, further, that notwithstanding this Section 24,
Sections 9, 12 and 15 of the Employment Agreement shall survive and shall continue to be binding on the Parties and to
govern the payment of the Severance Benefits.
25.
Tax Acknowledgement. In connection with the Severance Benefits provided to Executive pursuant to this
Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and
Executive shall be responsible for all applicable taxes owed by him or her with respect to such Severance Benefits under
applicable law. Executive acknowledges that he is not relying upon the advice or representation of the Company with
respect to the tax treatment of any of the Severance Benefits.
26.
Section 409A. Section 15 of the Employment Agreement is hereby incorporated by reference and shall
apply to this Agreement as if set forth herein in full.
27.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
7
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date(s) written below.
NABRIVA THERAPEUTICS US, INC.
By:
Name:
Title:
Date:
EXECUTIVE
I hereby agree to the terms and conditions set forth above. I have been given at least [twenty-one (21)][forty-five
(45)] days to consider this Agreement and I have chosen to execute this on the date below. I intend that this
Agreement will become a binding agreement if I do not revoke my acceptance within seven (7) days.
Name: Steven Gelone
Date:
[SIGNATURE PAGE TO SEPARATION AND RELEASE OF CLAIMS AGREEMENT]
NABRIVA THERAPEUTICS plc
2021 INDUCEMENT SHARE INCENTIVE PLAN
Exhibit 10.46
1. Purpose
The purpose of this 2021 Inducement Share Incentive Plan (the “Plan”) of Nabriva Therapeutics plc, a
public limited company organized under the laws of the Republic of Ireland (the “Company”), is to advance the
interests of the Company’s shareholders by enhancing the Company’s ability to attract, retain and motivate
persons who are expected to make important contributions to the Company with an inducement material for such
persons to enter into employment with the Company and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended to better align the interests of such persons with
those of the Company’s shareholders. Except where the context otherwise requires, the term “Company” shall
include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or
(f) of the United States Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”)
and any other business venture (including, without limitation, joint venture or limited liability company) in which
the Company has a controlling interest, as determined by the Board of Directors of the Company (the “Board”).
2. Eligibility
Awards under the Plan may only be granted to persons who (a) were not previously an employee or
director of the Company or (b) are commencing employment with the Company following a bona fide period of
non-employment, in either case as an inducement material to the individual’s entering into employment with the
Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4). For the avoidance
of doubt, neither consultants nor advisors shall be eligible to participate in the Plan. Each person who is granted
an Award under the Plan is deemed a “Participant.” The Plan provides for the following types of awards, each of
which is referred to as an “Award”: Options (as defined in Section 5), SARs (as defined in Section 6), Restricted
Shares (as defined in Section 7), Restricted Share Units (as defined in Section 7) and Other Share-Based Awards
(as defined in Section 8).
3. Administration and Delegation
(a)
Administration by Board of Directors. The Plan will be administered by the Board. The Board shall
have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices
relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any
Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient and it
shall be the sole and final judge of such expediency. All decisions by the Board with respect to the Plan and any
Awards shall be made in the Board’s sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. The Board may delegate administration of the Plan to a
Committee or Committees, as provided in Section 3(b). Notwithstanding the foregoing or anything in the Plan to
the contrary, the grant of
any Award under the Plan must be approved by the Company’s independent compensation committee or a
majority of the Company’s independent directors (as defined in Nasdaq Stock Market Rule 5605(a)(2)) to the
extent necessary to comply with the exemption from the shareholder approval requirement for “inducement
grants” provided under Nasdaq Stock Market Rule 5635(c)(4).
(b)
Appointment of Committees. To the extent permitted by applicable law, the Board may delegate
any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a
“Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the
officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee or officers.
(c)
Delegation to Officers. Subject to any requirements of applicable law, the Board may delegate to
one or more officers of the Company the power to grant Awards (subject to any limitations under the Plan) to
employees or officers of the Company and to exercise such other powers under the Plan as the Board may
determine, provided that the Board shall fix the terms of Awards to be granted by such officers, the maximum
number of shares subject to Awards that the officers may grant, and the time period in which such Awards may be
granted; and provided further, that no officer shall be authorized to grant Awards to any “executive officer” of the
Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
or to any “officer” of the Company (as defined by Rule 16a-1(f) under the Exchange Act).
4.
Shares Available for Awards
(a)
Number of Shares; Share Counting.
(1)
Authorized Number of Shares. Subject to adjustment under Section 9, Awards may be made
under the Plan for up to 200,000 ordinary shares of the Company (the “Ordinary Shares”). Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
(2)
Share Counting. For purposes of counting the number of shares available for the grant of
Awards under the Plan:
(A)
all Ordinary Shares covered by SARs shall be counted against the number of shares
available for the grant of Awards under the Plan; provided, however, that (i) SARs that may be settled only in cash
shall not be so counted and (ii) if the Company grants an SAR in tandem with an Option for the same number of
Ordinary Shares and provides that only one such Award may be exercised (a “Tandem SAR”), only the shares
covered by the Option, and not the shares covered by the Tandem SAR, shall be so counted, and the expiration of
one in connection with the other’s exercise will not restore shares to the Plan;
(B)
if any Award (i) expires or is terminated, surrendered or canceled without having
been fully exercised or is forfeited in whole or in part (including as the result of Ordinary Shares subject to such
Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase
right) or (ii) results in any Ordinary Shares
not being issued (including as a result of an SAR that was settleable either in cash or in shares actually being
settled in cash), the unused Ordinary Shares covered by such Award shall again be available for the grant of
Awards; provided, however, that (1) in the case of the exercise of an SAR, the number of shares counted against
the shares available under the Plan shall be the full number of shares subject to the SAR multiplied by the
percentage of the SAR actually exercised, regardless of the number of shares actually used to settle such SAR
upon exercise and (2) the shares covered by a Tandem SAR shall not again become available for grant upon the
expiration or termination of such Tandem SAR; and
(C) Ordinary Shares delivered (either by actual delivery, attestation, or net exercise) to
the Company by a Participant to (i) purchase Ordinary Shares upon the exercise of an Award or (ii) satisfy tax
withholding obligations with respect to Awards (including shares retained from the Award creating the tax
obligation) shall be added back to the number of shares available for the future grant of Awards.
5.
Share Options
(a)
General. The Board may grant options to purchase Ordinary Shares (each, an “Option”) and
determine the number of Ordinary Shares to be covered by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable. All Options under the Plan shall be
Nonstatutory Share Options. A “Nonstatutory Share Option” is an Option which is not intended to be an
“incentive share option” within the meaning of Section 422 of the Code.
(b)
Exercise Price. The Board shall establish the exercise price of each Option and specify the formula
by which such exercise price will be determined provided that in all cases it will not be less than the nominal
value of an Ordinary Share. The exercise price shall be specified in the applicable Option agreement which may
be electronic. The exercise price shall be not less than 100% of the Grant Date Fair Market Value (as defined
below) of the Ordinary Shares on the date the Option is granted; provided that if the Board approves the grant of
an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100%
of the Grant Date Fair Market Value on such future date. “Grant Date Fair Market Value” of an Ordinary Share
for purposes of the Plan will be determined as follows:
(1)
if the Ordinary Shares trade on a national securities exchange, the closing sale price (for the
primary trading session) on the date of grant; or
(2)
if the Ordinary Shares do not trade on any such exchange, the average of the closing bid
and asked prices on the date of grant as reported by an over-the-counter marketplace designated by the Board; or
(3)
if the Ordinary Shares are not publicly traded, the Board will determine the Grant Date Fair
Market Value for purposes of the Plan using any measure of value it determines to be appropriate (including, as it
considers appropriate, relying on appraisals) in a manner consistent with the valuation principles under Code
Section 409A, except as the Board may expressly determine otherwise.
For any date that is not a trading day, the Grant Date Fair Market Value of an Ordinary Share for such date
will be determined by using the closing sale price or average of the bid and asked prices, as appropriate, for the
immediately preceding trading day and with the timing in the formulas above adjusted accordingly. The Board
can substitute a particular time of day or other measure of “closing sale price” or “bid and asked prices” if
appropriate because of exchange or market procedures or can, in its sole discretion, use weighted averages either
on a daily basis or such longer period as is consistent with Code Section 409A.
The Board has sole discretion to determine the Grant Date Fair Market Value for purposes of the Plan, and
all Awards are conditioned on the participants’ agreement that the Board’s determination is conclusive and
binding even though others might make a different determination.
(c)
Duration of Options. Each Option shall 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 will
be granted with a term in excess of 10 years.
(d)
Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise
in a form (which may be electronic) approved by the Company, together with payment in full (in the manner
specified in Section 5(e)) of the exercise price for the number of shares for which the Option is exercised.
Ordinary Shares subject to the Option will be delivered by the Company as soon as practicable following exercise.
(e)
Payment Upon Exercise. Ordinary Shares purchased upon the exercise of an Option granted under
the Plan shall be paid for as follows:
(1)
(2)
in cash or by check, payable to the order of the Company;
except as may otherwise be provided in the applicable Option agreement or approved by the
Board, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii)
delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and
any required tax withholding;
(3)
to the extent provided for in the applicable Option agreement or approved by the Board, and
subject to compliance with applicable law, by delivery (either by actual delivery or attestation) of Ordinary Shares
owned by the Participant valued at their fair market value (valued in the manner determined by (or in the manner
approved by) the Board), provided (i) such method of payment is then permitted under applicable law, (ii) such
Ordinary Shares, if acquired directly from the Company, were owned by the Participant for such minimum period
of time, if any, as may be established by the Board and (iii) such Ordinary Shares are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(4)
to the extent provided for in the applicable Nonstatutory Share Option agreement or
approved by the Board and subject to compliance with applicable law, by delivery of a notice of “net exercise” to
the Company, as a result of which the Participant would receive (i) the number of shares underlying the portion of
the Option being exercised, less (ii) such number of shares as is equal to (A) the aggregate exercise price for the
portion of the Option being exercised divided by (B) the fair market value of an Ordinary Share (valued in the
manner determined by (or in the manner approved by) the Board) on the date of exercise;
(5)
to the extent permitted by applicable law and provided for in the applicable Option
agreement or approved by the Board, by payment of such other lawful consideration as the Board may determine;
or
(6)
by any combination of the above permitted forms of payment, as approved by the Board.
(f)
Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the
Company may not (except as provided for under Section 9): (1) amend any outstanding Option granted under the
Plan to provide an exercise price per share that is lower than the then-current exercise price per share of such
outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in
substitution therefor new Awards under the Plan covering the same or a different number of Ordinary Shares and
having an exercise price per share lower than the then-current exercise price per share of the cancelled option, (3)
cancel in exchange for a cash payment any outstanding Option with an exercise price per share above the then-
current fair market value of an Ordinary Share (valued in the manner determined by (or in the manner approved
by) the Board), or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the
rules of the Nasdaq Stock Market (“Nasdaq”).
(g)
No Dividend Equivalents. No Option shall provide for the payment or accrual of dividend
equivalents.
6.
Share Appreciation Rights
(a)
General. The Board may grant Awards consisting of share appreciation rights (“SARs”) entitling
the holder, upon exercise, to receive a number of Ordinary Shares or cash or a combination thereof (such form to
be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the Fair
Market Value of an Ordinary Share over the measurement price established pursuant to Section 6(b). The date as
of which such appreciation is determined shall be the exercise date. The SAR agreement may be in written or
electronic form.
(b)
Measurement Price. The Board shall establish the measurement price of each SAR and specify it in
the applicable SAR agreement. The measurement price shall not be less than 100% of the Grant Date Fair Market
Value of an Ordinary Share on the date the SAR is granted; provided that if the Board approves the grant of an
SAR effective as of a future date, the measurement price shall be not less than 100% of the Grant Date Fair
Market Value on such future date.
(c)
Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and
conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be
granted with a term in excess of 10 years.
(d)
Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a
form (which may be electronic) approved by the Company, together with any other documents required by the
Board.
(e)
Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the
Company may not (except as provided for under Section 9): (1) amend any outstanding SAR granted under the
Plan to provide a measurement price per share that is lower than the then-current measurement price per share of
such outstanding SAR, (2) cancel any outstanding SAR (whether or not granted under the Plan) and grant in
substitution therefor new Awards under the Plan covering the same or a different number of Ordinary Shares and
having an exercise or measurement price per share lower than the then-current measurement price per share of the
cancelled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per
share above the then-current fair market value of an Ordinary Share (valued in the manner determined by (or in
the manner approved by) the Board), or (4) take any other action under the Plan that constitutes a “repricing”
within the meaning of the rules of Nasdaq.
(f)
No Dividend Equivalents. No SAR shall provide for the payment or accrual of dividend
equivalents.
7.
Restricted Shares; Restricted Share Units
(a)
General. The Board may grant Awards entitling recipients to acquire Ordinary Shares (“Restricted
Shares”), subject to the right of the Company to repurchase (in accordance with applicable law and the Award
agreement) all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of
such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable restriction period or periods established by the
Board for such Award. The Board may also grant Awards entitling the recipient to receive Ordinary Shares or cash
to be delivered at the time such Award vests (“Restricted Share Units”) (Restricted Shares and Restricted Share
Units are each referred to herein as a “Restricted Share Award”).
(b)
Terms and Conditions for All Restricted Share Awards. The Board shall determine the terms and
conditions of a Restricted Share Award, including the conditions for vesting and repurchase (or forfeiture) and the
issue price, if any. The award agreement with respect to Restricted Shares or Restricted Share Units, as
applicable, may be in written or electronic form.
(c)
Additional Provisions Relating to Restricted Shares.
(1)
Dividends. Any dividends (whether paid in cash, shares or property) declared and paid by
the Company with respect to Restricted Shares (“Accrued Dividends”) shall be paid to the Participant only if and
when such shares become free from the restrictions on
transferability and forfeitability that apply to such shares. Each payment of Accrued Dividends will be made no
later than the end of the calendar year in which the dividends are paid to shareholders of that class of shares or, if
later, the 15th day of the third month following the lapsing of the restrictions on transferability and the
forfeitability provisions applicable to the underlying Restricted Shares.
(2)
Share Certificates. The Company may require that any share certificates issued in respect of
Restricted Shares, as well as dividends or distributions paid on such Restricted Shares, shall be deposited in
escrow by the Participant, together with a share power endorsed in blank, with the Company (or its designee). At
the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates
no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated
Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board,
by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death
or (ii) in the absence of an effective designation by a Participant, the Participant’s estate.
(d)
Additional Provisions Relating to Restricted Share Units.
(1)
Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement)
with respect to each Restricted Share Unit, the Participant shall be entitled to receive from the Company such
number of Ordinary Shares or (if so provided in the applicable Award agreement or otherwise determined by the
Board) an amount of cash equal to the fair market value (valued in the manner determined by (or in the manner
approved by) the Board) of such number of Ordinary Shares as are set forth in the applicable Restricted Share
Unit agreement, or a combination thereof. The Board may, in its discretion, provide that settlement of Restricted
Share Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies
with Section 409A of the Code or any successor provision thereto, and the regulations thereunder (“Section
409A”).
(2)
Voting Rights. A Participant shall have no voting rights with respect to any Restricted Share
Units.
(3)
Dividend Equivalents. The Award agreement for Restricted Share Units may provide
Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on
an equal number of outstanding Ordinary Shares (“Dividend Equivalents”). Dividend Equivalents shall be
credited to an account for the Participant, may be settled in cash and/or Ordinary Shares as set forth in the
applicable Award agreement, and shall be subject to the same restrictions on transfer and forfeitability as the
Restricted Share Units with respect to which paid.
8.
Other Share-Based Awards
(a)
General. Other Awards of Ordinary Shares, and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Ordinary Shares or other property, may be granted hereunder to
Participants (“Other Share-Based Awards”). Such Other Share-Based Awards shall also be available as a form
of payment in the settlement of other Awards
granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other
Share-Based Awards may be paid in Ordinary Shares or cash, as the Board shall determine.
(b)
Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms
and conditions of each Other Share-Based Award, including any purchase price applicable thereto.
(c)
Dividend Equivalents. The Award agreement for Other Share-Based Awards may provide
Participants with the right to receive Dividend Equivalents. Dividend Equivalents shall be credited to an account
for the Participant, may be settled in cash and/or Ordinary Shares as set forth in the applicable Award agreement,
and shall be subject to the same restrictions on transfer and forfeitability as the Other Share-Based Awards with
respect to which paid.
9.
Adjustments for Changes in Ordinary Shares and Certain Other Events
(a)
Changes in Capitalization. In the event of any alteration or reorganization whatsoever
taking place in the capital structure of the Company whether by way of share split, reverse share split, share
dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any dividend or distribution to holders of Ordinary Shares other than an ordinary cash
dividend, (i) the number and class of securities available under the Plan, (ii) the share counting rules set forth in
Section 4(a), (iii) the number and class of securities and exercise price per share of each outstanding Option,
(iv) the share and per-share provisions and the measurement price of each outstanding SAR, (v) the number of
shares subject to and the repurchase price per share subject to each outstanding award of Restricted Shares and
(vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding RSU and each
Other Share-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if
applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event
the Company effects a split of the Ordinary Shares by means of a share dividend and the exercise price of and the
number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend
(rather than as of the record date for such dividend), then an optionee who exercises an Option between the record
date and the distribution date for such share dividend shall be entitled to receive, on the distribution date, the share
dividend with respect to the Ordinary Shares acquired upon such Option exercise, notwithstanding the fact that
such shares were not outstanding as of the close of business on the record date for such share dividend.
(b)
Reorganization Events.
(1)
Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation of the
Company with or into another entity as a result of which all of the Ordinary Shares of the Company are converted
into or exchanged for the right to receive cash, securities or other property or is canceled, (b) any transfer or
disposition of all of the Ordinary Shares of the Company for cash, securities or other property pursuant to a share
exchange or other transaction or (c) any liquidation or dissolution of the Company. For the avoidance of doubt,
any one or more of the above events may be effected pursuant to (A) a compromise or arrangement sanctioned by
the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of
Ireland or (B) otherwise under Part 9 of the Companies Act 2014 of the Republic of Ireland or (C) otherwise
under the Companies Act 2014 of the Republic of Ireland.
(2)
Consequences of a Reorganization Event on Awards Other than Restricted Shares.
(A)
In connection with a Reorganization Event, the Board may take any one or more of
the following actions as to all or any (or any portion of) outstanding Awards other than Restricted Shares on such
terms as the Board determines (except to the extent specifically provided otherwise in an applicable Award
agreement or another agreement between the Company and the Participant): (i) provide that such Awards shall be
assumed, or substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation (or
an affiliate thereof), (ii) upon written notice to a Participant, provide that all of the Participant’s unvested Awards
will be forfeited immediately prior to the consummation of the Reorganization Event and/or that all of the
Participant’s unexercised Awards will terminate immediately prior to the consummation of such Reorganization
Event unless exercised by the Participant (to the extent then exercisable) within a specified period following the
date of such notice, (iii) provide that outstanding Awards shall become exercisable, realizable, or deliverable, or
restrictions applicable to an Award shall lapse, in whole or in part prior to or upon such Reorganization Event, (iv)
in the event of a Reorganization Event under the terms of which holders of Ordinary Shares will receive upon
consummation thereof a cash payment for each share surrendered in the Reorganization Event (the “Acquisition
Price”), make or provide for a cash payment to Participants with respect to each Award held by a Participant
equal to (A) the number of Ordinary Shares subject to the vested portion of the Award (after giving effect to any
acceleration of vesting that occurs upon or immediately prior to such Reorganization Event) multiplied by (B) the
excess, if any, of (I) the Acquisition Price over (II) the exercise, measurement or purchase price of such Award
and any applicable tax withholdings, in exchange for the termination of such Award, (v) provide that, in
connection with a liquidation or dissolution of the Company, Awards shall convert into the right to receive
liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable
tax withholdings) and (vi) any combination of the foregoing. In taking any of the actions permitted under this
Section 9(b)(2), the Board shall not be obligated by the Plan to treat all Awards, all Awards held by a Participant,
or all Awards of the same type, identically.
(B) Notwithstanding the terms of Section 9(b)(2)(A), in the case of outstanding
Restricted Share Units that are subject to Section 409A: (i) if the applicable Restricted Share Unit agreement
provides that the Restricted Share Units shall be settled upon a “change in control event” within the meaning of
Treasury Regulation Section 1.409A-3(i)(5)(i), and the Reorganization Event constitutes such a “change in control
event”, then no assumption or substitution shall be permitted pursuant to Section 9(b)(2)(A)(i) and the Restricted
Share Units shall instead be settled in accordance with the terms of the applicable Restricted Share Unit
agreement; and (ii) the Board may only undertake the actions set forth in clauses (iii), (iv) or (v) of Section 9(b)(2)
(A) if the Reorganization Event constitutes a “change in control event” as defined under Treasury Regulation
Section 1.409A-3(i)(5)(i) and such action is permitted or required by Section 409A; if the Reorganization Event is
not a “change in control event” as so defined or such action is not permitted or required by Section 409A, and the
acquiring or succeeding corporation does not assume or substitute the Restricted Share Units pursuant to
clause (i) of Section 9(b)(2)(A), then the unvested Restricted Share Units shall terminate immediately prior to the
consummation of the Reorganization Event without any payment in exchange therefor.
(C)
For purposes of Section 9(b)(2)(A)(i), an Award (other than Restricted Shares) shall
be considered assumed if, following consummation of the Reorganization Event, such Award confers the right to
purchase or receive pursuant to the terms of such Award, for each Ordinary Share subject to the Award
immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or
other property) received as a result of the Reorganization Event by holders of Ordinary Shares for each Ordinary
Share held immediately prior to the consummation of the Reorganization Event (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Ordinary
Shares); provided, however, that if the consideration received as a result of the Reorganization Event is not solely
ordinary shares of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise
or settlement of the Award to consist solely of such number of ordinary shares of the acquiring or succeeding
corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such
determination or another date specified by the Board) to the per share consideration received by holders of
outstanding Ordinary Shares as a result of the Reorganization Event.
(3)
Consequences of a Reorganization Event on Restricted Shares. Upon the occurrence of a
Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of
the Company with respect to outstanding Restricted Shares shall inure to the benefit of the Company’s successor
and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the
Ordinary Shares were converted into or exchanged for pursuant to such Reorganization Event in the same manner
and to the same extent as they applied to such Restricted Shares; provided, however, that the Board may either
provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing
any Restricted Shares or any other agreement between a Participant and the Company, either initially or by
amendment, or provide for forfeiture of such Restricted Shares if issued at no cost. Upon the occurrence of a
Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically
provided to the contrary in the instrument evidencing any Restricted Shares or any other agreement between a
Participant and the Company, all restrictions and conditions on all Restricted Shares then outstanding shall
automatically be deemed terminated or satisfied.
10.
General Provisions Applicable to Awards
(a)
Transferability of Awards. Awards shall not be sold, assigned, transferred, pledged or otherwise
encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution or pursuant to a qualified domestic relations order, and, during the life of the
Participant, shall be exercisable only by the Participant; provided, however, that, except with respect to Awards
subject to Section 409A, the Board may permit or provide in an Award for the gratuitous transfer of the Award by
the Participant to or for the benefit of any immediate family member, family trust or
other entity established for the benefit of the Participant and/or an immediate family member thereof if the
Company would be eligible to use a Form S-8 under the Securities Act of 1933, as amended, for the registration of
the sale of the Ordinary Shares subject to such Award to such proposed transferee; provided further, that the
Company shall not be required to recognize any such permitted transfer until such time as such permitted
transferee shall, as a condition to such transfer, deliver to the Company a written instrument in form and substance
satisfactory to the Company confirming that such transferee shall be bound by all of the terms and conditions of
the Award. References to a Participant, to the extent relevant in the context, shall include references to authorized
transferees. For the avoidance of doubt, nothing contained in this Section 10(a) shall be deemed to restrict a
transfer to the Company.
(b)
Documentation; Press Release. Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set
forth in the Plan. Promptly following the grant of an Award hereunder, the Company must disclose in a press
release the material terms of the grant, the number of shares involved, and, if required by law or Nasdaq rules, the
identity of the Participant and each Participant, by accepting the Award, consents to the foregoing.
(c)
Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in
addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not
treat Participants uniformly.
(d)
Termination of Status. The Board shall determine the effect on an Award of the disability, death,
termination or other cessation of employment, authorized leave of absence or other change in the employment or
other status of a Participant and the extent to which, and the period during which, the Participant, or the
Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights, or receive
any benefits, under an Award.
(e)
Withholding. The Participant must satisfy all applicable federal, state, and local or other income
and employment tax withholding obligations before the Company will deliver share certificates or otherwise
recognize ownership of Ordinary Shares under an Award. The Company may elect to satisfy the withholding
obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold
from other compensation, the Participant must pay the Company the full amount, if any, required for withholding
or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding
obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an
Award or at the same time as payment of the exercise or purchase price, unless the Company determines
otherwise. If provided for in an Award or approved by the Board, a Participant may satisfy such tax obligations in
whole or in part by delivery (either by actual delivery or attestation) of Ordinary Shares, including shares retained
from the Award creating the tax obligation, valued at their fair market value (valued in the manner determined by
(or in the manner approved by) the Company); provided, however, except as otherwise provided by the Board,
that the total tax withholding where shares are being used to satisfy such tax obligations cannot exceed the
Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income) except
that, to the extent that the Company is
able to retain shares having a fair market value (determined by, or in a manner approved by, the Company) that
exceeds the statutory minimum applicable withholding tax without financial accounting implications or the
Company is withholding in a jurisdiction that does not have a statutory minimum withholding tax, the Company
may retain such number of Ordinary Shares (up to the number of shares having a fair market value equal to the
maximum individual statutory rate of tax (determined by, or in a manner approved by, the Company)) as the
Company shall determine in its sole discretion to satisfy the tax liability associated with any Award. Shares used
to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements.
(f)
Amendment of Award. Except as otherwise provided in Sections 5(f) and 6(e) with respect to
repricings, the Board may amend, modify or terminate any outstanding Award, including but not limited to,
substituting therefor another Award of the same or a different type and changing the date of exercise or
realization; provided that no amendment that would require shareholder approval under the rules of Nasdaq may
be made effective unless and until the Company’s shareholders approve such amendment. The Participant’s
consent to such action shall be required unless (i) the Board determines that the action, taking into account any
related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is
permitted under Section 9.
(g)
Conditions on Delivery of Shares. The Company will not be obligated to deliver any Ordinary
Shares pursuant to the Plan or to remove restrictions from shares previously issued or delivered under the Plan
until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the
opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such
shares have been satisfied, including any applicable securities laws and regulations and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may consider appropriate to satisfy the
requirements of any applicable laws, rules or regulations.
(h)
Acceleration. The Board may at any time provide that any Award shall become immediately
exercisable in whole or in part, free from some or all restrictions or conditions, or otherwise realizable in whole or
in part, as the case may be.
11.
Miscellaneous
(a)
No Right To Employment or Other Status. No person shall have any claim or right to be granted an
Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the applicable Award.
(b)
No Rights As Shareholder; Clawback. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any Ordinary Shares
to be distributed with respect to an Award until becoming the
record holder of such shares. In accepting an Award under the Plan, the Participant agrees to be bound by any
clawback policy that the Company has in effect or may adopt in the future.
(c)
Effective Date. The Plan shall become effective on the date on which it is adopted by the Board. It
is expressly intended that approval of the Company’s shareholders not be required as a condition to the
effectiveness of the Plan, and the Plan’s provisions shall be interpreted in a manner consistent with such intent for
all purposes.
(d)
Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, provided that no amendment that would require shareholder approval under the rules of Nasdaq may
be made effective unless and until the Company’s shareholders approve such amendment. Unless otherwise
specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) shall apply
to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted,
provided the Board determines that such amendment, taking into account any related action, does not materially
and adversely affect the rights of Participants under the Plan.
(e)
Authorization of Sub-Plans (including for Grants to non-U.S. Employees). The Board may from
time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or
other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to the Plan
containing (i) such limitations on the Board’s discretion under the Plan as the Board deems necessary or desirable
or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem
necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each
supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required
to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such
supplement.
(f)
Compliance with Section 409A. Except as provided in individual Award agreements initially or by
amendment, if and to the extent (i) any portion of any payment, compensation or other benefit provided to a
Participant pursuant to the Plan in connection with his or her employment termination constitutes “nonqualified
deferred compensation” within the meaning of Section 409A and (ii) the Participant is a specified employee as
defined in Section 409A(a)(2)(B)(i), in each case as determined by the Company in accordance with its
procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound,
such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus
one day after the date of “separation from service” (as determined under Section 409A) (the “New Payment
Date”), except as Section 409A may then permit. The aggregate of any payments that otherwise would have been
paid to the Participant during the period between the date of separation from service and the New Payment Date
shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be
paid on their original schedule.
The Company makes no representations or warranty and shall have no liability to the Participant or any
other person if any provisions of or payments, compensation or other benefits under the Plan are determined to
constitute nonqualified deferred compensation subject to Section 409A but do not satisfy the conditions of that
section.
(g)
Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as
a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse,
beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan, nor
will such individual be personally liable with respect to the Plan because of any contract or other instrument he or
she executes in his or her capacity as a director, officer, employee or agent of the Company. The Company will,
subject to applicable law, and the terms of the Company’s constituent documents, indemnify and hold harmless
each director, officer, employee or agent of the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been or will be delegated, against any cost or expense (including
attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Board’s approval) arising out
of any act or omission to act concerning the Plan unless arising out of such person’s own fraud or bad faith.
(h)
Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by,
except to the extent preempted by other applicable laws (1) with respect to the corporate law requirements
applicable to the Company, the validity and authorization of the issuance of Shares under the Plan and similar
matters, the laws of Ireland (without reference to conflict of law principles thereof) and (2) with respect to all
other matters relating to the Plan and Awards, the laws of the State of Delaware, excluding choice-of-law
principles of the law of that state.
EMPLOYMENT AGREEMENT
Exhibit 10.47
THIS EMPLOYMENT AGREEMENT (the “Agreement”), is made as of March 10, 2021 by and between Nabriva
Therapeutics US, Inc. (the “Company”), and Daniel Dolan (the “Executive”) (together, the “Parties”).
RECITALS
WHEREAS, the Company desires to employ the Executive as its Chief Financial Officer and as Chief Financial
Officer of its group of companies; and
WHEREAS, the Executive has agreed to accept such employment on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the
Parties herein contained, the Parties hereto agree as follows:
1.
Agreement. This Agreement shall be effective as of the date first set forth above (the “Effective
Date”). Following the Effective Date, the Executive shall continue to be an employee of the Company until such
employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).
2.
Position. During the Term of Employment, the Executive shall serve as the Chief Financial Officer of the
Company and Nabriva Therapeutics plc (“Parent”), working out of the Company’s office in King of Prussia, Pennsylvania,
and travelling as reasonably required by the Executive’s job duties.
3.
Scope of Employment. During the Term of Employment, the Executive shall be responsible for the
performance of those duties consistent with the Executive’s position as Chief Financial Officer, and shall report to the Chief
Executive Officer of the Company. In the event of the Chief Executive Officer’s unavailability or incapacity, the Executive
shall report to the Board of Directors of Parent (the “Parent Board”), and shall perform and discharge faithfully, diligently,
and to the best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote
substantially all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company,
Parent, and their affiliates. Membership on boards of directors of any additional companies will be permitted only with the
express approval of the Parent Board. Notwithstanding the previous sentence, the Executive may engage in community and
charitable activities or participate in industry associations and serve on the boards of community, charitable or industry
organizations, with the approval of the Chief Executive Officer. The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and Parent and any changes therein that may be adopted from
time to time by the Company and/or Parent.
4.
Compensation. As full compensation for all services rendered by the Executive to the Company and Parent,
and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:
(a)
Base Salary. The Executive shall receive a base salary at the annualized rate of $330,000 (the “Base
Salary”), paid in equal semi-monthly installments in accordance with the Company’s regularly established payroll
procedure. Such Base Salary shall be reviewed by the compensation committee of the Parent Board or the full Parent Board
in the first quarter of each fiscal year.
1
(b)
Annual Bonus. Following the end of each fiscal year and subject to the approval of the Parent
Board, the Executive may be eligible to receive an annual retention and performance bonus based on the Executive’s
performance and the performance of the Company and Parent during the applicable fiscal year, as determined by the Parent
Board in its sole discretion. The Executive’s target annual bonus for each fiscal year shall be 40% of the Executive’s then
current Base Salary (the “Target Bonus”). All annual bonuses, if any, will be payable no later than March 15 of the year
following the year in which they are earned. The Executive must be employed on the date of payment in order to be eligible
for any annual bonus, except as specifically set forth below. The Executive’s bonus for 2021 shall be pro-rated to reflect the
portion of such year following the Executive’s commencement of employment.
(c)
Equity Award. Subject to approval by the compensation committee of the Parent Board or a majority
of the Parent’s Independent Directors as defined in Nasdaq Listing Rule 5605(a)(2), and as a material inducement to the
Executive entering into employment with the Company, the Executive shall be granted an option (the “Option”) to purchase
100,000 ordinary shares, nominal value $0.01 per share, of Parent (each an “Ordinary Share”), such Option to (i) have an
exercise price per share equal to the closing price per share of the Ordinary Shares on the Nasdaq Global Select Market on
the date of grant, (ii) vest over a period of four (4) years, (iii) be a nonqualified share option and (iv) be subject to the terms
and conditions of the Parent’s 2021 Inducement Share Incentive Plan and a nonqualified share option agreement between the
Executive and the Parent. The Option shall be awarded outside of the Parent’s and the Company’s equity incentive plans as
an “inducement grant” within the meaning of Nasdaq Listing Rule 5635(c)(4). The Executive will be eligible to receive
additional equity awards, if any, at such times and on such terms and conditions as the Parent Board shall, in its sole
discretion, determine.
(d)
Vacation or Paid Time Off. The Executive shall be eligible for paid vacation or paid time off and
holidays in accordance with the Company’s vacation or paid time off and holiday policies for senior executive employees.
(e)
Benefits. The Executive may participate in any and all benefit programs that the Company
establishes and makes available to its senior executive employees from time to time, provided that the Executive is eligible
under (and subject to all provisions of) the plan documents governing those programs. Benefits are subject to change at any
time in the Company’s sole discretion.
5.
Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable business and
travel expenses incurred by the Executive on the Company’s behalf during the course of the Executive’s employment, upon
the presentation by the Executive of documentation itemizing such expenditures and attaching all supporting vouchers and
receipts. Reimbursement will be made no later than thirty (30) calendar days after the expense is substantiated (which must
occur within thirty (30) calendar days after the expense is incurred).
6.
Restrictive Covenants Agreement. As a condition to the Executive’s commencement of employment, the
Executive has executed the Company’s standard form of Proprietary Rights, Non-Disclosure, Inventions, and Non-
Solicitation Agreement attached hereto as Exhibit A (the “Restrictive Covenants Agreement”).
7.
Employment Termination. This Agreement and the employment of the Executive shall terminate upon the
occurrence of any of the following:
(a)
Upon the death or “Disability” of the Executive. As used in this Agreement, the term “Disability”
shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the
Executive’s position for a period of more than any three (3) consecutive months
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or for periods aggregating more than twenty-six (26) weeks. The Company shall determine in good faith and in its sole
discretion whether the Executive is unable to perform the services provided for herein.
(b)
At the election of the Company, with or without “Cause” (as defined below), immediately upon
written notice by the Company to the Executive (subject to the cure period requirements set forth below). As used in this
Agreement, “Cause” shall mean a finding by the Parent Board that the Executive:
(i)
repeatedly failed or refused to perform (other than by reason of physical or mental illness or
disability for a period of less than three (3) consecutive months or in aggregate less than twenty-six (26) weeks) the
Executive’s assigned duties under this Agreement or was negligent in the performance of these duties; provided that
it is understood that this clause (i) shall not permit the Company to terminate the Executive’s employment for Cause
solely because of (A) the Executive’s failure to meet specified performance objectives or achieve a specific result or
outcome, or (B) the Company’s dissatisfaction with the quality of services provided by the Executive in the good
faith performance of his or her duties to the Company;
(ii)
materially breached this Agreement;
(iii)
materially breached the Executive’s Restrictive Covenants Agreement, or any similar
written agreement between the Executive and the Company;
(iv)
engaged in willful misconduct, fraud, embezzlement, harassment, discrimination, assault or
other acts of violence in connection with his employment with the Company;
(v)
engaged in any conduct that is materially harmful to the business, interests or reputation of
the Company, unless the Executive had a reasonable and good faith belief that such conduct was in the best interest
of the Company; or
(vi)
was convicted of, or pleaded guilty or nolo contendere to a crime involving moral turpitude
or any felony (other than a vehicular offense not committed in the course of Executive’s duties to the Company).
To the extent any of the above grounds, other than the grounds set forth in Section 7(b)(iv) and 7(b)(vi), is
capable of being cured, the Company shall provide Executive with written notice of the grounds for the Executive’s
termination for Cause, and thirty (30) days within which to cure such grounds.
(c)
At the election of the Executive, with or without “Good Reason” (as defined below), immediately
upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in
the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean:
(i)
the Company’s failure to pay or provide in a timely manner any material amounts owed to
Executive in accordance with this Agreement;
(ii)
a material diminution in the Executive’s base compensation, unless such a reduction is
imposed across-the-board to senior management of the Company;
3
(iii)
a material diminution in the nature or scope of Executive’s duties, responsibilities, or
authority;
(iv)
the Company requiring Executive (without Executive’s consent) to be based at any place
outside a fifty (50)-mile radius of his then-current place of employment with the Company prior to any such
relocation, except for reasonably required travel on the Company’s business; or
(v)
any material breach of this Agreement by the Company not otherwise covered by this
paragraph;
provided, however, that in each case, the Company shall have a period of not less than thirty (30) days to cure any act
constituting Good Reason following the Executive’s delivery to the Company of written notice within sixty (60) days of the
action or omission constituting Good Reason. Any resignation by the Executive for Good Reason shall occur within six (6)
months following the expiration of such cure period.
8.
Effect of Termination.
(a)
All Terminations Other Than by the Company Without Cause or by the Executive With Good
Reason. If the Executive’s employment is terminated under any circumstances other than a Qualifying Termination (as
defined below) (including a voluntary termination by the Executive without Good Reason pursuant to Section 7(c), a
termination by the Company for Cause pursuant to Section 7(b) or due to the Executive’s death or Disability pursuant to
Section 7(a)), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be
entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such
termination, accrued but unused paid time off through and including the effective date of such termination, to be paid in
accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly
scheduled pay period (or such earlier date as is required by applicable law), (ii) unreimbursed business expenses for which
expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any
amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the
Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the
Internal Revenue Code of 1986, as amended, (the “Code”)) (the payments described in this sentence, the “Accrued
Obligations”). The Executive shall not be entitled to any other compensation or consideration that the Executive may have
received had the Executive’s Term of Employment not ceased, except that if Executive’s employment terminated because of
his death or Disability, he or his estate, as the case may be, shall, subject to Section 8(d) hereof, be paid on the later of the
Payment Date (as defined below) and the date on which annual bonuses are paid to all other employees, any earned but
unpaid annual bonus from any previously completed calendar year notwithstanding the requirement that the individual be
employed on the payment date of such annual bonus (such payment, the “Earned but Unpaid Bonus”).
(b)
Termination by the Company Without Cause or by the Executive With Good Reason Prior to or
More Than Twelve Months Following a Change in Control. If the Executive’s employment is terminated by the Company
without Cause pursuant to Section 7(b) or by the Executive with Good Reason pursuant to Section 7(c) (in either case, a
“Qualifying Termination”) prior to or more than twelve (12) months following a Change in Control (as defined below), the
Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the
Company shall: (i) continue to pay to the Executive, in accordance with the Company’s regularly established payroll
procedure, the Executive’s Base Salary for a period of twelve (12) months; (ii) for a period of twelve (12) months following
the date of the Executive’s termination of employment (or, if earlier, the date on which the applicable continuation period
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
4
amended (“COBRA”) expires) (such period, the “COBRA Coverage Period”), provided the Executive is eligible for and
timely elects to continue receiving group medical insurance pursuant to COBRA, continue to pay the Company’s share of
the premium the Executive and/or his eligible dependents are required to pay for continuation coverage pursuant to COBRA
based on the cost sharing levels in effect on the date of the Executive’s termination of employment, unless the Company’s
provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case,
instead of providing the benefits as set forth above, the Company shall instead pay to the Executive the foregoing monthly
amount as a taxable monthly payment for the COBRA Coverage Period (or any remaining portion thereof), unless the
Company determines that such payments would not comply with applicable law in a manner that causes the Company to
incur additional taxes, penalties, fines or charges as a result of such payments (other than employer-side employment taxes
payable on such payments); (iii) pay the Executive any earned but unpaid annual bonus from a previously completed
calendar year on the Payment Date, notwithstanding the requirement that the individual be employed on the payment date of
such annual bonus (but in no event later than March 15 of the calendar year following the calendar year to which such
annual bonus relates); and (iv) pay the Executive a prorated annual bonus for the year in which the Qualifying Termination
occurs, calculated by multiplying 100% of the Target Bonus by a fraction, the numerator of which is equal to the number of
days in the calendar year during which Executive was employed and the denominator of which equals three hundred sixty-
five (365) (the “Pro-Rated Bonus Payment”), which Pro-Rated Bonus Payment shall be paid in a single lump-sum on the
Payment Date (but in no event more than seventy-five (75) days following the termination date) (collectively, the
“Severance Benefits”).
(c)
Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve
Months Following a Change in Control. If a Qualifying Termination occurs within twelve (12) months following a Change
in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of
Section 8(d): (i) the Executive will be eligible to receive the Severance Benefits as set forth in Section 8(b) other than the
Pro-Rated Bonus Payment, subject to the same terms, conditions and limitations described therein; (ii) in lieu of the Pro-
Rated Bonus Payment, the Executive will be eligible to receive a lump sum payment equal to 100% of the Executive’s
Target Bonus for the year in which the Qualifying Termination occurs without regard to whether the performance goals
applicable to such Target Bonus had been established or satisfied at the date of termination of employment, payable in a
lump sum on the Payment Date (but in no event more than seventy-five (75) days following the termination date); and (iii)
all of the Executive’s then-unvested equity awards shall vest and become fully exercisable or non-forfeitable effective as of
the termination date, with the same treatment applying to any then-unvested equity awards granted by the Company to the
Executive under any successor equity incentive plan (provided, however, that the accelerated vesting of any equity awards
the vesting of which is subject to performance-based vesting conditions (and excluding, for the avoidance of doubt,
performance-based awards that are subject to time-based vesting following the achievement of the applicable performance
metric) shall be governed by the individual award agreement and the equity plan under which such awards were granted to
the extent such award agreement specifically provides that such awards will not be eligible for accelerated vesting under this
Agreement) (provided that, with respect to any equity award that is a restricted stock unit, in no event shall such restricted
stock unit be settled later than the March 15 of the calendar year following the year in which the termination date occurs)
(collectively, the “Change in Control Severance Benefits”).
(d)
Release. As a condition of the Executive’s receipt of the Earned but Unpaid Bonus, the Severance
Benefits or the Change in Control Severance Benefits, as applicable, the Executive or his estate, as applicable, must execute
and deliver to the Company a severance and release of claims agreement in substantially the form attached hereto as Exhibit
B (the “Severance Agreement”), which Severance Agreement must become irrevocable within sixty (60) days following the
date of the Executive’s termination of employment (or such shorter period as may be directed by the Company). Subject to
any earlier payment deadline set forth in Section 8(b) or 8(c) above, the Earned but Unpaid Bonus, the
5
Severance Benefits or the Change in Control Severance Benefits, as applicable, will be paid or commence to be paid in the
first regular payroll beginning after the Severance Agreement becomes effective, provided that if the foregoing sixty (60)
day period would end in a calendar year subsequent to the year in which the Executive’s employment ends, the Earned but
Unpaid Bonus, the Severance Benefits or Change in Control Severance Benefits, as applicable, will not be paid or begin to
be paid before the first payroll of the subsequent calendar year (the date the Earned but Unpaid Bonus, the Severance
Benefits or Change in Control Severance Benefits, as applicable, are paid or commence pursuant to this sentence, the
“Payment Date”). The Executive must continue to comply with the Restrictive Covenants Agreement in order to be eligible
to continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.
(e)
Change in Control Definition. For purposes of this Agreement, “Change in Control” shall mean:
(i) an exclusive license of or the sale, the lease or other disposal of all or substantially all of the assets of the Company or
Parent; (ii) a sale or other disposal (for the avoidance of doubt, the term disposal shall not include a pledge) in any
transaction or series of transactions to which the Company is a party of 50% or more of the voting power of the Company
(other than a sale or other disposal to the Company, Parent or any of their respective subsidiaries), other than any transaction
or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or
indebtedness of the Company is cancelled or converted, or a combination thereof; (iii) a sale or other disposal (for the
avoidance of doubt, the term disposal shall not include a pledge) in any transaction or series of transactions to which Parent
is a party of 50% or more of the voting power of Parent (other than a sale or other disposal to the Company, Parent or any of
their respective subsidiaries), other than any transaction or series of transactions principally for bona fide equity financing
purposes in which cash is received by Parent or indebtedness of Parent is cancelled or converted, or a combination thereof;
(iv) a merger or consolidation of the Company or Parent with or into any third party, other than any merger or consolidation
in which the shares of the Company or Parent, respectively, immediately preceding such merger or consolidation continue to
represent a majority of the voting power of the surviving entity immediately after the closing of such merger or
consolidation; (v) during any period of two (2) consecutive years, individuals who, at the beginning of such period,
constitute the Parent Board together with any new director(s) (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv)) whose election by the
Parent Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of the two (2) year period or whose election or
nomination for election was previously so approved, cease for any reason to constitute a majority thereof; and (vi) a
liquidation, winding up or any other form of dissolution of the Company or Parent. For the avoidance of doubt, any one or
more of the above events with respect to Parent may be effected pursuant to (A) a compromise or arrangement sanctioned by
the court under Chapter 1 of Part 9 of the Companies Act 2014 of the Republic of Ireland or (B) otherwise under Part 9 of
the Companies Act 2014 of the Republic of Ireland or (C) otherwise under the Companies Act 2014 of the Republic of
Ireland.
9.
Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth
in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the
following provisions shall apply:
(a)
The Company shall not be obligated to provide to the Executive any portion of any “Contingent
Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the minimum
extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(1) of the Code) for the
Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the
“Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1,
Q/A-30 or any successor
6
provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”
(b)
Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation
Payments shall be made if (1) the net amount of such Contingent Compensation Payments, as so reduced by the Eliminated
Amount (computed without regard to this sentence) (but after subtracting the amount of any taxes that would be incurred by
the Executive on such reduced Contingent Compensation Payments (including state and federal income taxes on the reduced
Contingent Compensation Payments and any withholding taxes)) is less than (2) the net amount of such Contingent
Compensation Payments without such reduction (but after subtracting the amount of any taxes that would be incurred by the
Executive on the Contingent Compensation Payments if the Eliminated Payments (determined without regard to this
sentence) were paid to the Executive (including state and federal income taxes on the Contingent Compensation Payments,
the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in
excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes)). The
override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a
“Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the
receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated
Payment by the maximum combined federal and state income tax rate provided by law.
(c)
For purposes of this Section 9 the following terms shall have the following respective meanings:
(i)
“Change in Ownership or Control” shall mean a change in the ownership or effective
control of the Company or in the ownership of a substantial portion of the assets of the Company determined in
accordance with Section 280G(b)(2) of the Code.
(ii)
“Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of
compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a
“disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.
(d)
The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined
by the Company in a manner that results in the maximum economic benefit to the Executive on an after-tax basis
(considering maximum statutory tax rates). Except to the extent that an alternative reduction order would result in a greater
economic benefit to the Executive on an after-tax basis, the Parties intend that such reduction be determined by the 280G
Firm (as defined below) by determining the “Contingent Compensation Payment Ratio” (as defined below) for each
Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the
Contingent Compensation Payment with
that,
notwithstanding the foregoing, any such reduction shall be undertaken in a manner that complies with and does not result in
the imposition of additional taxes on the Executive under Section 409A of the Code. For Contingent Compensation
Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be
reduced based on the time of payment of such Contingent Compensation Payments with amounts having later payment dates
being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and
the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below
zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term
“Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which
the highest Contingent Compensation Payment Ratio; provided
7
is the value of the applicable Contingent Compensation Payment for purposes of Section 4999(a) of the Code, and the
denominator of which is the actual amount received by the Executive in respect of the applicable Contingent Compensation
Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control
because the time at which the payment is made or the payment vests is accelerated, the denominator shall be determined by
reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for
determining the value of accelerated payments set forth in Treasury Regulation Section 1.280G-1 Q/A-24(b) or (c).
(e)
All determinations regarding the application of this Section 9 shall be made by an accounting firm,
law firm or consulting group with nationally recognized standing and substantial expertise and experience in performing
calculations regarding the applicability of Section 280G of the Code and the excise tax retained by the Company prior to the
date of the applicable change in control (the “280G Firm”). The 280G Firm will be directed to submit its determination and
detailed supporting calculations to both the Executive and the Company within thirty (30) days after notification from either
the Company or the Executive that the Executive may receive payments which may be Contingent Compensation Payments
(or such earlier or later date as the Company and Executive may agree). The Executive and the Company will each provide
the 280G Firm access to and copies of any books, records, and documents in their possession as may be reasonably
requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of
the determinations and calculations contemplated by this letter agreement. The fees and expenses of the 280G Firm for its
services in connection with the determinations and calculations contemplated by this Section 9 will be borne by the
Company. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses
incurred in any later audit) shall be borne by the Company.
(f)
The provisions of this Section 9 are intended to apply to any and all payments or benefits available
to the Executive under this Agreement or any other agreement or plan under which the Executive receives Contingent
Compensation Payments.
10.
Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any
employment contracts, restrictive covenants or other restrictions that prevent the Executive from entering into employment
with, or carrying out the Executive’s responsibilities for, the Company, Parent or their affiliates, or which are in any way
inconsistent with any of the terms of this Agreement.
11.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for
next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each
case addressed to the Company at its principal executive offices and to the Executive at his or her most recent address set
forth in the Company’s personnel records. Either Party may change the address to which notices are to be delivered by
giving notice of such change to the other Party in the manner set forth in this Section 11.
12.
Arbitration. Unless otherwise prohibited by law or specified below, all disputes, claims and causes of action,
in law or equity, arising from or relating to this Agreement or its enforcement, performance, breach, or interpretation shall be
resolved solely and exclusively by final and binding arbitration held in King of Prussia, Pennsylvania, before a single,
mutually-agreed neutral arbitrator, through Judicial Arbitration & Mediation Services/Endispute (“JAMS”) under the then
existing JAMS arbitration rules. The rules may be found online at www.jamsadr.com or upon written request to the
Company. This paragraph is intended to be the exclusive method for resolving any and all claims by the parties against each
other relating to Executive’s employment; provided that Executive will retain the right to file administrative charges with or
seek relief through any government agency of competent jurisdiction, and to participate in any government investigation,
including but not limited to (a) claims for workers’
8
compensation, state disability insurance or unemployment insurance; (b) administrative claims brought before any state or
federal governmental authority (provided that any appeal from an award or from denial of an award of wages and/or waiting
time penalties shall be arbitrated pursuant to the terms of this Section 12); and (c) claims for administrative relief from the
United States Equal Employment Opportunity Commission (or any similar agency in any applicable jurisdiction) (provided,
that, except as otherwise provided by law, Executive will not be entitled to obtain any monetary relief through such agencies
other than workers’ compensation benefits or unemployment insurance benefits). Further, nothing in this Section 12 is
intended to prevent either party from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion
of any such arbitration, including without limitation injunctive relief, in any court of competent jurisdiction. Seeking any
such relief shall not be deemed to be a waiver of such party’s right to compel arbitration. In resolving any matter submitted
to arbitration, the arbitrator will strictly follow the substantive law applicable to the dispute, claim or controversy and the
arbitrator’s authority and jurisdiction will be limited to determining the dispute in conformity with applicable law as to
liability, damages and remedies, to the same extent as if the dispute was determined by a court without a jury. The arbitrator
will issue a written decision that contains the essential findings of fact and conclusions of law on which the decision is
based, which may be entered as a judgment in any court of competent jurisdiction. The Company shall pay all costs of
arbitration, including without limitation, arbitration administrative fees, arbitrator compensation and expenses, and costs of
any witnesses called by the arbitrator. Unless otherwise ordered by the arbitrator under applicable law, each party shall each
bear its or his or her own expenses, such as attorneys’ fees, costs and disbursements; provided, however, the Company and
Executive agree that, to the extent permitted by law, the arbitrator may, in his or her discretion, award reasonable attorneys’
fees to the prevailing party. Each party warrants that it has had the opportunity to be represented by counsel in the
negotiation and execution of this Agreement, including the attorneys’ fees provision herein.
13.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the
Executive each hereby irrevocably waives any right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.
14.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
15.
Effect of Section 409A of the Code.
(a)
Six Month Delay. If and to the extent any portion of any payment, compensation or other benefit
provided to the Executive in connection with the Executive’s employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified
employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its
procedures, by which determination Executive hereby agrees that the Executive is bound, such portion of the payment,
compensation or other benefit shall not be paid before the earlier of (i) the expiration of the six (6) month period measured
from the date of the
9
Executive’s “separation from service” (as determined under Section 409A of the Code) and (ii) the tenth day following the
date of the Executive’s death following such separation from service (the “New Payment Date”). The aggregate of any
payments that otherwise would have been paid to the Executive during the period between the date of separation from
service and the New Payment Date shall be paid to the Executive in a lump sum in the first payroll period beginning after
such New Payment Date, and any remaining payments will be paid on their original schedule.
(b)
General 409A Principles. For purposes of this Agreement, a termination of employment will mean a
“separation from service” as defined in Section 409A of the Code, each amount to be paid or benefit to be provided will be
construed as a separate identified payment for purposes of Section 409A of the Code, and any payments that are due within
the “short term deferral period” as defined in Section 409A of the Code or are paid in a manner covered by Treas. Reg.
Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless applicable law requires otherwise. Neither
the Company nor the Executive will have the right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section 409A of the Code. This Agreement is intended to comply
with the provisions of Section 409A of the Code and this Agreement shall, to the extent practicable, be construed in
accordance therewith. Terms defined in this Agreement will have the meanings given such terms under Section 409A of the
Code if and to the extent required to comply with Section 409A of the Code. In any event, the Company makes no
representations or warranty and will have no liability to the Executive or any other person if any provisions of or payments
under this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but not to
satisfy the conditions of that section.
(c)
Reimbursements. To the extent that any payments or reimbursements provided to the Executive
under this Agreement are deemed to constitute compensation to the Executive to which Treasury Regulation Section
1.409A-3(i)(1)(iv) would apply, such amounts shall be paid or reimbursed reasonably promptly, but not later than December
31 of the year following the year in which the expense was incurred. The amount of any such payments eligible for
reimbursement in one year shall not affect the payments or expenses that are eligible for payment or reimbursement in any
other taxable year, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to
liquidation or exchange for any other benefit.
16.
Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully
discuss and review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive
further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
17.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in
exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by
the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of
any right on any other occasion.
18.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
10
19.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
20.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any
of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope,
whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it
to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent
of the Parties.
21.
Entire Agreement. This Agreement, together with the Restrictive Covenants Agreement, constitutes the
entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral,
relating to the subject matter hereof and thereof, including, without limitation, the Offer Letter dated February 12, 2021.
22.
Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and
withholdings.
23.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
11
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as of the day and year set forth
above.
NABRIVA THERAPEUTICS US, INC.
/s/ Michele Porreca
By:
Name:Michele Porreca
Title: Chief HR Officer
Date: March 10, 2021
EXECUTIVE
/s/ Daniel Dolan
Name: Daniel Dolan
Date: March 10, 2021
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
EXHIBIT A
RESTRICTIVE COVENANTS AGREEMENT
[Attached]
EXHIBIT B
SEPARATION AND RELEASE OF CLAIMS AGREEMENT1
This SEPARATION AND RELEASE OF CLAIMS AGREEMENT (the “Agreement”) is made as of the Agreement
Effective Date (as defined below) between Nabriva Therapeutics US, Inc. (the “Company”) and Daniel Dolan
(“Executive”) (together, the “Parties”).
RECITALS
WHEREAS, the Company and Executive are parties to the Employment Agreement dated as of March 10, 2021
(the “Employment Agreement”);
WHEREAS, the Parties are ending their employment relationship and wish to establish mutually agreeable terms
for Executive’s orderly transition and separation from the Company effective on the Separation Date (as defined below); and
WHEREAS, the Parties agree that the payments, benefits and rights set forth in this Agreement shall be the
exclusive payments, benefits and rights due Executive.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. Separation Date. Executive’s effective date of separation from employment with the Company and, as
may be applicable, any and all of its parents, affiliates and subsidiaries, including, without limitation, Nabriva Therapeutics
GMBH and Nabriva Therapeutics plc (“Parent”) (together, the “Affiliates”), will be [__________] (the “Separation Date”).
Executive hereby resigns, as of the Separation Date, from any and all of his or her positions as an officer and employee of
the Company and each of its Affiliates, and Executive further agrees to execute and deliver any documents reasonably
necessary to effectuate such resignations, provided that nothing in any such document is inconsistent with any terms set forth
in this Agreement. As of the Separation Date, all salary payments from the Company will cease and any benefits Executive
had as of such date under Company-provided benefit plans, programs, or practices will terminate, except as required by
applicable law or as otherwise specifically set forth in this Agreement.
2.
Severance Benefits. In return for Executive’s timely signing and not revoking this Agreement as set forth in
Section 13 below, and subject to Executive’s compliance with all terms hereof, the Company will provide Executive with
[INSERT PER EMPLOYMENT AGREEMENT, AS MAY BE APPLICABLE] (the “Severance Benefits”). Other than the
Severance Benefits, Executive will not be eligible for, nor shall he or she have a right to receive, any payments or benefits
from the Company or any of its Affiliates following the Separation Date, other than reimbursement for any outstanding
business expenses in accordance with Company policy.
1 NOTE: The Parties agree that the Company may revise this release agreement to reflect changes in law, additional statutes or
claims, benefits, or your circumstances, so that the Company receives the benefit of the most complete release of claims that is
legally permissible and may also change the timing, if required to obtain such release. This footnote and any other footnotes are part
of the form of release agreement and are to be removed only when the Company finalizes the Separation and Release of Claims
Agreement for execution. If the release is as a result of Executive’s death, the Company will revise and provide for a comparable
release by the Executive’s estate or beneficiaries.
1
3.
Release of Claims. In exchange for the consideration set forth in this Agreement, which Executive
acknowledges he or she would not otherwise be entitled to receive, Executive hereby fully, forever, irrevocably and
unconditionally releases, remises and discharges the Company, its Affiliates (including, without limitation, the Parent),
subsidiaries, parent companies, predecessors, and successors, and all of its and their respective past and present officers,
directors, stockholders, investors, partners, members, managers, employees, agents, representatives, plan administrators,
attorneys, insurers and fiduciaries (each in their individual and corporate capacities) (collectively, the “Released Parties”)
from any and all claims, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts,
reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys’ fees and costs), of every kind and nature that Executive ever had or now has against any or all
of the Released Parties, whether known or unknown, including, but not limited to, any and all claims arising out of or
relating to Executive’s employment with and/or separation from the Company, including, but not limited to, all claims under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., the Genetic Information
Nondiscrimination Act of 2008, 42 U.S.C. § 2000ff et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et seq., the
Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. § 2101 et seq., the Rehabilitation Act of 1973, 29
U.S.C. § 701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit Reporting Act, 15 U.S.C. § 1681 et
seq., the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), the False Claims Act, 31
U.S.C. § 3729 et seq., 38 U.S.C. § 4301 et seq., and the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. § 1001 et seq., all as amended; all claims arising out of the Pennsylvania Human Relations Act, 43 Pa. Stat. § 951 et
seq., the Pennsylvania Equal Pay Law, 43 Pa. Stat. § 336.1 et seq., and the Pennsylvania Whistleblower Law, 43 Pa.
Stat. § 1421 et seq., all as amended; all claims arising out of the California Fair Employment and Housing Act, Cal. Gov’t.
Code § 12900 et seq., Cal. Labor Code § 201 et seq. (California payment of wages law), the California Equal Pay Act, Cal.
Lab. Code § 1197.5 et seq., the California Family Rights Act, Cal. Gov’t. Code § 12945.2 and § 19702.3, the Cal-WARN
Act, Cal. Lab. Code §§ 1400-1408, Cal. Lab. Code § 233 (California’s kin care law), Cal. Lab. Code § 230.8 (California
leave for school activities law), Cal. Lab. Code § 245.5 (California paid sick leave law), Cal. Lab. Code §§ 230 and 230.1
(California domestic violence leave law), Cal. Mil. And Vet. Code § 395.10 (California military family leave law), Cal. Code
Regs. tit. 2, §§ 11035-11051 (California’s pregnancy leave law), California Unruh Civil Rights Act, Cal. Civ. Code § 51 et
seq., and Cal. Lab. Code §§ 98.6 and 1102.5 (California whistleblower protection laws), all as amended; all common law
claims including, but not limited to, actions in defamation, intentional infliction of emotional distress, misrepresentation,
fraud, wrongful discharge, and breach of contract (including, without limitation, all claims arising out of or related to the
Employment Agreement); all claims to any non-vested ownership interest in the Company, contractual or otherwise; all state
and federal whistleblower claims to the maximum extent permitted by law; and any claim or damage arising out of
Executive’s employment with and/or separation from the Company and/or its Affiliates (including a claim for retaliation)
under any common law theory or any federal, state or local statute or ordinance not expressly referenced above.
Notwithstanding the foregoing, nothing in this release of claims prevents Executive from filing a charge with,
cooperating with, or participating in any investigation or proceeding before, the Equal Employment Opportunity
Commission or a state fair employment practices agency (except that Executive acknowledges that he may not recover any
monetary benefits in connection with any such charge, investigation, or proceeding, and Executive further waives any rights
or claims to any payment, benefit, attorneys’ fees or other remedial relief in connection with any such charge, investigation
or proceeding). Further, nothing herein shall prevent Executive from bringing claims to enforce this Agreement, or release
(i) any rights Executive may have under the Company’s certificate of incorporation, by-laws, insurance and/or any
indemnification agreement between him or her and the Company (and/or otherwise under law) for indemnification and/or
defense as an employee, officer or director of the Company
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for his or her service to the Company (recognizing that such indemnification and/or defense is not guaranteed by this
Agreement and shall be governed by the instrument or law, if any, providing for such indemnification and/or defense),
(ii) any rights Executive may have to vested or earned compensation or benefits, including pension or 401(k) benefits or
interests under any ERISA-Covered benefit plan (excluding severance) provided by the Company, (iii) Executive’s right to
communicate or cooperate with any government agency, (iv) claims for unemployment compensation or any state disability
insurance benefits pursuant to the terms of applicable state law; (v) claims for workers’ compensation insurance benefits
under the terms of any worker’s compensation insurance policy or fund of the Company; and (vi) any rights or claims that
cannot be waived by law, including claims for unemployment benefits.
4.
Section 1542 Waiver. Executive understands and agree that the claims released in Section 3 above include
not only claims presently known to Executive, but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope
of the released claims as described in Section 3. Executive understands that he may hereafter discover facts different from
what he now believes to be true, which if known, could have materially affected this Agreement, but Executive nevertheless
waives any claims or rights based on different or additional facts. Executive knowingly and voluntarily waive any and all
rights or benefits that he may now have, or in the future may have, under the terms of Section 1542 of the Civil Code of the
State of California, which provides as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED
PARTY.”
5.
Continuing Obligations. Executive acknowledges and reaffirms his or her obligation, to the extent permitted
by law and except as otherwise permitted by Section 9 below, to keep confidential and not to use or disclose any and all non-
public information concerning the Company and/or its Affiliates that Executive acquired during the course of his or her
employment with the Company and/or its Affiliates, including, but not limited to, any non-public information concerning the
Company’s and/or its Affiliates’ business affairs, business prospects, and financial condition. Executive further
acknowledges and reaffirms his or her obligations set forth in the Proprietary Rights, Non-Disclosure, Inventions, and Non-
Solicitation Agreement that he previously executed for the benefit of the Company (the “Restrictive Covenants
Agreement”), which remain in full force and effect and which survive his or her separation from employment with the
Company.
6.
Non-Disparagement. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, he or she will not, in public or private, make any disparaging, derogatory or
defamatory statements to any person or entity, including, but not limited to, any media outlet, industry group, financial
institution or current or former employee, board member, consultant, client or customer of the Company, regarding the
Company or its Affiliates (including, without limitation, Parent), and all of its and their respective officers, directors or
employees or regarding the Company’s business affairs, business prospects, or financial condition. The Company agrees
that, to the extent permitted by law, none of their respective officers or directors will, in public or private, make any
disparaging, derogatory or defamatory statements to any person or entity, including, but not limited to, any media outlet,
industry group, financial institution or current or former employee, board member, consultant, client or customer of the
Company, regarding Executive. Notwithstanding the foregoing, nothing herein shall be construed as preventing any Party
from making truthful disclosures in any litigation or arbitration.
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7.
Return of Company Property. Executive confirms that he or she has returned to the Company or, with the
written permission of the Company, destroyed, all keys, files, records (and copies thereof), equipment (including, but not
limited to, computer hardware, software and printers, flash drives and other storage devices, wireless handheld devices,
cellular phones, tablets, etc.), Company identification and any other tangible or intangible Company-owned property in his
or her possession or control and, other than with the written permission of the Company, has left intact, and has otherwise
not destroyed, deleted or made inaccessible to the Company, all electronic Company documents, including but not limited to
those that he developed or helped to develop during his or her employment or service with the Company. Executive further
confirms that, to the extent requested by the Company, he has canceled all accounts for his or her benefit, if any, in the
Company’s name, including but not limited to, credit cards, telephone charge cards, cellular phone and/or wireless data
accounts and computer accounts.
8.
Confidentiality. Executive understands and agrees that, to the extent permitted by law and except as
otherwise permitted by Section 9 below, the contents of the negotiations and discussions resulting in this Agreement shall be
maintained as confidential by Executive and his or her agents and representatives and shall not be disclosed except as
otherwise agreed to in writing by the Company; provided, however, that nothing herein shall be construed as preventing
Executive from making truthful disclosures in any litigation or arbitration or from having confidential conversations with his
or her agents and representatives and family members on the condition that any individuals so informed must hold the above
information in strict confidence.
9.
Scope of Disclosure Restrictions. Nothing in this Agreement or elsewhere prohibits Executive from
communicating with government agencies about possible violations of federal, state, or local laws or otherwise providing
information to government agencies, filing a complaint with government agencies, or participating in government agency
investigations or proceedings. Executive is not required to notify the Company of any such communications; provided,
however, that nothing herein authorizes the disclosure of information Executive obtained through a communication that was
subject to the attorney-client privilege. Further, notwithstanding Executive’s confidentiality and nondisclosure obligations,
Executive is hereby advised as follows pursuant to the Defend Trade Secrets Act: “An individual shall not be held criminally
or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in
confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for
the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed
in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an
employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the
trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under
seal; and (B) does not disclose the trade secret, except pursuant to court order.”
10.
Cooperation. Executive agrees that, to the extent permitted by law, he or she shall cooperate fully with the
Company in the investigation, defense or prosecution of any claims or actions which already have been brought, are
currently pending, or which may be brought in the future against the Company by a third party or by or on behalf of the
Company against any third party, whether before a state or federal court, any state or federal government agency, or a
mediator or arbitrator, that relate in any manner to Executive’s conduct or duties at the Company or that are based on facts
about which Executive obtained personal knowledge while employed at or providing services to the Company. Executive’s
full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with
the Company’s counsel, at reasonable times and locations designated by the Company, to investigate or prepare the
Company’s claims or defenses, to prepare for trial or discovery or an administrative hearing, mediation, arbitration or other
proceeding and to act as a witness when requested by the Company. Any reasonable out-of-pocket expenses incurred by
Employee associated with such cooperation will be paid for or reimbursed by the Company. Executive further agrees that, to
the extent
4
permitted by law, he will notify the Company promptly in the event that he is served with a subpoena (other than a subpoena
issued by a government agency), or in the event that he is asked to provide a third party (other than a government agency)
with information concerning any actual or potential complaint or claim against the Company.
11.
Business Expenses and Final Compensation. Executive acknowledges that he has been reimbursed by the
Company for all business expenses incurred in conjunction with the performance of his or her employment and that no other
reimbursements are owed to him or her. Executive acknowledges that he has received all compensation due to him or her
from the Company, including, but not limited to, all wages, bonuses and accrued, unused vacation time, and that he or she is
not eligible or entitled to receive any additional payments or consideration from the Company beyond that provided for in
Section 2 of this Agreement.
12.
Modified Section 280G Cutback. Section 9 of the Employment Agreement is hereby incorporated by
reference and shall continue to apply to Executive as if fully set forth herein.
13.
2Time for Consideration and Revocation. Executive acknowledges that he or she was initially presented
with this Agreement on [________] (the “Receipt Date”). Executive understands that this Agreement shall be of no force or
effect, and that he or she shall not be eligible for the consideration described herein, unless he or she signs and returns this
Agreement no later than the [twenty-second (22nd) day] [forty-sixth (46th) day] after the Receipt Date and does not revoke
his or her acceptance in the subsequent seven (7) day period (the day immediately following expiration of such revocation
period, the “Agreement Effective Date”). Executive acknowledges that he or she will not be entitled to the Severance
Benefits unless the Agreement Effective Date occurs within sixty (60) days following the Separation Date (or such shorter
period as may be directed by the Company at the time of separation).
14.
Acknowledgments. Executive acknowledges that he or she has been given at least [twenty-one (21)][forty-
five (45)] days to consider this Agreement, and that the Company is hereby advising him or her to consult with an attorney
of his or her own choosing prior to signing this Agreement. Executive further acknowledges and agrees that any changes
made to this Agreement following his or her initial receipt of this Agreement, whether material or immaterial, shall not
restart or affect in any manner the [twenty-one (21)][forty-five (45)] day consideration period. Executive understands that
he or she may revoke this Agreement for a period of seven (7) days after he or she signs it by notifying the Company in
writing, and the Agreement shall not be effective or enforceable until the expiration of this seven (7) day revocation period.
Executive understands and agrees that by entering into this Agreement he or she will be waiving any and all rights or claims
he or she might have under the Age Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, and that he or she has received or will receive consideration beyond that to which he was previously entitled.
15.
Voluntary Assent. Executive states and represents that Executive has had an opportunity to fully discuss and
review all of the terms of this Agreement with an attorney of the Executive’s own choosing. The Executive further states and
represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily
assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.
16.
Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days
after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for
next-business day delivery via a reputable nationwide overnight
2 NOTE: Sections 13 and 14 to be included if Executive is age 40 or older on the Separation Date.
5
courier service, or immediately upon hand delivery, in each case addressed to the Company at its principal executive offices
and to the Executive at his or her most recent address set forth in the Company’s personnel records. Either Party may
change the address to which notices are to be delivered by giving notice of such change to the other Party in the manner set
forth in this Section 16.
17.
Arbitration. The parties agree that any and all disputes, claims and causes of action, in law or equity, arising
from or relating to this Agreement, the Employment Agreement or their enforcement, performance, breach, or interpretation,
or the Executive’s termination of employment or service, shall be subject to arbitration in accordance with the provisions of
Section 12 of the Employment Agreement, which is incorporated herein by reference.
18.
Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action,
suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a
court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of
Pennsylvania), and the Parties each consent to the jurisdiction of such a court. The Parties each hereby irrevocably waives
any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this
Agreement.
19.
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and
their respective successors and assigns, including any corporation with which or into which the Company may be merged or
which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall
not be assigned by the Executive. Notwithstanding the foregoing, in the event of the Executive’s death, his rights to any
payments or benefits hereunder to which he is or becomes entitled to at the time of his death may be assigned or transferred
by the laws of descent and distribution and any such payments or benefits will be provided to the Executive’s beneficiaries
or estate, as applicable.
20.
No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified
only by a written instrument executed by each Party. No delay or omission by the Company in exercising any right under
this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one
occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other
occasion.
21.
Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference
only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context
may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and
the singular forms of nouns and pronouns shall include the plural, and vice versa.
22.
Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or
rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or
“including” should be read as though they said “without limitation” or equivalent forms.
23.
Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any
of the provisions contained in
6
this Agreement to be unenforceable because the provision is excessively broad in scope, whether as to duration, activity,
geographic application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so
as to be enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.
24.
Entire Agreement. This Agreement and the Restrictive Covenant Agreement contain and constitute the entire
understanding and agreement between the Parties hereto with respect to Executive’s separation from the Company,
severance benefits and the settlement of claims against the Company, and cancels all previous oral and written negotiations,
agreements, commitments and writings in connection therewith, including without limitation, the Employment Agreement;
provided, however, that nothing in this Section shall modify, cancel or supersede Executive’s obligations set forth in
Section 5 above or under the Restrictive Covenants Agreement; provided, further, that notwithstanding this Section 24,
Sections 9, 12 and 15 of the Employment Agreement shall survive and shall continue to be binding on the Parties and to
govern the payment of the Severance Benefits.
25.
Tax Acknowledgement. In connection with the Severance Benefits provided to Executive pursuant to this
Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and
Executive shall be responsible for all applicable taxes owed by him or her with respect to such Severance Benefits under
applicable law. Executive acknowledges that he is not relying upon the advice or representation of the Company with
respect to the tax treatment of any of the Severance Benefits.
26.
Section 409A. Section 15 of the Employment Agreement is hereby incorporated by reference and shall
apply to this Agreement as if set forth herein in full.
27.
Counterparts; Facsimile or .pdf Signatures. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall
constitute one and the same agreement. This Agreement may be executed and delivered by facsimile or by .pdf file and upon
such delivery the facsimile or .pdf signature will be deemed to have the same effect as if the original signature had been
delivered to the other party.
[Signatures on Page Following]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date(s) written below.
NABRIVA THERAPEUTICS US, INC.
By:
Name:
Title:
Date:
EXECUTIVE
I hereby agree to the terms and conditions set forth above. I have been given at least [twenty-one (21)][forty-five
(45)] days to consider this Agreement and I have chosen to execute this on the date below. I intend that this
Agreement will become a binding agreement if I do not revoke my acceptance within seven (7) days.
Name: Daniel Dolan
Date:
[SIGNATURE PAGE TO SEPARATION AND RELEASE OF CLAIMS AGREEMENT]
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.
Exhibit 10.48
AMENDMENT TO THE LICENSE AGREEMENT
This Amendment to the License Agreement (this Amendment) is made and entered into effective as of October
29, 2020 (the Effective Date)
BY and BETWEEN:
(1) Nabriva Therapeutics Ireland Designated Activity Company, a private limited company incorporated
under the laws of Ireland (registered number 612454), with its registered office at Suite 510, Regus Dublin
Airport, Skybridge House Dublin, Airport, Swords, Co. Dublin, K67 P6K2, Republic of Ireland
(Nabriva); and
(2) Roivant China Holdings Limited (a/k/a Sinovant Sciences Ltd.), an exempted limited company
incorporated under the laws of Bermuda, having its registered office at 2 Church Street, Hamilton,
Bermuda and a wholly-owned subsidiary of Parent (Licensee);
(3) Nabriva Therapeutics GmbH (formerly Nabriva Therapeutics AG), a private limited company
incorporated and registered in Austria (registered number FN 269261y), with its registered office at
Leberstrasse 20, 1110 Vienna, Austria (NTGmbH);
(4) Roivant Sciences, Ltd., an exempted limited company incorporated under the laws of Bermuda, having
its registered office at 2 Church Street, Hamilton, Bermuda (Parent);
(5) Sinovant Sciences Co. Ltd. (Chinese name: 上海仑胜医药科技有限公司), a company duly established
and validly existing under the laws of the People’s Republic of China (PRC or China) with its registered
office at 3/F, Building 1, No. 400, Fang Chun Road, Pilot Free Trade Zone, Shanghai, China 200120
(business license number: 91310115MA1K44DG3J) (Sinovant Shanghai); and
(6) Sinovant Sciences HK Limited, a limited company incorporated under the laws of Hong Kong, with its
registered office at 9/F Three Exchange Square, Central, Hong Kong and a subsidiary of RCHL (Sinovant
HK).
Nabriva, Licensee, NTGmbH, Parent, Sinovant Shanghai, Sinovant HK are referred to herein individually as a
Party and collectively as the Parties. Nabriva and NTGmbH are referred to herein individually as a Nabriva
Party and collectively as the Nabriva Parties.
Terms not specifically defined herein shall have the same meanings as ascribed to them under the License
Agreement (defined below).
RECITALS:
(A) WHEREAS, Nabriva, NTGmbH, Licensee and Parent entered into that certain License Agreement dated
March 26, 2018 (the License Agreement) under which Nabriva and NTGmbH granted a license of certain
intellectual property rights to Licensee in order for Licensee to develop and commercialize Licensed
Products in the Territory (including Mainland China, the Hong Kong Special Administrative Region,
Execution Version
the Macau Special Administrative Region and Taiwan) pursuant to the terms and conditions of the License
Agreement;
(B) WHEREAS, to expedite commercialization of Licensed Products in the Territory, the Parties, after friendly
consultations, wish first to apply for an import drug license (IDL, including its renewals and supplements)
for import and commercialization of Licensed Products in mainland China where Nabriva will become the
marketing authorization holder of such IDL (MAH) and Sinovant Shanghai will be the drug registration
agent responsible for preparing, obtaining and maintaining on behalf of Nabriva relevant Drug Approval
Applications, Regulatory Approvals and other submissions for such IDL in accordance with the terms and
conditions set forth below; and
(C) Nabriva and Sinovant HK will enter into certain Technology Transfer Agreement, Agreement for the
Manufacture & Supply of Commercial Material, Framework Agreement and other transaction documents
to carry out the transactions contemplated under the License Agreement and the Parties wish to include
Sinovant HK as a party to the License Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions set forth herein
and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, do hereby agree as follows:
1. Nabriva as MAH for IDL
To designate Nabriva as the MAH and Sinovant Shanghai as the exclusive drug registration agent for an
IDL for Licensed Product in mainland China, the Parties agree that Clause 3.2(a) of License Agreement
shall be amended as follows.
Clause 3.2(a) currently reads:
“Licensee shall have the responsibility, at its cost, and subject to the Retained Rights, except as otherwise
expressly set forth in this Clause 3.2 (Regulatory Activities), and in accordance with this Agreement, to
prepare, obtain and maintain Drug Approval Applications (including the setting of the overall regulatory
strategy therefor), other Regulatory Approvals and other submissions (including INDs and CTAs) and to
conduct communications with the Regulatory Authorities, for Licensed Products in the Field in the
Territory in its name.”
Shall be deleted and replaced in its entirety with:
“Licensee shall have the responsibility, at its cost, and subject to the Retained Rights, except as otherwise
expressly set forth in this Clause 3.2 (Regulatory Activities), and in accordance with this Agreement, to
prepare, obtain and maintain Drug Approval Applications (including the setting of the overall regulatory
strategy therefor), other Regulatory Approvals and other submissions (including INDs and CTAs) and to
conduct communications with the Regulatory Authorities, for Licensed Products in the Field in the
Territory in its name.
Notwithstanding the foregoing, the Parties agree that for the purpose of Drug
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Approval Applications and submissions relating to IDL in mainland China, subject to and without
prejudice to Licensee’s exclusive rights to Develop and Commercialize the Licensed Compound and
Licensed Products in the Territory under the License Agreement (in particular, Clause 2.1 (Grants to
Licensee) of the License Agreement), Nabriva shall be the MAH for such Drug Approval Applications,
Regulatory Approvals and submissions, and Sinovant Shanghai shall be the exclusive drug registration
agent in mainland China to, at its own cost, prepare, obtain and maintain such Drug Approval
Applications, Regulatory Approvals and submissions on behalf of Nabriva.
In addition, the Parties agree that the definition of Retained Rights under License Agreement shall also
include the rights of the Nabriva Parties, their respective Affiliates and its and their licensors,
(sub)licensees and contractors to perform its and their obligations and exercise its and their rights under
this Amendment, including, without limitation, Nabriva’s rights as the MAH of IDL for Licensed Products
in mainland China, solely for purposes of the performance of this Clause 3.2 (Regulatory Activities).”.
2. Additional Representations and Warranties
Licensee and Sinovant Shanghai represent and warrant to the Nabriva Parties as of the Effective Date:
(a) Sinovant Shanghai is a wholly-owned subsidiary of Sinovant HK and an Affiliate of Licensee;
(b) Sinovant Shanghai is a company duly established, validly existing and in good standing under the
laws of the PRC and has all request power and authority, corporate and otherwise, to execute,
deliver and perform under this Amendment;
(c) Sinovant Shanghai possesses and maintains all valid permits and licenses issued by Governmental
Authority in mainland China and has the capacity to serve as the drug registration agent to prepare,
file, obtain and maintain Drug Approval Applications and other Regulatory Approvals and
submissions relating to IDL for Licensed Product in mainland China; and
(d) The provisions under Clause 8.1 (Mutual Representations and Warranties) of License Agreement
shall be deemed incorporated herein to apply to Sinovant Shanghai.
3. Covenants
Licensee and Sinovant Shanghai each covenants to the Nabriva Parties the following:
(a) Licensee and Sinovant Shanghai shall take the responsibility to prepare, obtain and maintain Drug
Approval Applications, Regulatory Approvals and submissions for IDL in connection with the
Development or Commercialization of Licensed Product in mainland China pursuant to Applicable
Laws;
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(b) All Drug Approval Applications, Regulatory Approvals and submissions relating to IDL for
Licensed Product prepared by Licensee and Sinovant Shanghai shall accurately reflect the datasets
used by Nabriva in Nabriva Development Data and Nabriva Regulatory Documentation outside the
Territory and Licensee and Sinovant Shanghai shall ensure that information contained in any Drug
Approval Applications, filings or submissions relating to IDL for Licensed Product in mainland
China is not untrue, misleading or misrepresented in any material respects;
(c) Licensee and Sinovant Shanghai shall provide Nabriva with an opportunity to review and comment
on all Drug Approval Applications, Regulatory Approvals and submissions relating to IDL of
Licensed Product in mainland China before the submission of the same to any Regulatory
Authority in mainland China. Licensee and Sinovant Shanghai shall provide access to interim
drafts of relevant Drug Approval Applications, submissions or filings relating to IDL for Licensed
Product in mainland China to Nabriva via access methods (such as secure databases) as agreed by
the Parties;
(d) Licensee and Sinovant Shanghai shall consider Nabriva’s comments in good faith and promptly
address any questions raised by Nabriva. No Drug Approval Applications relating to IDL for
Licensed Product in mainland China where Nabriva is named as the MAH may be submitted to any
Regulatory Authority in mainland China without Nabriva’s prior review;
(e) Licensee and Sinovant Shanghai shall take the responsibility to communicate with Regulatory
Authority in mainland China on an ongoing basis with respect to the filing and submission of Drug
Approval Applications for IDL and the subsequent maintenance of such IDL upon issuance and
shall promptly inform Nabriva of the status. Should any Regulatory Authority in mainland China
establish a response deadline for any Drug Approval Applications or Regulatory Approvals relating
to IDL for Licensed Product, Licensee and Sinovant Shanghai shall take necessary actions and
work cooperatively with Nabriva to ensure that Nabriva has a reasonable opportunity for review
and comment within such deadlines;
(f) All Drug Approval Applications relating to IDL for Licensed Product in mainland China shall be
made at Licensee and Sinovant Shanghai’s sole expense. In case any Drug Approval Applications,
filings or submissions are not prepared in English, Licensee and Sinovant Shanghai, shall, at their
own cost, provide Nabriva with a summary in English with details necessary for Nabriva to provide
substantive comments;
(g) Absent Nabriva’s prior review, neither Licensee nor Sinovant Shanghai shall make any
representations, warranties or covenants to, accept any liabilities or responsibilities requested by, or
enter into any agreements, commitments or undertakings with any Regulatory Authority in
mainland China, on behalf of Nabriva in connection with its capacity as the MAH in relevant Drug
Approval Applications, Regulatory Approvals or submissions relating to IDL for Licensed Product
in mainland China;
4
Execution Version
(h) In the event that Licensee or Sinovant Shanghai receives any correspondence, demands, requests or
inquiries from any Regulatory Authority in mainland China addressed to Nabriva as the MAH
under IDL for Licensed Product in mainland China, it shall promptly inform Nabriva of such
correspondence, demands, requests or inquiries, in no event later than [**] after the receipt thereof;
(i) Licensee and Sinovant shall, at their own cost, take necessary actions to maintain and renew the
validity term of Regulatory Approvals of IDL for Licensed Product in mainland China after
issuance if such renewal or maintenance is intended by the Parties; and
(j) Licensee and Sinovant Shanghai shall use their reasonable commercial efforts to work
cooperatively with Nabriva to perform their obligations under Clauses 3.2(b) (Regulatory
Cooperation), 3.2(c) (Recalls, Suspensions or Withdrawals), 3.2(d) (Pharmacovigilance
Agreement, Global Safety Database), and 3.2(e) (Regulatory Inspections) of the License
Agreement should any issue arise in connection with any Drug Approval Applications, Regulatory
Approvals or submissions relating to IDL for Licensed Product in mainland China.
4. Milestone Payments
The Parties agree that Milestone Event (iii) in Clause 5.2 (Milestones) of the License Agreement shall be
amended as follows.
Milestone Event (iii) currently reads:
Milestone Event
Milestone Payment
(iii) Receipt of Regulatory Approval (whether or not Reimbursement
Approval is received) from the CFDA in the first indication for a
Licensed Product
$5,000,000
Shall be deleted and replaced with the following:
(iii)(a) Within 30 days after the execution by the Parties of this
$1,000,000
Milestone Event
Milestone Payment
Amendment
(iii)(b) Within [**] after [**]
(iii)(c) within [**] upon the [**]
(iii)(d) [**]
[**]
[**]
[**]
5
All other provisions in Clause 5.2 of the License Agreement shall remain in full force and effect.
Execution Version
5. Indemnification of Nabriva
5.1 Indemnification of Nabriva
Licensee and Sinovant Shanghai shall indemnify the Nabriva Parties, their respective Affiliates,
(sub)licensees and its or their respective directors, officers, employees and agents and defend and save
each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) (collectively, Losses) in connection with any and all
suits, investigations, claims or demands of Third Parties (collectively, Third Party Claims) to the extent
arising from or occurring as a result of:
(a) the breach by Licensee or Sinovant Shanghai of any representations, warranties or covenants or
other terms of this Amendment;
(b) the negligence or willful misconduct on the part of Licensee or Sinovant Shanghai or their
Affiliates or Sublicensees or their distributors or contractors or their respective directors, officers,
employees or agents in performing its or their obligations under this Amendment; or
(c) the submission by Licensee, Sinovant Shanghai or any of their respective Affiliates or
Sublicensees of any Drug Approval Applications, filings or submissions relating to IDL for
Licensed Product to any Regulatory Authority in mainland China which contain untrue or
misleading information.
except, in each case ((a), (b) and (c)), for those Losses for which Nabriva is responsible, as to which
Losses each Party shall indemnify the other to the extent of their respective liability.
5.2 Indemnification of Licensee and Sinovant Shanghai
The Nabriva Parties shall indemnify Licensee and Sinovant Shanghai, their respective Affiliates,
(sub)licensees and its or their respective directors, officers, employees and agents and defend and save
each of them harmless, from and against any and all Losses in connection with any and all Third Party
Claims to the extent arising from or occurring as a result of:
6
Execution Version
(a) the breach by the Nabriva Parties of any representations, warranties or covenants or other terms of
this Amendment; or
(b) the negligence or willful misconduct on the part of the Nabriva Parties or their Affiliates or
Sublicensees or their distributors or contractors or their respective directors, officers, employees or
agents in performing its or their obligations under this Amendment.
except, in each case ((a) and (b)), for those Losses for which Licensee or Sinovant Shanghai is responsible,
as to which Losses each Party shall indemnify the other to the extent of its respective liability.
6. Compliance with Applicable Law
Licensee and Sinovant Shanghai shall and shall cause their respective Affiliates and Sublicensees to,
comply with all Applicable Law in mainland China with respect to the preparation, submission and
maintenance of any Drug Approval Applications, Regulatory Approvals and submissions relating to IDL
for Licensed Product in mainland China.
The Nabriva Parties shall and shall cause their respective Affiliates and Sublicensees to, comply with all
Applicable Law in mainland China with respect to the performance of this Amendment.
Licensee and Sinovant Shanghai shall avoid, and shall require and use commercially reasonable efforts to
cause their respective Affiliates and Sublicensees, and their employees, representatives, agents, and
distributors, to avoid, taking or failing to take, any actions that Licensee, Sinovant Shanghai, such
Affiliates or Sub licensees know or reasonably should know would jeopardize the goodwill or reputation
of Nabriva, any of its Affiliates, or the Licensed Products or any Trademark associated therewith.
7. Use of Name
Nabriva hereby grants Licensee and Sinovant Shanghai a royalty-free license to use its name, logo or
Trademark for purposes of preparation, submission and maintenance of any Drug Approval Applications,
Regulatory Approvals or submissions relating to IDL for Licensed Product in mainland China pursuant to
the terms of this Amendment.
8. Anti-Corruption
Clause 8.6 (Anti-Bribery and Anti-Corruption Compliance) of License Agreement shall be deemed
incorporated herein to apply to Sinovant Shanghai.
9. Amendment
Unless specifically amended in this Amendment, all other terms and conditions of the License Agreement
shall continue to remain in full force and effect and shall continue to be complied with by the Parties.
7
Execution Version
10. Termination
This Amendment may be terminated in writing by the Parties. This Amendment shall terminate
automatically when the License Agreement terminates.
11. Additional Party to the License Agreement
Sinovant HK shall become a party to the License Agreement as of the date first written above and shall be
subject to all terms and conditions of the License Agreement, including, without limitation, relevant
confidentiality clauses in the License Agreement.
[The remainder of this page is intentionally left blank]
8
THIS AMENDMENT is executed by the authorized representatives of the Parties, NTGmbH and Parent as of the
date first written above.
SIGNATORIES
Execution Version
Nabriva Therapeutics Ireland Designated
Activity Company
Roivant China Holdings Limited (a/k/a
Sinovant Sciences Ltd.)
By:
/s/ Gary Sender
Name: Gary Sender
Title: Director
By:
/s/ Marianne L. Romeo
Name: Marianne L. Romeo
Head, Global Transactions & Risk
Management
Title:
Nabriva Therapeutics GmbH
Roivant Sciences Ltd.
By:
/s/ Mihovil Spoljaric
By:
/s/ Marianne L. Romeo
Name: Mihovil Spoljaric
Name: Marianne L. Romeo
Title: Managing Director
Head, Global Transactions & Risk
Management
Title:
Sinovant Sciences Co., Ltd.
Sinovant Sciences HK Limited
By:
/s/ Rae Yuan
Name: Rae Yuan
Title: President
By:
/s/ Rae Yuan
Name: Rae Yuan
Title: President
9
Exhibit 10.49
NABRIVA THERAPEUTICS US, INC.
CONSULTING AGREEMENT
This Consulting Agreement (“Agreement”) is dated as of March 9, 2021 and effective as of March 15, 2021 (the
“Effective Date”) by and between Nabriva Therapeutics US, Inc., a Delaware corporation, with a business address of 1000
Continental Drive, Suite 600, King of Prussia, Pennsylvania 19406 (“Company”), and Sender Consulting LLC having an
address at [**] (“Consultant”).
WHEREAS, Company desires to retain Consultant as an independent contractor to perform consulting services for
Company; and
WHEREAS, Consultant is willing to perform such services, on the terms described herein.
NOW, THEREFORE, in consideration of the foregoing, and of the covenants, terms and conditions hereinafter
expressed, the parties agree as follows:
1.
Services and Compensation. Consultant agrees to perform for Company the services described in Exhibit
A as requested by Company from time to time (the “Services”), and Company agrees to pay Consultant the compensation
described in Exhibit A for Consultant’s performance of the Services. If not specified on Exhibit A, the scope, timing,
duration, and site of performance of said Services shall be mutually and reasonably agreed to by Company and Consultant
and are subject to change upon the written agreement of both parties. Consultant will make reasonable, good faith efforts to
provide the Services in a timely and professional manner consistent with industry practices. Consultant’s engagement shall
be on a non-exclusive basis, and nothing herein shall prevent, restrict or limit Consultant’s engagement to perform
consulting services for other parties.
2.
Confidentiality.
2.1
Definitions. “Confidential Information” means all information relating to the business of Company,
including, without limitation, any financial information, business plans, clinical and product development plans, strategies,
business forecasts, sales and merchandising materials, patent disclosures, patent applications, structures, models, techniques,
know-how, trade secrets, processes, compositions, formulations, compounds and apparatus relating to the same and other
proprietary information related to the current, future and proposed products and services of Company or its subsidiaries or
affiliates disclosed by Company or obtained by Consultant through observation or examination of such information, whether
written, graphic or oral, furnished to Consultant by or on behalf of Company, either directly or indirectly, or obtained or
observed by Consultant while providing Services hereunder, and the Services to be provided by Consultant hereunder.
2.2
Nonuse and Nondisclosure. Consultant agrees that for a period of ten (10) years from the termination of
this Agreement, Consultant will hold in strict confidence and not disclose to any third party any Confidential Information,
except as approved in writing by Company; provided, however, that Consultant shall not be obligated to treat as confidential,
any Confidential Information that (i) is known or made available to the public or otherwise is in the public domain at the
time of disclosure by Company to Consultant, (ii) becomes part of the public domain after disclosure by Company to
Consultant by any means except through breach of this Agreement by Consultant, or by a third party under an obligation of
confidentiality to Company, or (iii) has been otherwise known by Consultant prior to communication by Company to
Consultant of such information.
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(a)
Consultant shall not use any Confidential Information provided to Consultant for any reason or purpose
other than the performance of Services on behalf of Company, and shall make no other use of the Confidential Information.
Consultant agrees that, as between Company and Consultant, all Confidential Information will remain the sole property of
Company. Consultant also agrees to take all necessary and reasonable precautions to prevent any unauthorized disclosure of
such Confidential Information. Without Company’s prior written approval, Consultant may disclose the existence, but not
the terms, of this Agreement to third parties.
(b)
In the event a court or governmental agency legally compels Consultant to disclose Confidential
Information, Consultant shall promptly inform Company of the compelled disclosure, so that Company may seek a
protective order or other remedy, and Consultant agrees to cooperate with Company in any proceeding to obtain a protective
order or other remedy. If, in the absence of a protective order or other remedy, Consultant is nonetheless, in the opinion of
Consultant’s legal counsel, compelled to disclose Confidential Information, Consultant may disclose only that portion of the
Confidential Information that such counsel advises Consultant is legally required to be disclosed. In such an event,
Consultant shall give to Company written notice of the Confidential Information to be disclosed as far in advance of its
disclosure as is practicable and, upon Company’s request, Consultant shall use reasonable commercial efforts to obtain
assurances that confidential treatment will be accorded to such information.
2.3
Third Party Confidential Information.
(a)
Consultant recognizes that Company has received and in the future may receive from third parties, their
confidential or proprietary information subject to a duty on Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. Consultant agrees that, during the Term of this Agreement and
thereafter, Consultant owes Company and such third parties a duty to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or entity or to use it except as necessary in carrying out the
Services for Company consistent with Company’s agreement with such third party, unless otherwise authorized by such third
party.
(b)
Consultant agrees not to disclose to Company, or to use in connection with providing the Services to
Company, any confidential information belonging to any third party, including Consultant’s prior employers.
2.4
Return of Materials. At any time upon Company’s request, Consultant will deliver to Company all of
Company’s property, equipment and documents, together with all copies thereof, that were previously given to Consultant,
including but not limited to all electronically stored confidential and/or nonpublic information, passwords to access such
property, or Confidential Information that Consultant may have in Consultant’s possession or control, and Consultant agrees
to certify in writing that Consultant has fully complied with this obligation.
3.
Ownership.
3.1
Assignment. Consultant agrees that all copyrights and copyrightable material, notes, records, drawings,
designs, inventions, ideas, discoveries, enhancements, modifications, know-how, improvements, developments, discoveries,
trade secrets’ data and information of every kind and description conceived, generated, made, discovered, developed or
reduced to practice by Consultant, solely or in collaboration with others, during the Term and in the course of performing
Services under this Agreement (collectively, “Inventions”), are, as between Company and Consultant, the sole and exclusive
property of Company. Consultant agrees to disclose such Inventions promptly to Company and hereby assigns, and agrees
to assign,
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all of Consultant’s right, title and interest in and to any such Inventions promptly to Company without royalty or any other
consideration and to execute all applications, assignments or other instruments reasonably requested by Company in order
for Company to establish Company’s ownership of such Inventions and to obtain whatever protection for such Inventions,
including copyright and patent rights in any and all countries on such Inventions as Company shall determine.
3.2
Further Assurances. Consultant agrees to assist Company, or its designee, in every reasonable way to
secure Company’s rights in Inventions and any copyrights, patents or other intellectual property rights relating to all
Inventions in any and all countries, including the disclosure to Company of all pertinent information and data with respect to
all Inventions, the execution of all applications, specifications, oaths, assignments and all other instruments that Company
may deem necessary in order to apply for and obtain such rights and in order to assign and convey to Company, its
successors, assigns and nominees the sole and exclusive right, title and interest in and to all Inventions, and any copyrights,
patents, or other intellectual property rights relating to all Inventions. Consultant also agrees that Consultant’s obligation to
execute or cause to be executed any such instrument or papers shall continue after the termination of this Agreement.
Consultant represents and warrants that each of Consultant’s employees or other personnel who are involved in the Services
shall have executed a binding written agreement with Consultant obligating such person to assign to Consultant all of his or
her respective rights, title and interests in and to each Invention and to provide reasonable cooperation and assistance in
filing and prosecuting patent applications with respect to such Inventions. Consultant shall assume full responsibility and
liability to Company for any actions of its personnel that are not in accordance with such obligations.
3.3
Pre-Existing Materials. Subject to Section 3.1, Consultant agrees that if, in the course of performing the
Services, Consultant incorporates into any Invention developed under this Agreement any pre-existing invention,
improvement, development, concept, discovery or other proprietary information owned by Consultant or in which
Consultant has an interest, (i) Consultant will inform Company, in writing before incorporating such invention,
improvement, development, concept, discovery or other proprietary information into any Invention, and (ii) Company is
hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and
sell such item as part of or in connection with such Invention. Consultant will not incorporate any invention, improvement,
development, concept, discovery or other proprietary information owned by any third party into any Invention without
Company’s prior written permission.
3.4
Attorney-in-Fact. Consultant agrees that, if Company is unable because of Consultant’s unavailability,
dissolution, or mental or physical incapacity to secure Consultant’s signature for the purpose of applying for or pursuing any
application for any United States or foreign patents, mask work or copyright registrations covering the Inventions assigned
to Company in Section 3.1, then Consultant hereby irrevocably designates and appoints Company and its duly authorized
officers and agents as Consultant’s agent and attorney-in-fact, to act for and on Consultant’s behalf to execute and file any
such applications and to do all other lawfully permitted acts only to further the prosecution and issuance of patents,
copyright and mask work registrations with the same legal force and effect as if executed by Consultant.
4.
Representations and Warranties. Consultant represents and warrants to Company that Consultant is
legally able to enter into this Agreement and that Consultant’s execution, delivery and performance of this Agreement will
not and does not conflict with any agreement, arrangement or understanding, written or oral, to which Consultant is a party
or by which Consultant is bound. Consultant further represents and warrants that Consultant has not and has never been, nor
has any of Consultant’s personnel who may provide Services under this Agreement, been (a) debarred or convicted of a
crime for which a person or entity can be debarred under Section 306(a) or 306(b) of the United States Generic Drug
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Enforcement Act of 1992 or under 42 U.S.C. Section 1320a-7 or (b) sanctioned by, suspended, excluded, or otherwise
deemed ineligible to participate in any federal health care program including Medicare and Medicaid, or any other federal
procurement or non-procurement programs. Should Consultant or any of Consultant’s personnel be debarred, convicted or
sanctioned as described above, Consultant shall immediately notify Company of such debarment, conviction or sanction.
5.
Term and Termination.
5.1
Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and shall remain in
full force and effect until the earlier of (i) the expiration date as set forth on Exhibit A attached hereto, or (ii) termination as
provided in Section 5.2.
5.2
Termination. Either party may terminate this Agreement by giving 30 days prior written notice to the other
party. Company may terminate this Agreement immediately and without prior notice if Consultant refuses to or is unable to
perform the Services or is in breach of any material provision of this Agreement. Company and Consultant agree that the
terms and conditions of this Agreement, including the Term, shall be subject to an annual review by Company.
5.3
Survival. Upon termination of this Agreement, all rights and duties of Company and Consultant toward
each other shall cease except:
(a)
Company will pay, within 30 days after the effective date of termination, all amounts owing to Consultant
for Services completed prior to the termination date and related expenses, if any, submitted in accordance with Company’s
policies and in accordance with the provisions of Section 1 of this Agreement; and
(b)
6.
Sections 2, 3, 4, 5.3, 6, 7, 8, 9 and 10 will survive termination of this Agreement.
Independent Contractor; Benefits; Taxes.
6.1
Independent Contractor. It is the express intention of Company and Consultant that Consultant performs
the Services as an independent contractor to Company, and nothing in this Agreement should be construed to create a
partnership, joint venture or employer-employee relationship. Consultant (a) is not the agent of Company and (b) is not
authorized to make any representation, contract, or commitment on behalf of Company.
6.2
Benefits. Company and Consultant agree that Consultant will receive no Company-sponsored benefits from
Company. If Consultant is reclassified by a state or federal agency or court as Company’s employee, Consultant will
become a reclassified employee and will receive no benefits from Company, except those mandated by state or federal law,
even if by the terms of Company’s benefit plans or programs of Company in effect at the time of such reclassification,
Consultant would otherwise be eligible for such benefits.
6.3
Taxes and Withholdings. Company shall not be responsible for paying any federal, state or local taxes on
compensation, and Consultant shall be solely responsible for the payment thereof. Company may, however, report payments
made to Consultant hereunder to tax authorities and shall inform Consultant of such actions. Consultant agrees to accept
exclusive liability for complying with all applicable state and federal laws, including laws governing self-employed
individuals, if applicable, such as laws related to payment of taxes, social security, disability, and other contributions based
on fees paid to Consultant under
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this Agreement. Company will not withhold or make payments for social security, unemployment insurance or disability
insurance contributions, or obtain workers’ compensation insurance on Consultant’s behalf.
7.
Indemnification.
7.1
By Consultant. Consultant agrees to indemnify and hold harmless Company and its directors, officers and
employees (each a “Company Indemnitee”) from and against all losses, damages, liabilities, costs and expenses whatsoever,
(including without limitation attorneys’ fees and costs), arising from any claim, action, demand or proceeding made or
brought against a Company Indemnitee, arising from or in connection with (i) any intentionally wrongful act of Consultant
or Consultant’s assistants, employees or agents, (ii) any material and knowing failure of Consultant to perform the Services
in accordance with all applicable laws, rules and regulations, or (iii) any violation or claimed violation of a third party’s
rights resulting in whole or in part from Company’s use of the work product of Consultant under this Agreement and for
which Consultant deliberately misrepresented to Company the status of third party rights.
7.2
By Company. Company shall defend, indemnify and hold Consultant harmless from and against any and
all losses, damages, liabilities (including without limitation product liability), settlement amounts, costs and expenses
whatsoever (including without limitation reasonable attorneys’ fees and costs) arising from any claim, action, demand or
proceeding made or brought against Consultant arising from Consultants’ performance of Services, including, without
limitation, as a result of the development, use, manufacture, marketing or sale of products regarding which Consultant has
provided Services unless such liability arises from Consultant’s or Consultant’s assistants’, employees’ or agents’ intentional
misconduct.
8.
Nonsolicitation; Non-Disclosure.
8.1
Nonsolicitation. From the date of this Agreement until twelve (12) months after the termination of this
Agreement (the “Restricted Period”), Consultant will not, without Company’s prior written consent, directly or indirectly,
whether for Consultant’s own account or for the account of any other person, firm, corporation or other business
organization, solicit, entice, persuade, induce or otherwise attempt to influence any person or business who is, or during the
period of Consultant’s engagement by Company was, an employee, consultant, contractor, partner, supplier, customer or
client of Company or its affiliates to leave or otherwise stop doing business with Company.
8.2
Non-Disclosure. Consultant agrees that without the prior written consent of Company, Consultant will not
intentionally generate any publicity, news release or other such public announcement concerning the engagement of
Consultant hereunder or the services to be performed by Consultant hereunder or otherwise utilize the name of Company or
any of its affiliates for any advertising or promotional purposes.
9.
Voluntary Nature of Agreement. Consultant acknowledges and agrees that Consultant is executing this
Agreement voluntarily and without any duress or undue influence by Company or anyone else. Consultant further
acknowledges and agrees that Consultant has carefully read this Agreement and has asked any questions needed to
understand the terms, consequences and binding effect of this Agreement and fully understand it to his or her satisfaction.
Finally, Consultant agrees that Consultant has been provided an opportunity to seek the advice of an attorney of its choice
before signing this Agreement.
10.
Miscellaneous.
10.1 Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to conflicts of law rules.
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10.2
Assignability. Except as otherwise provided in this Agreement, Consultant may not sell, assign or delegate
any rights or obligations under this Agreement.
10.3
Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior written and oral agreements between the parties regarding the
subject matter of this Agreement. Nothing herein shall supersede, replace, limit or otherwise affect any agreement between
Consultant and Company, or the rights and obligations of Consultant and Company, arising from or relating to Consultant’s
past employment with Company.
10.4 Headings. Headings are used in this Agreement for reference only and shall not be considered when
interpreting this Agreement.
10.5
Notices. Any notice or other communication required or permitted by this Agreement to be given to a party
shall be in writing and shall be deemed given if delivered personally or by commercial messenger or nationally recognized
overnight delivery service (e.g. Federal Express, UPS), or mailed by U.S. registered or certified mail (return receipt
requested), or sent via facsimile (with receipt of confirmation of complete transmission) to the party at the party’s address or
facsimile number written below or at such other address or facsimile number as the party may have previously specified by
like notice. If by mail, delivery shall be deemed effective 3 business days after mailing in accordance with this Section 10.5.
If to Company, to: The address set forth in the first paragraph of this Agreement
If to Consultant, to: The address for notice on the signature page to this Agreement or, if no such address is
provided, to the last address of Consultant provided by Consultant to Company.
10.6
Nature of Services. Company acknowledges that Consultant’s role is advisory in nature. Company is
therefore free, in its sole discretion to accept, modify, or reject Consultant’s recommendations or any work product resulting
from the provision of Services as described herein. Company shall be solely responsible for the consequences, direct or
indirect, of any such decision by Company.
10.7
Amendments; Waiver. No modification of or amendment to this Agreement, or any waiver of any rights
under this Agreement, will be effective unless in writing and signed by Consultant and Company.
10.8
Attorneys’ Fees. In any court action at law or equity that is brought by one of the parties to this Agreement
to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, in
addition to any other relief to which that party may be entitled.
10.9
Further Assurances. Consultant agrees, upon request, to execute and deliver any further documents or
instruments necessary or desirable to carry out the purposes or intent of this Agreement.
10.10 Severability. If any provision of this Agreement is found to be illegal or unenforceable, the other
provisions shall remain effective and enforceable to the greatest extent permitted by law.
10.11 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the same instrument. Facsimile and electronic
signatures shall be deemed original signatures for all purposes.
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In Witness Whereof, the parties hereto have executed this Consulting Agreement as of the date first written above.
CONSULTANT
NABRIVA THERAPEUTICS US, Inc.
By:
/s/ Gary Sender
By:
/s/ Robert Crotty
Name: Sender Consulting LLC
Name:Robert Crotty
Title: General Counsel
Consultant’s Address for Notice:
379 Selby Place
Blue Bell PA 19422
Please attached completed W-9 form.
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EXHIBIT A
SERVICES AND COMPENSATION
1.
Services. The Services shall include, but shall not be limited to, the following operational activities, as
requested by Company:
◾ Provide any Financially related advice and actively manage projects as requested
The manner and means that Consultant chooses to complete the Services are in Consultant’s sole discretion and
control. Consultant agrees to provide Consultant’s own equipment, tools, and other materials at Consultant’s own expense;
however, Company will make its facilities and equipment available to Consultant when necessary.
2.
3.
4.
Expiration Date. This Agreement shall expire March 13, 2023 from the Effective Date.
Contact Party. The prime contact person within Company shall be Dan Dolan.
Compensation.
A.
Company will pay Consultant a consulting fee of $300 per hour during the Term. Invoices will be submitted
by Consultant on a monthly basis. If Company has any reason for disputing an invoice, Company will notify Consultant
within 15 days following receipt of the invoice. Payment of the undisputed portion of the invoiced consulting fee will be
made 30 days following Company’s receipt of an invoice, all of which fees shall be net of any applicable withholding taxes.
B.
Company will reimburse Consultant for all reasonable expenses incurred by Consultant in performing the
Services pursuant to this Agreement that are consistent with Company’s policies in effect from time to time with respect to
travel, entertainment and other business expenses, subject to Company’s requirements with respect to documentation and
reporting of such expenses, and provided that any expense in excess of $1,000 shall require prior approval by Company.
C.
Invoices shall be sent electronically to: [**]; Attn: Dan Dolan
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SUBSIDIARIES OF NABRIVA THERAPEUTICS plc
Nabriva Therapeutics GmbH
Nabriva Therapeutics Ireland Designated Activity Company
Zavante Therapeutics, Inc.
Nabriva Therapeutics US, Inc.
Exhibit 21.1
Austria
Ireland
Delaware
Delaware
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
The Board of Directors
Nabriva Therapeutics plc:
We consent to the incorporation by reference in the registration statements (Nos. 333-208097, 333-222003, 333-226330,
333-228094, 333-230216 and 333-240178) on Forms S-8 and the registration statements (Nos. 333-219567, 333-223739
and 333-248530) on Forms S-3 of Nabriva Therapeutics plc of our report dated March 11, 2021 with respect to the
consolidated balance sheets of Nabriva Therapeutics plc and subsidiaries as of December 31, 2019 and 2020, and the
related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the years in the
three-year period ended December 31, 2020, and the related notes (collectively, the “consolidated financial statements”),
which report appears in the December 31, 2020 annual report on Form 10-K of Nabriva Therapeutics plc.
Our report dated March 11, 2021 contains an explanatory paragraph that states that Nabriva Therapeutics plc has incurred
recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going
concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 11, 2021
EXHIBIT 31.1
CERTIFICATIONS
I, Theodore Schroeder, certify that:
1. I have reviewed this Annual Report on Form 10-K 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: March 11, 2021
EXHIBIT 31.2
CERTIFICATIONS
I, Gary Sender, certify that:
1. I have reviewed this Annual Report on Form 10-K 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/ Gary Sender
Gary Sender
Chief Financial Officer
(Principal Financial Officer)
Dated: March 11, 2021
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
In connection with the Annual Report on Form 10-K of Nabriva Therapeutics plc (the “Company”) for the year
ended December 31, 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:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; 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: March 11, 2021
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.2
In connection with the Annual Report on Form 10-K of Nabriva Therapeutics plc (the “Company”) for the year
ended December 31, 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:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended; 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: March 11, 2021