Paratek Pharmaceuticals
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K ☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended: December 31, 2017or☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission file number: 001-36066 PARATEK PHARMACEUTICALS, INC.(Exact name of registrant as specified in its charter) Delaware 33-0960223(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 75 Park PlazaBoston, MA 02116(617) 807-6600(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of exchange on which registeredCommon Stock, par value $0.001 per share The Nasdaq Global Market 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 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 thepreceding 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 90days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☒ No ☐.Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒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 growthcompany. 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☐ (Do not check if a smaller reporting company)Smaller reporting company☐ Emerging growth company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒The aggregate market value of the common stock of the registrant held by non-affiliates of the registrant on June 30, 2017, the last business day of the registrant’s secondfiscal quarter was: $600,690,355.As of February 28, 2018 there were 31,443,149 shares of the registrant’s common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement for the registrant’s 2018 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days ofthe registrant’s year ended December 31, 2017 are incorporated herein by reference into Part III of this Annual Report on Form 10-K.  TABLE OF CONTENTS Item No. Page No. PART I 1 1. Business 1 1A. Risk Factors 29 1B. Unresolved Staff Comments 55 2. Properties 56 3. Legal Proceedings 56 4. Mine Safety Disclosures 56 PART II 57 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 6. Selected Financial Data 59 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 61 7A. Quantitative and Qualitative Disclosures About Market Risk 79 8. Financial Statements and Supplementary Data 80 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 119 9A. Controls and Procedures 119 9B. Other Information 120 PART III 121 10. Directors, Executive Officers and Corporate Governance 121 11. Executive Compensation 121 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 121 13. Certain Relationships and Related Transactions, and Director Independence 121 14. Principal Accountant Fees and Services 121 PART IV 122 15. Exhibits and Financial Statement Schedules 122 16. Form 10-K Summary 127 SIGNATURES 128 i Special Note Regarding Forward-Looking StatementsThis Annual Report on Form 10-K contains forward-looking statements that are based upon current expectations within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Paratek Pharmaceuticals, Inc. intends that such statements be protected by the safe harbor created thereby. In somecases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”“potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions intended to identify forward-looking statements. Examples of suchforward-looking statements include, but are not limited to, statements about or relating to: •The timing, scope and anticipated initiation, enrollment and completion of our ongoing and planned clinical trials and any other futureclinical trials that we or our development partners may conduct •the plans, strategies and objectives of management for future operations •proposed new products or developments; •future economic conditions or performance; •the therapeutic and commercial potential of our product candidates; •the timing of regulatory discussions and submissions, and the anticipated timing, scope and outcome of related regulatory actions or guidance; •our ability to establish and maintain potential new collaborative, partnering or other strategic arrangements for the development andcommercialization of our product candidates; •the anticipated progress of our clinical programs, including whether our ongoing clinical trials will achieve clinically relevant results; •our ability to obtain regulatory approvals of our product candidates and any related restrictions, limitations and/or warnings in the label of anapproved product candidate; •our ability to market, commercialize and achieve market acceptance for our product candidates, if approved; •our ability to timely manufacture conforming products; •our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; •our estimates regarding the sufficiency of our cash resources, expenses, capital requirements and needs for additional financing, and our abilityto obtain additional financing; and •our projected financial performance.Forward-looking statements are neither historical facts nor assurances of future performance. . These statements involve known and unknown risks,uncertainties and other factors that may cause our actual results, levels of activity, performance, time frames or achievements to be materially different fromthe information set forth in these forward-looking statements. While we believe that we have a reasonable basis for each forward-looking statement, wecaution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which wecannot be certain. We discuss many of these risks in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Given these risks,uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Any of the events anticipated by the forward-looking statements may not occur or, if any of them do, the impact they will have on our business, results of operations and financial condition is uncertain.We hereby qualify all of our forward-looking statements by these cautionary statements.Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results coulddiffer materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.Paratek Pharmaceuticals, Inc. is our registered and unregistered trademark in the United States and other jurisdictions. Intermezzo is a registered andunregistered trademark of Purdue Pharmaceutical Products L.P. and associated companies in the United States and other jurisdictions and is a registered andunregistered trademark of ours in certain other jurisdictions. Other trademarks and trade names referred to in this Annual Report on Form 10-K are theproperty of their respective owners.All references to “Paratek,” “we,” “us,” “our” or the “Company” in this Annual Report on Form 10-K mean Paratek Pharmaceuticals, Inc. and itssubsidiaries. ii PART I Item 1.BusinessOverviewWe are a clinical stage biopharmaceutical company focused on the development and commercialization of innovative therapeutics based upontetracycline chemistry. We have used our expertise in biology and tetracycline chemistry to create chemically diverse and biologically distinct smallmolecules derived from the minocycline core structure. Our two lead product candidates are the antibacterials omadacycline and sarecycline.We have generated innovative small molecule therapeutic candidates based upon medicinal chemistry-based modifications, according to structure-based activity, of all positions of the core tetracycline molecule. These efforts have yielded molecules with broad-spectrum antibiotic properties and narrow-spectrum antibiotic properties, and molecules with potent anti-inflammatory properties to fit specific therapeutic applications. This proprietary chemistryplatform has produced many compounds that have shown interesting characteristics in various in vitro and in vivo efficacy models. Omadacycline andsarecycline are examples of molecules that were synthesized from this chemistry discovery platform. The following table summarizes the primary therapeuticapplications for our product candidates: Omadacycline If approved, omadacycline will be the first in a new class of aminomethylcycline antibiotics. Omadacycline is a broad-spectrum, well-tolerated once-daily oral and intravenous, or IV, antibiotic. We believe that omadacycline has the potential to become the primary antibiotic choice of physicians for use asa broad-spectrum monotherapy antibiotic for acute bacterial skin and skin structure infections, or ABSSSI, community-acquired bacterial pneumonia, orCABP, urinary tract infection, or UTI, and other serious community-acquired bacterial infections, where resistance is of concern. We believe omadacycline, ifapproved, will be used in the emergency room, hospital and community care settings. We have designed omadacycline to provide potential advantages overexisting antibiotics, including activity against resistant bacteria, broad-spectrum antibacterial activity, oral and IV formulations with once-daily dosing, nodosing adjustments for patients on concomitant medications and a generally safe and well tolerated profile.In the fall of 2013, the U.S. Food and Drug Administration, or the FDA, agreed to the design of our omadacycline Phase 3 studies for ABSSSI andCABP through the Special Protocol Assessment, or SPA, process. In addition, the FDA confirmed that positive data from the individual studies for ABSSSIand CABP would be sufficient to support approval of omadacycline for each indication and for both oral and IV formulations in the United States. Inaddition to Qualified Infectious Disease Product, or QIDP, designation, on November 4, 2015, the FDA granted Fast Track designation for the development ofomadacycline in ABSSSI, CABP, and complicated urinary tract infections, or complicated UTI. Fast Track designation facilitates the development, andexpedites the review of drugs that treat serious or life-threatening conditions and that fill an unmet medical need. In February 2016, we reached agreementwith the FDA on the terms of the omadacycline pediatric program associated with the Pediatric Research Equity Act, or1 PREA. The FDA has granted Paratek a waiver for conducting studies with omadacycline in children less than eight years old due to the risk of teethdiscoloration, a known class effect of tetracyclines. In addition, the FDA has granted a deferral on conducting studies in children eight years and older untilsafety and efficacy is established in adults. In May 2016, we received confirmation from the FDA that the oral-only ABSSSI study design was acceptable andconsistent with the currently posted guidance for the industry. In September 2017, both the oral and IV formations of omadacycline were granted anadditional QIDP designation by the FDA for the treatment of uncomplicated urinary tract infection, or uncomplicated UTI.To date, we have conducted more than 20 Phase 1 studies of omadacycline to characterize the effects of the drug on humans including how it isabsorbed, metabolized, and excreted. These Phase 1 studies also included evaluation in special populations like hepatic and renal failure patients. We havealso conducted and completed three successful Phase 3 clinical studies. Our first two Phase 3 clinical studies were for the treatment of ABSSSI (OASIS-1) andCABP (OPTIC). Both studies utilized initiation of IV therapy with transitions to oral-based treatment on clinical response. Our third Phase 3 clinicalstudy (OASIS-2) was an oral-only administration of omadacycline in ABSSSI compared to oral-only linezolid. All three Phase 3 clinical studies resulted inomadacycline demonstrating positive efficacy results and a generally safe and well tolerated profile. We plan to include these clinical data in the MarketAuthorization Applications, or MAA, submission to the European Medicines Agency, or the EMA, which we plan to submit in the second half of 2018. Weare working to schedule a date in the second quarter of 2018 to meet with our rapporteurs and the EMA as the last regulatory interaction step before the MAAfiling.Scientific advice received through the centralized procedure in Europe confirmed general agreement on the design and choice of comparators of thePhase 3 clinical program for ABSSSI and CABP and noted that approval based on a single study in each indication could be possible but would be subjectto more stringent statistical standards than MAA programs that conduct two pivotal Phase 3 studies per indication. We believe that the inclusion of thesecond Phase 3 oral-only study in ABSSSI strengthens the data package for submission of an MAA filing for approval in European Union, or EU. In February 2018, we completed our New Drug Application, or NDA, submissions to the FDA. The NDAs included all the data from the clinicalprogram described above. We anticipate, based on our experience with the FDA, that the applications will be accepted in early April 2018. The FDA reviewprocess includes a 60-day evaluation to accept applications for filing. That acceptance will start the final review period of our applications and set the finalPrescription Drug User Fee Act, or PDUFA, action date. Assuming a priority review designation, we expect our PDUFA action date to be set eight monthsfrom the completed submission, in early October 2018.In October 2016, we announced that we entered into a Cooperative Research and Development Agreement with the U.S. Army Medical ResearchInstitute of Infectious Diseases to study omadacycline against pathogenic agents causing infectious diseases of public health and biodefense importance.These studies are designed to confirm humanized dosing regimens of omadacycline in order to study the efficacy of omadacycline against biodefensepathogens, including Yersinia pestis, or plague, and Bacillus anthracis, or anthrax. Funding support for the trial has been made available through the DefenseThreat Reduction Agency, or DTRA/ Joint Science and Technology Office and Joint Program Executive Office for Chemical and Biological Defense / JointProject Manager Medical Countermeasure Systems / BioDefense Therapeutics.SarecyclineOur second antibacterial product candidate, sarecycline, also known as Seysara™ in the U.S, is a new, once-daily, tetracycline-derived compounddesigned for use in the treatment of acne and rosacea. We believe that, based upon the data generated to-date, sarecycline possesses favorable anti-inflammatory activity, plus narrow-spectrum antibacterial activity relative to other tetracycline-derived molecules, oral bioavailability, does not cross theblood-brain barrier, and favorable pharmacokinetic properties that we believe make it particularly well-suited for the treatment of inflammatory acne in thecommunity setting. We have exclusively licensed U.S. development and commercialization rights to sarecycline for the treatment of acne to Allergan plc, orAllergan, while retaining development and commercialization rights in the rest of the world.In March 2017, Allergan announced that two Phase 3 studies of sarecycline for the treatment of moderate to severe acne vulgaris met their 12-week primary efficacy endpoints. In addition, a nine-month long-term safety extension study was completed. The safety results from the long-term study aregenerally consistent with results from the two 12-week studies. Based on these clinical data, Allergan submitted an NDA to the FDA, which was accepted inDecember 2017, for the treatment of moderate to severe acne. As a result, we earned a $5.0 million milestone payment from Allergan under the terms of ourcollaboration for the development of Seysara™ for the treatment of moderate to severe acne, which became payable upon the FDA’s acceptance of Allergan’sNDA for Seysara™. We received the milestone payment in January 2018. Allergan plans to commercialize Seysara™ in the U.S. Paratek retains all ex-U.S. rights to sarecycline. We are anticipating the FDA’s decision on approval of sarecycline in the second half of 2018.2 Allergan currently also holds a non-exclusive license to develop and commercialize sarecycline for the treatment of rosacea in the United States. Thereare currently no clinical trials with sarecycline in rosacea underway.Corporate HistoryMerger of Novacea, Inc. and Transcept Pharmaceuticals, Inc.We are a Delaware corporation that was incorporated in February 2001 as D-Novo Therapeutics, Inc., which later changed its corporate name toNovacea, Inc., or Novacea. Novacea previously traded on The Nasdaq Global Market under the ticker symbol “NOVC.” On January 30, 2009, Novaceacompleted a business combination with privately-held Transcept Pharmaceuticals, Inc., or Old Transcept, pursuant to which Old Transcept became a wholly-owned subsidiary of Novacea, and the corporate name of Novacea was changed to Transcept Pharmaceuticals, Inc., or Transcept. In connection with theclosing of such transaction, Transcept common stock began trading on The Nasdaq Global Market under the ticker symbol “TSPT” on February 3, 2009.Merger of Transcept Pharmaceuticals, Inc. and Paratek Pharmaceuticals, Inc.On October 30, 2014, Transcept completed a business combination with privately-held Paratek Pharmaceuticals, Inc., or Old Paratek, in accordancewith the terms of the Agreement and Plan of Merger and Reorganization, dated as of June 30, 2014, by and among Transcept, Tigris Merger Sub, Inc., orMerger Sub, Tigris Acquisition Sub, LLC, or Merger LLC, and Old Paratek, or the Merger Agreement, pursuant to which Merger Sub merged with and intoOld Paratek, with Old Paratek surviving as a wholly-owned subsidiary of Transcept, followed by the merger of Old Paratek with and into Merger LLC, withMerger LLC surviving as a wholly-owned subsidiary of Transcept (we refer to these mergers together as the Merger). Immediately following the Merger,Transcept changed its name to “Paratek Pharmaceuticals, Inc.”, and Merger LLC changed its name to “Paratek Pharma, LLC.” In connection with the closingof the Merger, our common stock began trading on The Nasdaq Global Market under the ticker symbol “PRTK” on October 31, 2014.The Antibiotics Market and Limitations of Current TherapiesPhysicians commonly prescribe antibiotics to treat patients with acute and chronic infectious diseases that are either known, or presumed, to be causedby bacteria. The World Health Organization has identified the development of worldwide resistance to currently available antibacterial agents as being oneof the three greatest threats to human health in this decade. In a press release announcing the release of a study titled “Hospital and Societal Costs ofAntimicrobial Resistant Infections in a Chicago Teaching Hospital: Implications for Antibiotic Stewardship,” it was estimated that antibiotic-resistantinfections cost the U.S. healthcare system in excess of $20 billion annually. In addition, these infections result in more than $35 billion in societal costs andmore than 8 million additional days spent in the hospital. Historically, the majority of life-threatening infections resulting from antibiotic-resistant bacteriawere acquired in the hospital setting. According to AMR data from 2015 projected to 2028, approximately 6.7 million antibiotic treated events occurannually in the two combined indications of ABSSSI and CABP in U.S. hospitals. Furthermore, research conducted by Paratek suggests that in these sameindications of ABSSSI and CABP there are approximately 890 thousand patients treated in U.S hospitals who fail to respond or are intolerant to the existinggeneric options. Paratek estimates this could yield approximately $2.6 billion in potential sales by 2028. In the U.S. community setting, IMS NDTI data(2014-2015) projected to 2028 suggests there are approximately 23.7 million prescriptions for ABSSSI and CABP. Additionally, research conducted byParatek suggests that approximately 2.1 million patients fail to respond or are intolerant to the existing oral generics in the U.S. community setting. Paratekestimates this could yield approximately $5.4 billion in potential sales by 2028. The emergence of multi-drug resistant pathogens, coupled with limitationsin terms of intolerance to existing generic options, emphasizes the need for novel agents capable of overcoming antibiotic resistance.Bacteria are often broadly classified as gram-positive bacteria, including antibiotic-resistant bacteria such as methicillin-resistant Staphylococcusaureus, or MRSA, and multi-drug resistant Streptococcus pneumoniae, or MDR-SP; gram-negative bacteria, including antibiotic-resistant bacteria such asextended-spectrum beta-lactamases, or ESBL, producing Enterobacteriaceae; atypical bacteria, including Chlamydophila pneumoniae and Legionellapneumophila; and anaerobic bacteria, including Bacteroides and Clostridia. Antibiotics that are active against both gram-positive and gram-negativebacteria are referred to as “broad-spectrum,” while antibiotics that are active only against a select subset of gram-positive or gram-negative bacteria arereferred to as “narrow spectrum”. Today, because many of the currently prescribed antibiotics that have activity against resistant organisms typically are“narrow spectrum,” they cannot be used as an empiric monotherapy treatment of serious infections where gram-negative, atypical or anaerobic bacteria mayalso be involved. Empiric monotherapy refers to the use of a single, antibacterial agent to begin treatment of an infection before the specific pathogencausing the infection has been identified. We believe omadacycline, if approved, will be used in the emergency room, hospital and community caresettings. Based on studies published by the Cleveland Clinic Foundation, the National Institutes of Health, or NIH, and American Academy of FamilyPhysicians, rates of infections involving organisms other than gram-positive bacteria have been found to be as much as 15% in ABSSSI, up to 40% in CABPand 70% to 90% in UTI.3 When a patient goes to the emergency room or hospital for treatment of a serious infection, the physician’s selection of which IV antibiotic to use isoften based on the severity of infection, the pathogen(s) believed most likely to be involved and the probability of a resistant pathogen(s) being present.After initial IV therapy and once the infection begins to respond to treatment, hospitals and physicians face strong pressures to discharge patients from thehospital to reduce costs, limit hospital-acquired infections and improve the patient’s quality of life. In order to transition patients out of the hospital andhome to complete the course of therapy, physicians typically prefer to have the option to prescribe a bioequivalent oral formulation of the same antibiotic.Antibiotics used to treat ABSSSI, CABP, UTI and other serious, community-acquired bacterial infections must satisfy a wide range of criteria on a cost-effective basis. For example, we believe that existing treatment options for ABSSSI, including vancomycin, linezolid, daptomycin, piperacillin tazobactam,oritavancin, dalbavancin, tigecycline and delafloxacin; for CABP, including levofloxacin, moxifloxacin, azithromycin, ceftriaxone, clarithromycin,ceftaroline and tigecycline; and for UTI, including levofloxacin, ciprofloxacin, and trimethoprim/sulfamethoxazole, have one or more of the followingsignificant limitations: •Limited spectrum of antibacterial activity. Since it may take as long as 48 to 72 hours to identify the pathogen(s) causing an infection and mostof the currently available options that cover resistant pathogens are narrow-spectrum treatments, physicians frequently prescribe two or moreantibiotics to treat a broad-spectrum of potential pathogens. For example, vancomycin, linezolid and daptomycin, the most frequentlyprescribed treatments for certain serious bacterial skin infections, are narrow-spectrum treatments active only against gram-positive bacteria.The currently available treatment with a more appropriate spectrum for use as a monotherapy against serious and antibiotic-resistant bacterialinfections is tigecycline, but it has other significant limitations, most notably dose limiting tolerability of nausea and vomiting. •Lack of both oral and IV formulations. The most common treatments for serious bacterial infections, vancomycin, daptomycin, ceftriaxone,piperacillin tazobactam, and tigecycline are only available as injectable or IV formulations. The lack of an effective bioequivalent oralformulation of these and many other commonly prescribed antibiotics requires continued IV therapy, which is inconvenient for the patient andmay result in longer hospital stays and greater cost. Alternatively, because of the absence of the same antibiotic in an oral, well-toleratedformulation, physicians may switch the patient to a different orally available antibiotic at the time of hospital discharge. This carries the risk ofnew side effects and possible treatment failure if the oral antibiotic does not cover the same bacteria that were being effectively treated by theIV antibiotic therapy. While linezolid is a twice-daily IV and oral therapy, it is a narrow-spectrum treatment that is associated with increasingbacterial resistance, side effects from interactions with other therapies and other serious safety concerns. •Safety/tolerability concerns and side effects. Concerns about antibiotic safety and tolerability are among the leading reasons why patients stoptreatment and fail therapy. The most commonly used antibiotics, such as vancomycin, linezolid, daptomycin, levofloxacin, moxifloxacin,azithromycin, piperacillin/tazobactam and tigecycline, are associated with safety and tolerability concerns. For example, vancomycin, whichrequires frequent therapeutic monitoring of blood levels and corresponding dose adjustments, is associated with allergic reactions and cancause kidney damage, loss of balance, loss of hearing, vomiting and nausea in certain patients. Linezolid is associated with bone marrowsuppression and loss of vision and should not be taken by patients who are also on many commonly prescribed anti-depressants, such asmonoamine oxidase inhibitors and serotonin reuptake inhibitors. Daptomycin has been associated with a reduction of efficacy in patients withmoderate renal insufficiency and has a side effect profile that includes muscle damage. Piperacillin/tazobactam is not used in patients withbeta-lactam (penicillin) allergy while tigecycline is associated with tolerability concerns because of nausea and vomiting. Levofloxacin andmoxifloxacin are associated with tendon rupture and peripheral neuropathy. In July 2016, the FDA approved changes to the labels offluoroquinolone antibacterial drugs for systemic use (i.e., taken by mouth or by injection), stating “These medicines are associated withdisabling and potentially permanent side effects of the tendons, muscles, joints, nerves, and central nervous system that can occur together inthe same patient. As a result, the FDA revised the Boxed Warning, FDA’s strongest warning, to address these serious safety issues. They alsoadded a new warning and updated other parts of the drug label, including the patient Medication Guide. Additionally, a May 2012 article inthe New England Journal of Medicine indicated that a small number of patients treated with azithromycin and quinolones, such as levofloxacinor moxifloxacin, may experience sudden death due to cardiac arrhythmia, which is often predicted by a prolongation of the corrected QTinterval, or QTc. The FDA issued a Drug Safety Communication on March 12, 2013 titled “Azithromycin (Zithromax or Zmax) and the risk ofpotentially fatal heart rhythms,” and the azithromycin drug label warnings were strengthened to address this concern.4 •Increasing bacterial resistance. Bacterial resistance to the most frequently prescribed antibiotics (branded or generic) has limited theirpotential to treat infections, which often prevents their use as an empiric monotherapy. We believe that MRSA and MDR-SP, in the communityhave posed treatment challenges because of resistance to penicillins (resistance rate up to 100% for both), cephalosporins (100% and 11%,respectively, for ceftriaxone), macrolides (83% and 86%, respectively, for erythromycin/azithromycin) and quinolones (73% and 2%,respectively, for levofloxacin), particularly in ABSSSI and CABP. There have also been recent reports of resistance developing duringtreatment with daptomycin and concerns about an increasing frequency of strains of Staphylococcus aureus with reduced susceptibility tovancomycin. Additionally, linezolid use has been associated with drug resistance, including reports of outbreaks of resistance amongStaphylococcus aureus and Enterococcus strains. The increasing occurrence of multi-drug resistant, ESBL-producing, gram-negative bacteriain community-acquired UTIs has severely curtailed the oral antibiotic treatment options available to physicians for these UTIs. For example, ina recent survey, 95% and 76% of the ESBL isolates of Escherichia coli found in UTIs, respectively, were resistant to ceftriaxone andlevofloxacin.These limitations can ultimately lead to longer hospital stays, greater healthcare costs and increased morbidity and mortality due to lower cure ratesand additional side effects. While certain antibiotics address some of these outcomes, we do not believe there is one superior treatment option that satisfies alloutcomes. We believe that it is essential for the treatment of patients with serious, community-acquired bacterial infections that physicians prescribe the rightantibiotic the first time, as ineffective antibiotics can quickly lead to progressively more severe and invasive infections or even death.Attributes of Omadacycline as a Product Candidate •Equivalent Once-daily oral and IV formulations to support transition therapy. We have studied once-daily IV and oral formulations ofomadacycline in approximately 1,900 subjects to-date across multiple Phase 1, Phase 2 and Phase 3 clinical trials. The equivalent exposures ofthe IV and oral formulations permit transition therapy, which could allow patients to start treatment on the IV formulation in the hospitalsetting then “transition” to the oral formulation of the same bioequivalent antibacterial agent once the infection is responding enabling thepatient to be released from the hospital to complete the full course of therapy at home. We believe that transition therapy has the potential toavoid the concerns that can accompany switching from an IV agent to a different class of oral antibiotic and to facilitate the continuance ofcurative therapy at home. •Broad-spectrum of antibacterial activity. Omadacycline has demonstrated in vitro activity against all common pathogens found in ABSSSI,such as Staphylococcus aureus, including MRSA, Streptococci (including Group A Streptococci), anaerobic pathogens and many gram-negative organisms. Omadacycline is also active in vitro against the key pathogens found in CABP, such as Streptococcus pneumoniae,including MDR-SP, Staphylococcus aureus, Haemophilus influenzae and atypical bacteria, including Legionella pneumophila. On the basis ofthe in vitro spectrum of activity demonstrated by omadacycline against a range of pathogens in our pre-clinical testing, we believeomadacycline has the in vitro spectrum of coverage needed to potentially become the primary antibiotic choice of physicians and serve as anempiric monotherapy option for ABSSSI, CABP, UTI and other serious, community-acquired bacterial infections where resistance is of concern,if approved by the FDA. •Generally safe and well tolerated profile. To date, we have observed omadacycline to be generally well tolerated in studies involvingapproximately 1,900 subjects. We have conducted a thorough QTc study, as defined by FDA guidance to assess prolongation of QTc, anindicator of cardiac arrhythmia. This study suggests no prolongation of QTc by omadacycline at three times the therapeutic exposure. Therehave been observations of a transient, self-limited increase in heart rate, primarily in normal healthy volunteer subjects. These effects appear tobe related to peak plasma concentration, or Cmax, and to a specific antagonist effect on the M2 subtype of the muscarinic receptor. These heartrate changes are not accompanied by changes in blood pressure, nor concurrent complaints of palpitations, shortness of breath nor chestpain. There have been no Adverse Events, or AEs, of ventricular arrhythmia, QT prolongation, seizures, syncope, or sudden death in thecompleted studies. Further, in clinical studies, omadacycline does not appear to adversely affect blood cell production, nor does it appear tometabolize in the liver or anywhere else in the body, thus reducing the likelihood of causing drug-to-drug interactions. Additionally,omadacycline has resulted in low rates of diarrhea, and we have not observed confirmed cases of Clostridium difficile infection, which canfrequently occur from the use of other classes of broad-spectrum antibiotics such as beta-lactams and quinolones. •Designed to overcome bacterial resistance. We designed omadacycline to overcome the two major mechanisms of tetracycline resistance,known as pump efflux and ribosome protection. This approach was via structure-activity relationship chemistry-based modifications of theseven and nine positions of minocycline. Our attempts to generate resistance to omadacycline in the laboratory suggest a low potential fordeveloping resistance. In addition, our testing of thousands of bacterial samples in the laboratory suggests that omadacycline has not beenaffected to date by clinically relevant mechanisms of resistance to tetracyclines or to any other class of antibiotics.5 •Tissue Penetration Omadacycline appears to penetrate tissues broadly, including lung, muscle, and kidney, thereby achieving highconcentrations at the sites of infection. Since omadacycline is eliminated from the body (as unchanged parent compound) via the kidneys andintestine in an expected manner, based on the results of our Phase 1 studies, we believe it may potentially be used in patients with diminishedkidney and liver function, without dose adjustment, and may potentially have benefit in patients receiving poly-pharmacy, where drug-druginteractions are of concern. We have completed pre-clinical work evaluating omadacycline for the potential treatment of sinusitis, also knownas an acute sinus infection or rhinosinusitis. In addition, we have completed a proof-of-principle study in females with uncomplicated UTI,given the high percentage of renal elimination and urinary concentrations, omadacycline may have utility as a treatment option for patientswith UTI infections.Completed Omadacycline Clinical StudiesIn the two pivotal Phase 3 studies in ABSSSI (OASIS-1 and OASIS-2), omadacycline successfully met the primary endpoint for the FDA bydemonstrating statistical non-inferiority based upon the Early Clinical Response, or ECR, assessment at 48 to 72 hours after the first dose of study medicationin the modified intent‑to‑treat, or mITT, population (all randomized subjects without a baseline sole gram‑negative causative pathogen). In the same twopivotal Phase 3 studies in ABSSSI, omadacycline also successfully met the primary endpoint for the EMA by demonstrating statistical non-inferiority basedupon the investigator’s assessment of clinical outcome at the post therapy evaluation, or PTE, visit (7 to 14 days after the subject’s last day of study therapy),in the mITT and the clinically evaluable, or CE, population (defined as all mITT subjects who received study medication, had a qualifying ABSSSI, anassessment of outcome, and met all other evaluability criteria). Clinical success at the PTE assessment was based on resolution of the infection such thatfurther antibacterial therapy was not needed, and the subject was alive and did not meet any clinical failure or indeterminate criteria. Omadacycline OASIS-1 Study ResultsClinical Success at PTE by Baseline Pathogen (OASIS-1) Omadacycline(N=228) Linezolid(N=227)Baseline Pathogen N1 FavorableResponsen(%) N1 FavorableResponsen(%)Staphylococcus aureus 156 130(83.3) 151 126(83.4)MRSA 69 57(82.6) 50 43(86.0)MSSA 88 74(84.1) 102 84(82.4)Streptococcus anginosus group 47 36(76.6) 37 26(70.3)Streptococcus pyogenes 11 8(72.7) 18 16(88.9)Enterococcus faecalis (VSE) 10 9(90.0) 13 12(92.3)6 *10 or More Isolates for Omadacycline*S. anginosus group consists of: S.anginosus, S. intermedius, and S. constellatus.MRSA, methicillin-resistant Staphylococcus aureus; MSSA, methicillin-susceptible Staphylococcus aureus; VSE, vancomycin-susceptibleenterococci. Omadacycline OASIS-2 Study Results Clinical Success at PTE by Baseline Pathogen (OASIS-2) Omadacycline(n=276) Linezolid(n=287)Baseline Pathogen N Clinical Successn(%) N Clinical Successn(%)Staphylococcus aureus 220 182(82.7) 233 186(79.8)MRSA 104 89(85.6) 107 85(79.4)MSSA 120 97(80.8) 130 103(79.2)Staphylococcus lugdunensis 5 4(80.0) 0 0Streptococcus pyogenes 29 20(69.0) 16 9(56.3)Streptococcus anginosus group 57 49(86.0) 45 33(73.3)Streptococcus anginosus 27 24(88.9) 20 16(80.0)Streptococcus intermedius 23 18(78.3) 24 16(66.7)Streptococcus constellatus 9 8(88.9) 7 5(71.4)Enterococcus faecalis 8 8(100.0) 12 9(75.0)VRE 0 0 2 2(100.0)VSE 7 7(100.0) 10 7(70.0) In a single pivotal Phase 3 study in CABP (OPTIC), omadacycline successfully met the primary endpoint for the FDA by demonstrating statistical non-inferiority based upon the ECR assessment at 72 to 120 hours after the first dose of study medication in the intent‑to‑treat, or ITT, population. In the samepivotal Phase 3 study in CABP, omadacycline also successfully met the primary endpoint for the EMA by demonstrating statistical non-inferiority basedupon clinical success, as assessed by the investigator at the PTE visit in both the ITT and CE populations. 7 Omadacycline OPTIC Study Results Clinical Success at PTE by Baseline Pathogen (OPTIC) Omadacycline(N=204) Moxifloxacin(N=182)Baseline Pathogen N Clinical Successn(%) N Clinical Successn(%)Atypical Pathogens 118 109(92.4) 106 97(91.5)Mycoplasma pneumoniae 70 66(94.3) 57 50(87.7)Chlamydophila pneumoniae 28 25(89.3) 28 25(89.3)Legionella pneumophila 37 35(94.6) 37 36(97.3)Gram-Negative Bacteria (aerobes) 79 67(84.8) 68 55(80.9)Haemophilus influenzae 32 26(81.3) 16 16(100.0)Haemophilus parainfluenzae 18 15(83.3) 17 13(76.5)Klebsiella pneumoniae 13 10(76.9) 13 11(84.6)Gram-Positive Bacteria (aerobes) 61 52(85.2) 56 49(87.5)Streptococcus pneumoniae 43 37(86.0) 34 31(91.2)PSSP 26 23(88.5) 22 21(95.5)Macrolide Resistant 10 10(100.0) 5 5(100.0)Staphylococcus aureus 11 8(72.7) 11 9(81.8) *10 or More Isolates for OmadacyclineOverall, omadacycline demonstrated a generally safe and well tolerated profile. The percentage of all subjects from the pivotal Phase 3 studies whohad at least 1 Treatment Emergent Adverse Events, or TEAEs, was similar in the omadacycline, linezolid, and moxifloxacin subjects. Gastrointestinal eventswere the most frequent type of TEAEs across all pools, consistent with the known adverse effect profiles of the tetracycline, oxazolidinone, andfluoroquinolone antibiotic classes. A higher frequency of nausea and vomiting events occurred in the omadacycline group compared to the moxifloxacin andlinezolid groups. This was most notable in oral-only OASIS-2 study where higher rates were noted with the loading dose on Days 1 and 2. The most commonTEAEs not associated with the disease under study in subjects treated with omadacycline were nausea, vomiting, diarrhea, increased transaminases, andheadache.8 Most Frequent Treatment Emergent Adverse Events (TEAEs) in the OASIS-1, OASIS-2 and OPTIC studies Selected TEAEs Occurring in ≥2% of Patients ReceivingOmadacycline in the Pooled Phase 3 CABP and ABSSSIClinical Trials Omadacycline(N=1073) Linezolid(N=689) Moxifloxacin(N=388) Nausea1 14.9 8.7 5.4 Vomiting1 8.3 3.9 1.5 Diarrhea2 2.4 2.9 8.0 Transaminase Elevations Increased 4.3 4.4 5.2 Headache 2.9 3.0 1.3 Events of Nausea and Vomiting in Phase 3 CABP and ABSSSI Clinical Trials CABP IV/Oral ABSSSI IV/Oral ABSSSI Oral-Only IV Oral IV Oral Oral(D1 thru D2) Oral(D3 thru EOT) Nausea1 0.5 2.4 4.3 9.1 25.2 4.1 Vomiting 1.8 1.0 1.2 4.5 12.5 4.1 1Nearly all events of nausea and vomiting were mild or moderate in severity, resolved, and were not treatment limiting. Only 4 patients (0.4%)discontinued omadacycline treatment for nausea or vomiting.2Diarrhea occurred in 2.4% of omadacycline patients and no cases of C. Difficile infection were reported in omadacycline patients.In Vitro Microbiology StudiesThe tables below compare the in vitro activity of omadacycline and various antibiotics for ABSSSI, CABP and UTI pathogens against various strainsof bacteria, including those resistant to current antibiotics.Key Pathogens—ABSSSI MIC90 (µg/ml)Organism (Number of Isolates) Omadacycline Ceftriaxone Linezolid Levofloxacin Vancomycin TMP-SMX(1) AzithromycinStaphylococcus aureus (MRSA) (942) 0.12 >8 (2) 1 >4 1 ≤0.5 N/AStaphylococcus aureus (MSSA) (1206) 0.12 4 1 4 1 ≤0.5 N/AStreptococcus pyogenes (286) 0.06 ≤0.03 1 1 0.25 N/A N/A (1)Trimethroprim-sulfamethoxazole.(2)“>” indicates the highest concentration tested.“N/A” indicates that the antibiotic was not tested against this organism and/or has no useful therapeutic activityKey Anaerobe Pathogens—ABSSSI MIC90 (µg/ml) Organism (Number of Isolates) Omadacycline Cefotaxime Metronidazole Clindamycin Amox-Clav Anaerobic gram-positive cocci (101) 0.5 16 >64(1) 8 16 (1)“>” indicates the highest concentration tested.9 Key Typical Pathogens—CABP MIC90 (µg/ml) Organism (Number of Isolates) Omadacycline Ceftriaxone Linezolid Levofloxacin Vancomycin Amox-Clav Azithromycin Staphylococcus aureus (MRSA) (942) 0.12 >8 (1) 1 >4 (1) 1 N/A N/A Streptococcus pneumoniae, PRSP (86) 0.12 2 1 1 0.25 >4 (1)N/A Haemophilus influenzae (2000) 1 ≤0.06 N/A ≤0.12 N/A 2 2 Moraxella catarrhalis (639) 0.12 0.5 8 ≤0.12 N/A ≤1 ≤0.03 (1)“>” indicates the highest concentration tested.“N/A” indicates that the antibiotic was not tested against this organism and/or has no useful therapeutic activity Key Atypical Pathogens—CABP MIC90 (µg/ml) Organism (Number of Isolates) Omadacycline Ceftriaxone Linezolid Moxifloxacin Vancomycin Amox-Clav Azithromycin Legionella pneumophila (90) 0.25 N/A N/A 0.016 (1) N/A N/A 0.5 “N/A” indicates that the antibiotic was not tested against this organism and/or has no useful therapeutic activity.(1)DuBois, J. et al. 2016. In vitro Bacterial and Intracellular Activity of Omadacycline Against Legionella pneumophila. 26th ECCMID. Poster P1323Key Pathogens—UTI MIC90 (µg/ml)Organism (Number of Isolates) Omadacycline Ceftriaxone Linezolid Levofloxacin Vancomycin Amox-clavEscherichia coli ESBL pos. (1152) 2 >8 N/A >4 N/A >8Staphylococcus aureus (MRSA) (942) 0.12 >8(2) 1 >4 1 N/ACoNS, MR (843)(1) 1 >8 1 >4 2 >8Enterococcus species (897) 0.12 N/A 1 >4 >16 N/A (1)CoNS, MR: Coagulase-negative Staphylococcus species (not Staphylococcus aureus), methicillin resistant.(2)“>” indicates the highest concentration tested.“N/A” indicates that the antibiotic was not tested against this organism and/or has no useful therapeutic activity.Ongoing Omadacycline UTI ProgramWe conducted a Phase 1b proof-of-principle study last year that provides the evidence to continue to explore the development of omadacycline inUTI. The Phase 1b study results are highlighted below.10 Phase 1 Clinical Study to Evaluate the Safety and Pharmacokinetics of Omadacycline in Female Adults with Cystitis (uncomplicated UTI):Study Design. The primary objectives were to evaluate the urine and plasma concentrations of omadacycline. The secondary objectives were toevaluate the safety and efficacy of omadacycline in female adults with cystitis. This study was a randomized (1:1:1), open-label, parallel-designed Phase 1bstudy evaluating three dosing regimens of omadacycline in the treatment of female adults with cystitis. Following a Screening period of up to 48 hours,eligible subjects were randomly assigned to 1 of 3 groups and received dosing regimens of omadacycline. Dosing was as follows: Dose Time Study Day Group 1omadacyclineIV Load,Oral Daily Group 2omadacyclineOral Load,Oral Daily Group 3omadacyclineHigh oral Load,High oral Dailyt = 0 h 1 200 mg iv 300 mg po 450 mg pot = 12 h 1 — 300 mg po 450 mg pot = 24 h 2 300 mg po 300 mg po 450 mg pot = 48 h 3 300 mg po 300 mg po 450 mg pot = 72 h 4 300 mg po 300 mg po 450 mg pot = 96 h 5 300 mg po 300 mg po 450 mg po Study Results. Overall, 31 subjects (11 in Group 1 and 10 in each of Groups 2 and 3) were randomized and received the study drug at three study sites.All but one subject completed the intended five days of study treatment (1 subject in Group 1 withdrew consent). Subjects were females and they ranged inage from 19 to 75 years (mean 42 years overall). Plasma PK results on Day 1 showed the highest omadacycline exposure following the 200-mg IV dose inGroup 1 (geometric mean AUC0-24 15557 h*ng/mL). The Day 1 geometric mean AUC0-12 value for Group 2 was 6152 h*ng/mL (following the first 300 mgpo dose) and, for Group 3, the value was 6686 h*ng/mL (following the first 450 mg po dose). By Day 5 the geometric mean AUC0-24 values for Groups 1 and2 were 9555 h*ng/mL and 12375 h*ng/mL, respectively following 300 mg po doses, and for Group 3 the value was 18693 h*ng/mL following the 450 mg podose. At steady state (Day 5), the geometric mean cumulative amount of drug excreted in urine from time t0 to t24 (Ae0-24) values for Groups 1, 2, and 3were 21.72 mg, 31.46 mg, and 43.60 mg, respectively. Relative to the absorbed amount of omadacycline, this corresponds to geometric mean fraction of thedose excreted unchanged in urine from 0 to 24 hours after dosing (Fe0-24) for Groups 1, 2, and 3 on Day 5 of 20.7%, 30.0%, and 27.7%, respectively. Thehighest mean omadacycline urine concentration value (65360 ng/mL [65.4 µg/mL]) was observed in Group 1 over 0 to 4 hours after the 200 mg IV dose onDay 1. The mean values across all other intervals/Groups ranged from 11699 to 48117 ng/mL (i.e., 11.7 to 48.1 µg/mL). The most common TEAEs in allgroups were gastrointestinal, most notably nausea (60% to 73% per group) and vomiting (20% to 40% per group), all of which were of mild or moderateintensity. No subjects in the study discontinued study treatment because of these TEAEs. No subjects in this study experienced severe TEAEs or seriousadverse events, leading to premature discontinuation of the study drug. Mean (± SD) Plasma Concentrations of Omadacycline Three Dose Levels on Days 1 (Left Panel) and 5 (Right Panel)11 Mean (± SD) Urine Concentrations of Omadacycline Three Dose Levels on Days 1 (Left Panel) and 5 (Right Panel)Study Conclusions. Omadacycline is partially excreted in urine in adult female subjects with cystitis. With the treatment regimens studied, observedurine concentrations of omadacycline compared favorably with minimum inhibitory concentration values for common UTI pathogens, and a high percentageof subjects achieved clinical success and favorable microbiological response. There was a higher than expected incidence of gastrointestinal, or GI, TEAEs(particularly nausea and vomiting), which contrasts with the notably lower rates of nausea and vomiting observed in other clinical studies using comparabledosing regimens. Omadacycline may be a useful treatment for certain UTIs and warrants evaluation in larger controlled studies, with continued closemonitoring of GI tolerability. Based on the above data results, in December 2017, we initiated sites for the first of two planned Phase 2 clinical studies evaluating omadacycline forthe treatment of UTI. The first study will evaluate the efficacy, safety, tolerability and pharmacokinetics of omadacycline in female patients with cystitis, acommon uncomplicated UTI. The second study, which we plan to initiate later this year, will evaluate the efficacy, safety, tolerability and pharmacokineticsof omadacycline in patients with acute pyelonephritis, a common complicated UTI. We plan to enroll approximately 200 patients in each study at multiplesites. The results of the Phase 2 UTI program are expected in the second half of 2019. The following illustration highlights the adaptive design we plan toemploy in the cystitis and acute pyelonephritis studies. 12 SarecyclineSarecycline, also known as Seysara™ in the U.S, is a novel, next generation, narrow spectrum tetracycline that we designed specifically fordermatological use. We exclusively licensed the U.S. rights to sarecycline for the treatment of acne to Allergan, who funds all U.S. development costs for thisprogram. In exchange for license rights, we have the right to receive (i) milestone payments upon the achievement of development and regulatory progress;and (ii) a royalty on eventual net sales, if any. We retain development and commercialization rights outside of the United States, which are available forlicensing to other partners in key international markets, such as the EU, Japan, the rest of Asia, Canada, and Latin America.In March 2017, Allergan announced that two Phase 3 studies of sarecycline for the treatment of moderate to severe acne vulgaris met their 12-week primary efficacy endpoints. In addition, a 9-month long-term safety extension study was completed. The safety results from the long-term study aregenerally consistent with results from the two 12-week studies. Based on these clinical data, Allergan submitted an NDA to the FDA in the fourth quarter of2017 for the treatment of moderate to severe acne. Development and regulatory milestones we have earned as a result of Allergan’s progress include a $4.0million milestone payment for the initiation of the Phase 3 acne vulgaris clinical studies in December 2014 and a $5.0 million milestone payment foracceptance by the FDA of Allergan’s NDA for sarecycline in December 2017, with $12.0 million remaining to be achieved.We have also granted Allergan an exclusive license to develop and commercialize sarecycline for the treatment of rosacea in the United States, whichconverted to a non-exclusive license in December 2014 after Allergan did not exercise its development option with respect to rosacea. There are currently noclinical trials in rosacea underway.MarketBoth acne and rosacea can be disfiguring conditions with significant social and medical costs. According to IMS sales data, over $3.0 billion wasspent on treatments for acne in 2013. In excess of $1.3 billion was spent in 2011 on various oral formulations of doxycycline or minocycline to treat theseconditions. Periostat, reformulated doxycycline, and Solodyn, reformulated minocycline, recorded peak sales of approximately $300 million in 2012 and$750 million in 2011, respectively. In November 2015, at an investor day conference, Allergan estimated peak U.S. revenue for sarecycline to potentiallyreach $250 to $300 million.The most common oral treatments prescribed by dermatologists are generic tetracycline derivatives, which dermatologists widely accept as a therapyfor moderate to severe acne. A common side effect associated with the use of any broad-spectrum antibacterial agent is gastrointestinal upset and antibiotic-associated infections caused by the destruction of the normal bacterial flora. In addition, we believe there is a growing concern and awareness of thedevelopment of antibiotic-resistant bacteria from the heavy use of broader-spectrum antibiotics, such as these older-generation tetracyclines, when broad-spectrum antibacterial therapy is not necessary.Similarly, for patients with severe acne, we believe that oral retinoid drugs remain a leading option, but these drugs do carry potentially serious sideeffects. Therefore, we believe there is an unmet need for an improved narrow spectrum tetracycline.DevelopmentIn the treatment of acne, we believe a new product that targets a narrower spectrum of bacterial types, including Propionibacterium acnes, a keybacterium associated with acne, would offer advantages over the existing therapies, including older tetracycline derivatives. As compared to existingtetracyclines being used for the treatment of acne, preclinical studies suggest that sarecycline may have an improved profile that includes a narrow spectrumof antibacterial activity, oral bioavailability, anti-inflammatory activity, favorable GI tolerability, and favorable PK properties.Omadacycline Commercialization StrategyAssuming approval from regulatory authorities, we currently intend to market omadacycline as an empiric monotherapy that will be commercializedworldwide for the treatment of serious, community-acquired bacterial infections. We retain worldwide commercial rights to omadacycline, with the exceptionof the People’s Republic of China, Hong Kong, Macau and Taiwan, where we have entered into a collaboration agreement with Zai Lab (Shanghai) Co., Ltd.,or Zai. In the United States and Europe, we continue to reserve the right to either commercialize omadacycline alone, through one or more pharmaceuticalcompanies that have established commercial capabilities, or some combination thereof.13 If the FDA approves our NDA for omadacycline on the projected timeline, we anticipate a launch by the first quarter of 2019. In preparation for thecommercial launch we are building out our sales and marketing infrastructure, including key hires in marketing, market access, medical affairs, salesmanagement, and compliance. Recently we entered into an arrangement with a third party to provide a contract field sales force of between 80-85 salesrepresentatives with associated training and other services. These representatives will call on approximately 850 hospitals. In addition, we plan onconducting research for pricing and adoption, as well as conduct payer reimbursement and trade discussions starting after acceptance of our NDAs.We believe that there is a similar rapidly growing need in other markets throughout the world, including Europe, established Asian markets such asJapan and Korea, and emerging markets, such as Russia, South America and India. We plan to pursue expansion of omadacycline to these markets throughcollaboration or distribution arrangementsCompetitionOur potential competitors include large pharmaceutical and biotechnology companies, specialty pharmaceutical companies and generic drugcompanies. We believe that our product candidates offer key potential advantages over competitive products that could enable our product candidates, ifapproved, to capture meaningful market share from our competitors.If approved by the FDA, omadacycline will compete with other antibiotics in the serious bacterial skin infection market. These include, but are notlimited to, vancomycin, marketed as a generic by Abbott Laboratories and others; linezolid, marketed as Zyvox by Pfizer Inc. and available as a generic;daptomycin, marketed as Cubicin by Merck Pharmaceuticals, Inc. and available as a generic; dalbavancin, approved in May 2014 and marketed as Dalvanceby Allergan; tedizolid, marketed as Sivextro by Merck Pharmaceuticals, Inc.; oritavancin, approved in August 2014 and marketed as Orbactiv by MelintaTherapeutics, Inc.; quinupristin/dalfopristin, marketed as Synercid by Pfizer, Inc.; tigecycline, marketed as Tygacil by Pfizer Inc. and available as a generic;telavancin, marketed as Vibativ by Theravance, Inc.; ceftaroline, marketed as Teflaro by Allergan; and generic trimethoprim/sulfamethoxazole andclindamycin.Further, we expect that product candidates currently in review with the FDA, or in Phase 3 clinical development, or that could enter Phase 3 clinicaldevelopment in the near future, may represent significant competition if approved. These include, but are not limited to, delafloxacin for CABP, submittedfor FDA review in October 2016 by Melinta Therapeutics, Inc.; CG-400549, under development by Crystal Genomics; GSK2140944, under development byGSK; nemonoxacin, under development by TaiGen Biotechnology; avarofloxacin, under development by Allergan; brilacidin, under development byCellceutix; and radezolid, under development by Melinta Therapeutics, Inc.If approved by the FDA, omadacycline will also compete with other antibiotics in the community-acquired pneumonia market. These includeazithromycin, marketed as Zithromax and Z-PAK by Pfizer Inc. and available as a generic; clarithromycin, marketed as Biaxin by Abbott Laboratories andavailable as a generic; moxifloxacin, marketed as Avelox by Bayer AG and available as a generic; levofloxacin, marketed as Levaquin by Johnson &Johnson and available as a generic; tigecycline, marketed as Tygacil by Pfizer Inc. and available as a generic; linezolid, marketed as Zyvox by Pfizer Inc. andavailable as a generic; ceftriaxone, marketed as Rocephin by F. Hoffman-La Roche Ltd and available as a generic; and ceftaroline, marketed as Teflaro byAllergan. We are also aware of various drugs that are or may eventually be under development for the treatment of CABP, delafloxacin and radezolid, underdevelopment by Melinta Therapeutics; solithromycin, under development by Cempra, Inc.; GSK2140944, under development by GSK; lefamulin, underdevelopment by Nabriva Therapeutics; nemanoxacin, under development by TaiGen Biotechnology; and avarofloxacin, under development by Allergan.A number of competitors exist in the UTI indication. Generic potential competitors include levofloxacin, ciprofloxacin,trimethoprim/sulfamethoxazole, ceftriaxone and amoxicillin/clavulanic acid. Several branded and generic injectable-only antibiotics are also used inhospitals, including imipenem/cilastatin, piperacillin/tazobactam, and gentamicin . A limited number of companies are developing new oral antibiotics forthe treatment of UTI infections, finafloxacin by MerLion Pharmaceuticals and sulopenem by Iterum Therapeutics.Many of our potential competitors have substantially greater financial, technical and human resources than we do, as well as greater experience in thediscovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products.Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any product candidate we may commercialize and may render ourproduct candidates obsolete or non-competitive before we can recover the expenses of our development and commercialization. We anticipate that we willface intense and increasing competition as new drugs enter the market and advanced technologies become available. Finally, the development of newtreatment methods for the diseases we are targeting could render our product candidates non-competitive or obsolete.14 ManufacturingWe do not own or operate current Good Manufacturing Practices, or cGMP, manufacturing facilities for the production of any of our productcandidates, nor do we have plans to develop our own manufacturing operations in the foreseeable future. We generally develop the initial synthesis routes forour compounds and partner with third-party manufacturers to scale-up and develop these processes, analytical methods and formulations. Our productcandidates have to date been organic compounds of low molecular weight, commonly referred to as small molecules. They are manufactured in syntheticprocesses from starting materials that have to date been generally available. We currently rely on a small number of third-party contract manufacturers for allof our required raw materials, drug substance and finished product for our preclinical research and clinical trials. We have entered into agreements with third-party contract manufacturers for the commercial production of those product candidates to ensure that commercial supply is available should those productcandidates be approved.For omadacycline, the manufacturing process has been refined to commercial scale. The active pharmaceutical ingredient manufacturing process is anefficient three-step synthesis followed by purification and salt formation. The starting material is minocycline, which is a well characterized generic activeingredient. We have produced stable IV and oral drug product formulations. In 2017, we completed three registration batches each for the IV and oralformulations of omadacycline, which have subsequently been put on stability testing. We have entered into commercial supply agreements with qualifiedcommercial manufacturers, as described below, that also provided omadacycline for Phase 3 clinical use, and we intend to use these same manufacturers tocomplete process validation, which has now initiated, in support of potential market authorization filing, approval and launch.CIPANIn November 2016, we entered into a manufacturing and services agreement with CIPAN – Companhia Industrial Produtora de Antibióticos, or CIPAN.The agreement provides the terms and conditions under which CIPAN will manufacture and supply to us increased quantities of minocycline starting materialand crude omadacycline, or the CIPAN Products, for purification into omadacycline and, subsequently, for use in our products that contain omadacycline asthe active pharmaceutical ingredient. Under this agreement, we are obligated to pay a CIPAN Product price in the high three-digit U.S. Dollar range perkilogram for minocycline starting material and in the four-digit or five-digit U.S. Dollar range per kilogram for crude omadacycline, based on the annualvolume of crude omadacycline that we order, subject to adjustments as set forth in the agreement. CIPAN will also perform certain services related todevelopment, technology transfer and manufacturing of the CIPAN Products as provided in one or more statements of work, which shall set forth the feespayable by us to CIPAN for such services.Our agreement with CIPAN will remain in effect for a fixed initial term, after which the agreement will continue, with respect to each CIPAN Product,for successive renewal terms unless either we or CIPAN have given written notice of termination within a certain period prior to the expiration of either theinitial or then-current renewal term. The agreement may also be terminated under certain other circumstances, including by either party due to a materialuncured breach by the other party or the other party’s insolvency.CarbogenIn December 2016, we entered into an outsourcing agreement with CARBOGEN AMCIS AG, or Carbogen. The agreement provides for the terms andconditions under which Carbogen will manufacture and supply to us the active pharmaceutical ingredient for our omadacycline product in bulk quantities, orthe Carbogen Product. Under this agreement, we are responsible for the cost and supply of crude omadacycline that Carbogen requires to manufacture theCarbogen Products and perform related services. We are obligated to initially pay Carbogen an amount in the low seven-digit U.S. Dollar range per batch ofCarbogen Product that we order, depending on the size of the campaign, and the price may be adjusted in accordance with the terms of the agreement. Wemay also request that Carbogen perform certain services related to the Carbogen Product, for which we will pay reasonable compensation to Carbogen.Our agreement with Carbogen will remain in effect for a fixed initial term and both parties are obligated to use diligent efforts to come to a subsequentlong-term agreement to replace this agreement no later than the end of such initial term. If we have not executed a replacement agreement with Carbogen bysuch time, this agreement will automatically be extended for a fixed period of time. We may terminate this agreement by delivering notice of termination toCarbogen prior to the expiration of the initial or subsequent term. The agreement may also be terminated under certain other circumstances, including byeither party due to a material uncured breach by the other party or the other party’s insolvency.15 AlmacIn December 2016, we entered into a manufacturing and services agreement with Almac Pharma Services Limited, or Almac. The agreement providesfor the terms and conditions under which Almac will manufacture, package and supply to us omadacycline oral solid dosage tablets in bulk form, or theAlmac Products. Under this agreement, we are required to use commercially reasonable efforts to timely provide Almac with the active pharmaceuticalingredient needed to manufacture the Almac Products and perform related services. We are obligated to pay a supply price in the five-digit range in GreatBritain Pounds per batch of the Almac Products, subject to adjustments as provided in the agreement. We will also negotiate with Almac, as part of eachindividual scope of work, the reasonable costs for the services to be performed for us by Almac.Our agreement with Almac will remain in effect for a fixed initial term, after which the agreement will continue for successive renewal terms unlesseither we or Almac have given written notice of termination within a certain period prior to the expiration of the initial or then-current renewal term. Theagreement may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or the otherparty’s insolvency.PatheonIn July 2017, we entered into a master manufacturing services agreement and corresponding product agreement with Patheon UK Limited, orPatheon. The agreements provide for the terms and conditions under which Patheon will manufacture, package and supply to us, omadacycline in injectableform, or the Patheon Products. Under these agreements, we are required to deliver to Patheon the active pharmaceutical ingredient needed to manufacture thePatheon Products. We are obligated to pay a supply price in the six-digit dollar range per batch of the Patheon Products, subject to adjustments as provided inthe agreements. If our omadacycline product is approved, we will also be subject to an annual minimum purchase requirement in the six-digit euro range. Ifwe desire for Patheon to conduct additional services other than those expressly set forth in the agreements, those would be subject to additional fees.Our agreements with Patheon will remain in effect for a fixed initial term, after which they will continue for successive renewal terms unless either weor Patheon have given written notice of termination within a certain period prior to the expiration of the applicable initial or then-current renewal term. Theagreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or theother party’s insolvency.Research and DevelopmentWe have and will continue to make substantial investments in research and development. Our research and development expenses totaled $60.1million, $83.5 million and $50.8 million in 2017, 2016 and 2015, respectively.In the ordinary course of business, we enter into agreements with third parties, such as contract research organizations, medical institutions, clinicalinvestigators and contract laboratories, to conduct our clinical studies and aspects of our research and preclinical testing. These third parties provide projectmanagement and monitoring services and regulatory consulting and investigative services.Intellectual PropertyThe proprietary nature of, and protection for, our proprietary drug development platform, our product candidates and our discovery programs,processes and know-how are important to our business. We seek patent protection in the United States and internationally for areas such as composition ofmatter and the chemistries that allow for the synthesis of novel, substituted tetracycline compounds that exhibit significant antibacterial and/or anti-inflammatory activity, and any other technology to which we have rights, where available and when appropriate. Our policy is to pursue, maintain anddefend patent rights, whether developed internally or licensed from third parties, and to protect the technology, inventions and improvements that arecommercially important to the development of our business. We also rely on trade secrets that may be important to the development of our business.Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection of our proprietary technologiesand compounds, our current and future product candidates and the methods used to develop and manufacture them, as well as successfully defending thesepatents against third-party challenges. Our ability to prevent third parties from making, using, selling, offering to sell or importing our products andtechnology depends on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. We cannot be surethat patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor canwe be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our technology.16 As of December 31, 2017, our patent portfolio of owned or exclusively licensed patents and applications includes 62 issued U.S. patents, 27 pendingU.S. patent applications and corresponding foreign national or regional counterpart patents or applications. We expect that the patents and patentapplications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity or other government fees are paid, would expire between 2020and 2037, excluding any additional terms from patent term adjustments or patent term extensions under the Hatch-Waxman Amendments.OmadacyclineThe patent portfolio for omadacycline is directed to cover compositions of matter, formulations, salts and polymorphs, manufacturing methods,methods of use, dosing regimens, and modes of administration.. The patents and patent applications covering omadacycline include patents and patentapplications owned by us. In some corresponding foreign patents and patent applications, omadacycline is covered along with other compounds in patentsand patent applications that are owned jointly by us and Tufts University, or Tufts, that are subject to a license agreement we have with Tufts. The issuedcomposition of matter patent in the United States (U.S. Patent No. 7,553,828), if the appropriate maintenance, renewal, annuity, or other governmental feesare paid, is expected to expire in 2023. We believe that an additional term of potentially up to five years for one of our omadacycline patents may result fromthe patent term extension provision of the Hatch-Waxman Amendments of 1984. Omadacycline has received QIDP designation under the GeneratingAntibiotic Incentives Now Act, or the GAIN Act. This may provide up to an additional five years of market exclusivity layered with protection provided bythe Hatch-Waxman Amendments, which enables exclusivity to 2028. We expect that the other patents and patent applications in this portfolio, if issued, andif the appropriate maintenance, renewal, annuity or other governmental fees are paid, would expire between 2021 and 2037, excluding any additional termsfrom patent term adjustments or patent term extensions under the Hatch-Waxman Amendments.SarecyclineThe patent portfolio for our acne and rosacea program is directed to cover compositions of matter, methods of use, as well as salts and polymorphs ofsarecycline. As of December 31, 2017, our patent portfolio includes issued U.S. Patent No. 8,318,706, or the ‘706 Patent, which covers composition of matterof sarecycline and issued U.S. Patent No. 8,513,223, or the ‘223 Patent,, which covers methods of use for sarecycline, and corresponding foreign national orregional counterpart applications. The ‘706 Patent is expected to expire in 2031, and the ‘223 Patent is expected to expire in 2029, if the appropriatemaintenance, renewal, annuity or other governmental fees are paid. We may also be entitled to an extension of the patent term for one of the patents coveringsarecycline pursuant to the patent term extension provision of the Hatch-Waxman Amendments.. IntermezzoAs of December 31, 2017, our patent portfolio of owned or exclusively licensed patents and applications includes four issued U.S. patents, twopending U.S. patent applications and corresponding foreign national or regional counterpart patents and applications which are directed to formulations andmethods of use. The issued U.S. patents expire between 2025 and 2029.Trade SecretsIn addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive position. Trade secrets and know-how can bedifficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements and invention assignment agreementswith our employees, consultants, scientific advisors, contractors and commercial partners. These agreements are designed to protect our proprietaryinformation and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with athird party. We also seek to preserve the integrity and confidentiality of our data, trade secrets and know-how by maintaining physical security of ourpremises and physical and electronic security of our information technology systems.TrademarksWe have registered trademarks and service marks or pending trademark and services mark applications in a number of countries for PARATEK,PARATEK & HEXAGON DESIGN, and PARATEK POSITIVE PATIENT STORIES, and other marks which we presently use or may use in connection withour pharmaceutical research and development as well as with our product candidates. In connection with the ongoing development and advancement of ourproducts and services in the United States and in various international jurisdictions, we routinely seek to create protection for our marks and enhance theirvalue by pursuing trademarks and service marks where available and when appropriate. 17 Collaborations and License AgreementsOur commercial strategy is to partner with established pharmaceutical companies to develop and market products for the larger community markets,while retaining certain rights to products aimed at concentrated markets, such as hospital-based products, where we may seek to participate in developmentand commercialization.Zai Lab (Shanghai) Co., Ltd.On April 21, 2017, Paratek Bermuda Ltd., a wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., and Zai entered into a License andCollaboration Agreement, or the Zai Collaboration Agreement. Under the terms of the Zai Collaboration Agreement, Paratek Bermuda Ltd. granted Zai anexclusive license to develop, manufacture and commercialize omadacycline, or the licensed product, in the People’s Republic of China, Hong Kong, Macauand Taiwan, or the Zai territory, for all human therapeutic and preventative uses other than biodefense. Zai will be responsible for the development,manufacturing and commercialization of the licensed product in the Zai territory, at its sole cost with certain assistance from Paratek Bermuda Ltd.Under the terms of the Zai Collaboration Agreement, Paratek Bermuda Ltd. earned an upfront cash payment of $7.5 million, before taxes, and iseligible to receive up to $14.0 million in potential regulatory milestone payments and $40.5 million in potential commercial milestone payments, the nextbeing $5.0 million upon approval by the FDA of an NDA submission in the CABP indication. Zai will also pay Paratek Bermuda Ltd. tiered royalties at a lowdouble digit to mid-teen percent on net sales of the licensed product in the Zai territory.The Zai Collaboration Agreement will continue, on a region-by-region basis, until the expiration of and payment by Zai of all Zai’s paymentobligations, which is until the later of: (i) the abandonment, expiry or final determination of invalidity of the last valid claim within the Paratek patents thatcovers the licensed product in the region in the Zai territory in the manner that Zai or its affiliates or sublicensees exploit the licensed product or intend forthe licensed product to be exploited; or (ii) the eleventh anniversary of the first commercial sale of such licensed product in such region.Allergan plcIn July 2007, we and Warner Chilcott Company, Inc. (now part of Allergan), entered into a collaborative research and license agreement, or theAllergan Collaboration Agreement, under which we granted Allergan an exclusive license to research, develop and commercialize tetracycline products foruse in the United States for the treatment of acne and rosacea. Since Allergan did not exercise its development option with respect to the treatment of rosaceaprior to initiation of a Phase 3 trial for the product, the license grant to Allergan converted to a non-exclusive license for the treatment of rosacea as ofDecember 2014. Under the terms of the Allergan Collaboration Agreement, we and Allergan are responsible for, and are obligated to use, commerciallyreasonable efforts to conduct specified development activities for the treatment of acne and, if requested by Allergan, we may conduct certain additionaldevelopment activities to the extent we determine in good faith that we have the necessary resources available for such activities. Allergan has agreed toreimburse us for its costs and expenses, including third-party costs, incurred in conducting any such development activities.Under the terms of the Allergan Collaboration Agreement, Allergan is responsible for and is obligated to use commercially reasonable efforts todevelop and commercialize tetracycline compounds that are specified in the agreement for the treatment of acne. Allergan failed to elect to advance thedevelopment of sarecycline for the treatment of rosacea in accordance with the terms of the agreement so the license granted to Allergan was converted to anon-exclusive license for the treatment of rosacea as of December 2014. We have agreed during the term of the Allergan Collaboration Agreement not todirectly or indirectly develop or commercialize any tetracycline compounds in the United States for the treatment of acne and rosacea, and Allergan hasagreed during the term of the Allergan Collaboration Agreement not to directly or indirectly develop or commercialize any tetracycline compound includedas part of the agreement for any use other than as provided in the agreement.We earned an upfront fee in the amount of $4.0 million upon the execution of the Allergan Collaboration Agreement, $1.0 million upon filing of anInvestigational New Drug Application, or IND, in 2010, and $2.5 million upon initiation of Phase 2 trials in 2012. In December 2014, we also earned $4.0million upon initiation of Phase 3 trials associated with the Allergan Collaboration Agreement and, in December 2017, we earned a $5.0 million payment forNDA acceptance by the FDA. In addition, Allergan may be required to pay us $12.0 million upon the receipt of commercialization regulatory approval fromthe FDA. Allergan is also obligated to pay us tiered royalties, ranging from the mid-single digits to the low double digits, based on net sales of tetracyclinecompounds developed under the Allergan Collaboration Agreement, with a standard royalty reduction post patent expiration for such product for theremainder of the royalty term. Allergan’s obligation to pay us royalties for each tetracycline compound it commercializes under the Allergan CollaborationAgreement expires on the later of the expiration of the last to expire patent that covers the tetracycline compound in the United States and the date on whichgeneric drugs that compete with the tetracycline compound reach a certain threshold market share in the United States.18 Either we or Allergan may terminate the Allergan Collaboration Agreement for certain specified reasons at any time after Allergan has commenceddevelopment of any tetracycline compound, including if Allergan determines that it would not be commercially viable to continue to develop orcommercialize the tetracycline compound and/or that it is unlikely to obtain regulatory approval of the tetracycline compound, and, in any case, no backuptetracycline compound is in development or ready to be developed and the parties are unable to agree on an extension of the development program or analternative course of action. Either we or Allergan may terminate the Allergan Collaboration Agreement for the other party’s uncured breach of a materialterm of the agreement on 60 days’ notice (unless the breach relates to a payment term, which requires a 30-day notice) or upon the bankruptcy of the otherparty that is not discharged within 60 days. Upon the termination of the Allergan Collaboration Agreement by Allergan for our breach, Allergan’s license willcontinue following the effective date of termination, subject to the payment by Allergan of the applicable milestone and royalty payments specified in theagreement unless our breach was with respect to certain specified obligations, in which event the obligation of Allergan to pay us any further royalty ormilestone payments will terminate. Upon the termination of the Allergan Collaboration Agreement by us for Allergan’s breach or the voluntary terminationof the agreement by Allergan, Allergan’s license under the agreement will terminate. Tufts UniversityIn February 1997, we and Tufts entered into a license agreement under which we acquired an exclusive license to certain patent applications and otherintellectual property of Tufts related to the drug resistance field to develop and commercialize products for the treatment or prevention of bacterial ormicrobial diseases or medical conditions in humans or animals or for agriculture. We subsequently entered into eleven amendments to that agreement, orcollectively the Tufts License Agreement, to include patent applications filed after the effective date of the original license agreement, to exclusively licenseadditional technology from Tufts, to expand the field of the agreement to include disinfectant applications, and to change the royalty rate and percentage ofsublicense income paid by us to Tufts under sublicense agreements with specified sublicensees. We are obligated under the Tufts License Agreement toprovide Tufts with annual diligence reports and a business plan and to meet certain other diligence milestones. We have the right to grant sublicenses of thelicensed rights to third parties, which will be subject to the prior approval of Tufts unless the proposed sublicensee meets a certain net worth or marketcapitalization threshold. We are primarily responsible for the preparation, filing, prosecution and maintenance of all patent applications and patents coveringthe intellectual property licensed under the Tufts License Agreement at our sole expense. We have the first right, but not the obligation, to enforce thelicensed intellectual property against infringement by third parties.We issued Tufts 1,024 shares of our common stock on the date of execution of the original license agreement, and we may be required to make certainpayments of up to $0.3 million to Tufts upon the achievement by products developed under the agreement of specified development and regulatory approvalmilestones. We have already made a payment of $50,000 to Tufts for achieving the first milestone following commencement of the Phase 3 clinical trial foromadacycline and a payment of $100,000 to Tufts for achieving the second milestone following our first marketing application (NDA) submitted in theUnited States. We are also obligated to pay Tufts a minimum royalty payment in the amount of $25,000 per year. In addition, we are obligated to pay Tuftsroyalties based on gross sales of products, as defined in the agreement, ranging in the low single digits depending on the applicable field of use for suchproduct sale. If we enter into a sublicense under the Tufts License Agreement, based on the applicable field of use for such product, we will be obligated topay Tufts (i) a percentage, ranging from 10% to 14% (ten percent to fourteen percent) for compounds other than omadacycline, and a percentage in the singledigits for the compound omadacycline, of that portion of any sublicense issue fees or maintenance fees received by us that are reasonably attributable to thesublicense of the rights granted to us under the Tufts License Agreement and (ii) the lesser of (a) a percentage, ranging from the low tens to the high twentiesbased on the applicable field of use for such product, of the royalty payments made to us by the sublicensee or (b) the amount of royalty payments that wouldhave been paid by us to Tufts if we had sold the products. We paid a sublicense issue fee in the low six figures to Tufts during the year ended December 31,2017 upon earning the $7.5 million upfront payment under the Zai Collaboration Agreement.Unless terminated earlier, the Tufts License Agreement will expire at the same time as the last-to-expire patent in the patent rights licensed to us underthe agreement and after any such expiration we will continue to have an exclusive, fully-paid-up license to such intellectual property licensed from Tufts.Tufts has the right to terminate the agreement upon 30 days’ notice should we fail to make a material payment under the Tufts License Agreement or commita material breach of the agreement and not cure such failure or breach within such 30-day period, or if, after we have started to commercialize a product underthe Tufts License Agreement, we cease to carry on its business for a period of 90 consecutive days. We have the right to terminate the Tufts LicenseAgreement at any time upon 180 days’ notice. Tufts has the right to convert our exclusive license to a non-exclusive license if we do not commercialize aproduct licensed under the agreement within a specified time period.19 Purdue Pharma L.P.In July 2009, we and Purdue Pharma L.P., or Purdue Pharma, entered into a collaboration agreement, or the Purdue Collaboration Agreement, whichgrants an exclusive license to Purdue Pharma to commercialize Intermezzo in the United States and pursuant to which: •Purdue Pharma paid us a $25.0 million non-refundable license fee in August 2009; •Purdue Pharma paid us a $10.0 million non-refundable intellectual property milestone in December 2011 when the first of two issuedformulation patents was listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book; •Purdue Pharma paid us a $10.0 million non-refundable intellectual property milestone in August 2012 when the first of two issued methods ofuse patents was listed in the FDA’s Orange Book; •We transferred the Intermezzo NDA to Purdue Pharma, and Purdue Pharma is obligated to assume the expense associated with maintaining theNDA and further development of Intermezzo in the United States, including any expense associated with post-approval studies; •Purdue Pharma is obligated to commercialize Intermezzo in the United States at its expense using commercially reasonable efforts; •Purdue Pharma is obligated to pay us tiered base royalties on net sales of Intermezzo in the United States ranging from the mid-teens up to themid-20% level, with each such royalty tiers subject to an increase by a percentage in the low single digits upon a specified anniversary ofregulatory approval of Intermezzo. The base royalty is tiered depending upon the achievement of certain fixed net sales thresholds by PurduePharma, which net sales levels reset each year for the purpose of calculating the royalty. The royalty tiers are subject to reductions upon genericentry and patent expiration. Purdue Pharma is obligated to pay royalties until the later of 15 years from the date of first commercial sale in theUnited States or the expiration of patent claims related to Intermezzo; and •Purdue Pharma is obligated to pay us up to an additional $70.0 million upon the achievement of certain net sales targets for Intermezzo in theUnited States.We had an option to co-promote Intermezzo to psychiatrists in the United States and such option was terminated as a result of the Merger.The Purdue Collaboration Agreement expires on the expiration of Purdue Pharma’s royalty obligations. Purdue Pharma has the right to terminate thePurdue Collaboration Agreement at any time upon advance notice of 180 days. The Purdue Collaboration Agreement is also subject to termination by PurduePharma in the event of FDA or governmental action that materially impairs Purdue Pharma’s ability to commercialize Intermezzo or the occurrence of aserious event with respect to the safety of Intermezzo. The Purdue Collaboration Agreement may also be terminated by us upon Purdue Pharma commencingan action that challenges the validity of Intermezzo related patents. We also have the right to terminate the Purdue Collaboration Agreement immediately ifPurdue Pharma is excluded from participation in federal healthcare programs. The Purdue Collaboration Agreement may also be terminated by either party inthe event of a material breach by or insolvency of the other party.We also granted Purdue Pharma and an associated company the right to negotiate for the commercialization of Intermezzo in Mexico in 2013 butretained the rights to commercialize Intermezzo in the rest of the world.In December 2013, Purdue Pharma notified us that it intended to discontinue use of the Purdue Pharma sales force to actively market Intermezzo tohealthcare professionals during the first quarter of 2014.In October 2014, we announced that our Board of Directors had approved a special dividend of, among other things, the right to receive, on a pro ratabasis, 100% of any royalty income received by us pursuant to the Purdue Collaboration Agreement and 90% of any cash proceeds from a sale or dispositionof Intermezzo, less fees and expenses incurred in connection with such activity, to the extent that either occurred prior to the second anniversary of theclosing date of the Merger. On October 28, 2016, in satisfaction of our payment obligation of the proceeds of sale or disposition of the Intermezzo assets tothe former Transcept stockholders under the Merger Agreement, we executed a royalty sharing agreement, or the Royalty Sharing Agreement, with theSpecial Committee of the Company’s Board of Directors, or the Special Committee, a committee established in connection with the Merger. Under theRoyalty Sharing Agreement, we agreed to pay to the former Transcept stockholders fifty percent of all royalty income received by us pursuant to the PurdueCollaboration Agreement, net of all costs, fees and expenses incurred by the Company in connection with the Purdue Collaboration Agreement, relatedagreements, the Intermezzo product and the administration of the royalty income to the Transcept stockholders.20 U.S. Army Medical Research Institute of Infectious DiseasesIn October 2016, we announced that we entered into a Cooperative Research and Development Agreement with the U.S. Army Medical ResearchInstitute of Infectious Diseases to study omadacycline against pathogenic agents causing infectious diseases of public health and biodefense importance.These studies are designed to confirm humanized dosing regimens of omadacycline in order to study the efficacy of omadacycline against biodefensepathogens, including Yersinia pestis, or plague, and Bacillus anthracis, or anthrax. Funding support for the trial has been made available through the DefenseThreat Reduction Agency, or DTRA/ Joint Science and Technology Office and Joint Program Executive Office for Chemical and Biological Defense / JointProject Manager Medical Countermeasure Systems / BioDefense Therapeutics.Past CollaborationsNovartis International Pharmaceutical Ltd.In September 2009, we and Novartis International Pharmaceutical Ltd., or Novartis, entered into a Collaborative Development, Manufacture andCommercialization License Agreement, or the Novartis Agreement, which provided Novartis with a global, exclusive patent and technology license for thedevelopment, manufacturing and marketing of omadacycline. The Novartis Agreement was terminated by Novartis without cause in June 2011 and thetermination was effective 60 days later. We and Novartis subsequently entered in a letter agreement in January 2012, or the Novartis Letter Agreement, asamended, pursuant to which we reconciled shared development costs and expenses and granted Novartis a right of first negotiation with respect tocommercialization rights of omadacycline following approval of omadacycline from the FDA, EMA, or any regulatory agency, but only to the extent we hadnot previously granted such commercialization rights related to omadacycline to another third party as of any such approval. We also agreed to pay Novartisa 0.25% royalty, to be paid from net sales received by us in any country following the launch of omadacycline in that country and continuing until the laterof expiration of the last active valid patent claim covering such product in the country of sale and 10 years from the date of first commercial sale in suchcountry. The amended Novartis Letter Agreement resulted in a long-term liability in the amount of $3.6 million for the year ended December 31, 2017 and2016 included within “Other Long-Term Liabilities” on our consolidated balance sheet. There are no other payment obligations to Novartis under theNovartis Agreement or the amended Novartis Letter Agreement.Government RegulationGovernment authorities in the United States, at the federal, state and local level, and other countries extensively regulate, among other things, theresearch, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing and export and import of productssuch as those we are developing. Our drugs must be approved by the FDA through the NDA process before they may be legally marketed in the United States.U.S. Government RegulationNDA Approval ProcessesIn the United States, the FDA regulates drugs under the Federal Food, Drug and Cosmetic Act, or the FDCA, and implementing regulations. Theprocess of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulation require theexpenditure of substantial time and financial resources. Failure to comply with the FDCA and other applicable U.S. requirements at any time during theproduct development process, approval process or after approval may subject us to a variety of administrative or judicial sanctions, any of which could havea material adverse effect on us. These sanctions could include: •refusal to approve pending applications; •withdrawal of an approval; •imposition of a clinical hold; •warning letters, untitled letters and similar communications; •product seizures or recalls; •total or partial suspension of production or distribution; or •injunctions, fines, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and the Departmentof Justice, or DOJ, or other governmental entities.21 The process required by the FDA before a drug may be marketed in the United States generally involves the following: •completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices or otherapplicable regulations; •submission to the FDA of an IND application, which must become effective 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 to establish the safety and efficacy of the proposed drug for its intended use,conducted in accordance with current Good Clinical Practices, or cGCP, which are ethical and scientific quality standards and FDArequirements for conducting, recording and reporting clinical trials to assure that the rights, safety and well-being of trial participants areprotected; •preparation and submission to the FDA of an NDA; •satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product is produced to assesscompliance with cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s safety, identity,strength, quality and purity; and •FDA review and approval of the NDA.Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluationsof product chemistry, toxicity and formulation, as well as animal studies. An IND sponsor must submit the results of the preclinical tests, together withmanufacturing information and analytical data, to the FDA as part of the IND. Some preclinical or nonclinical testing may continue even after the IND issubmitted. In addition to including the results of the preclinical studies, the IND will also include a protocol detailing, among other things, the objectives ofthe clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated if the first phase lends itself to an efficacydetermination. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, places the IND onclinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin. A clinical hold may occurat any time during the life of an IND and may affect one or more specific studies or all studies conducted under the IND.All clinical trials must be conducted under the supervision of one or more qualified investigators in accordance with cGCP. They must be conductedunder protocols detailing the objectives of the trial, dosing procedures, subject selection and exclusion criteria and the safety and effectiveness criteria to beevaluated. Each protocol and any amendments must be submitted to the FDA as part of the IND, and progress reports detailing the results of the clinical trialsmust be submitted at least annually to the FDA and more frequently in other situations, including the occurrence of serious adverse events. An IRB at eachinstitution participating in the clinical trial must review and approve the protocol and any amendments before a clinical trial commences or continues at thatinstitution, approve the information regarding the clinical trial and the informed consent form that must be provided to each trial subject or his or her legalrepresentative, monitor the study until completed and otherwise comply with IRB regulations. Information about certain clinical trials must be submittedwithin specific timeframes to the NIH for public dissemination on their ClinicalTrials.gov website.Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: •Phase 1. The drug is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism,distribution and elimination. In the case of some products for severe or life-threatening diseases, such as cancer, especially when the productmay be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients with thetarget disease or condition. •Phase 2. Clinical trials are initiated in a limited patient population intended to identify possible adverse effects and safety risks, topreliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. •Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population atgeographically dispersed clinical study sites. These studies are intended to establish the overall risk-benefit ratio of the product and provide anadequate basis for regulatory approval and product labeling.Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend orterminate a clinical trial at any time for a variety of reasons, including a finding that the research subjects or patients are being exposed to an unacceptablehealth risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordancewith the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.22 During the development of a new drug, sponsors are given opportunities to meet with the FDA at certain points. These points may be prior tosubmission of an IND, at the end of Phase 2 and before an NDA is submitted. Meetings at other times may be requested. These meetings can provide anopportunity for the sponsor to share information about the data gathered to date, for the FDA to provide advice and for the sponsor and the FDA to reachagreement on the next phase of development. Sponsors typically use the End-of-Phase 2 meeting to discuss their Phase 2 clinical results and present theirplans for the pivotal Phase 3 clinical trial that they believe will support approval of the new drug. If this type of discussion occurred, a sponsor may be able torequest an SPA agreement, the purpose of which is to reach agreement with the FDA on the design of the Phase 3 clinical trial protocol and analysis that willform the primary basis of an efficacy claim.According to FDA guidance for industry on the SPA agreement process, a sponsor that meets the prerequisites may make a specific request for a SPAand provide information regarding the design and size of the proposed clinical trial. The FDA has a goal of evaluating the protocol within 45 days of therequest to assess whether the proposed trial is adequate and that evaluation may result in discussions and a request for additional information. An SPAagreement request must be made before the proposed clinical trial begins, and all open issues must be resolved before the clinical trial begins. If an agreementis reached, it will be documented in writing and made part of the record. The agreement may not be changed by the sponsor or the FDA after the trial begins,except with the documented written agreement of the sponsor and the FDA or if the FDA determines that a substantial scientific issue essential to determiningthe safety or efficacy of the drug was identified after the testing began. Also, if the sponsor makes any unilateral changes to the approved protocol, theagreement will be invalidated. An SPA agreement is intended to provide greater assurance that if the agreed upon clinical trial protocols are followed, theclinical trial endpoints are achieved, and there is a favorable risk-benefit profile, the data may serve as the primary basis for an efficacy claim in support ofNDA approval. However, SPA agreements are not a guarantee of an approval of a product candidate or any permissible claims about the product candidate,and final determinations of approvability will not be made until the FDA completes its review of the entire NDA.The PREA requires a sponsor to conduct pediatric studies for most drugs and biologic, for a new active ingredient, new indication, new dosage form,new dosing regimen or new route of administration. Under PREA, original NDAs, biologics license applications, or BLAs and supplements thereto mustcontain a pediatric assessment unless the sponsor has received a deferral or waiver. The required assessment must assess the safety and effectiveness of theproduct for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation forwhich the product is safe and effective. The sponsor or the FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. Adeferral may be granted for several reasons, including a finding that the drug or biologic is ready for approval for use in adults before pediatric studies arecomplete or that additional safety or effectiveness data needs to be collected before the pediatric studies begin. The FDA must send a non-compliance letterto any sponsor that fails to submit the required assessment, keep a deferral current or submit a request for approval of a pediatric formulation. On February 16,2016 we reached agreement with the FDA on the terms of the pediatric program associated with PREA. The FDA has granted Paratek a waiver fromconducting studies with omadacycline in children less than 8 years old and a deferral in conducting studies in children 8 years and older until safety andefficacy is established in adults. Concurrent with clinical trials, companies usually complete additional animal safety studies and must also develop additional information about thechemistry and physical characteristics of the drug and finalize a process for manufacturing the product in accordance with cGMP requirements. Themanufacturing process must be capable of consistently producing quality batches of the drug candidate and the manufacturer must develop methods fortesting the quality, purity and potency of the final drugs. Additionally, appropriate packaging must be selected and tested and stability studies must beconducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf-life.The results of product development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical testsconducted on the chemistry of the drug, proposed labeling and other relevant information are submitted to the FDA as part of an NDA requesting approval tomarket the product for one or more indications. The submission of an NDA is subject to the payment of user fees, but a waiver of such fees may be obtainedunder specified circumstances. The FDA reviews all NDAs submitted to ensure that they are sufficiently complete for substantive review before it acceptsthem for filing. It may request additional information rather than accept an NDA for filing. In this event, the NDA must be resubmitted with the additionalinformation. The resubmitted application also is subject to review before the FDA accepts it for filing.23 Once the submission is accepted for filing, the FDA begins an in-depth review. NDAs receive either standard or priority review. A drug representing asignificant improvement in treatment, prevention or diagnosis of disease may receive priority review. The FDA has agreed to specified performance goals inthe review process of NDAs. Under that agreement, 90% of applications seeking approval of New Molecular Entities, or NMEs, are meant to be reviewedwithin ten months from the date on which FDA accepts the NDA for filing, and 90% of applications for NMEs that have been designated for “priority review”are meant to be reviewed within six months of the filing date. For applications seeking approval of drugs that are not NMEs, the ten-month and six-monthreview periods run from the date that FDA receives the application. The review process may be extended by the FDA for three additional months to considernew information or clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturingcomplies with cGMP requirements to assure and preserve the product’s safety, identity, strength, quality and purity. The FDA may refer the NDA to anadvisory committee for review and recommendation as to whether the application should be approved and under what conditions. The FDA is not bound bythe recommendation of an advisory committee, but it generally follows such recommendation.Before approving an NDA, the FDA will typically inspect the facility or facilities where the product is manufactured and tested. These pre-approvalinspections cover all facilities associated with NDA submission, including drug component manufacturing (such as active pharmaceutical ingredients),finished drug product manufacturing, and control testing laboratories. Additionally, before approving an NDA, the FDA will typically inspect one or moreclinical sites to assure compliance with cGCP. In addition, the FDA may require, as a condition of approval, Risk Evaluation and Mitigation Strategies, orREMS, restricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre-approval ofpromotional materials, restrictions on direct-to-consumer advertising or commitments to conduct additional research post-approval.On the basis of the FDA’s evaluation of the NDA and accompanying information, the FDA may issue an approval letter or a complete response letter.An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. The FDA may refuse toapprove an NDA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data. Even if such data are submitted, the FDAmay ultimately decide that the NDA does not satisfy the criteria for approval and issue a complete response letter to indicate that the agency will not approvethe NDA in its present form. The complete response letter usually describes all of the specific deficiencies in the NDA identified by the FDA. If a completeresponse letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application.Expedited Review and ApprovalThe FDA has various programs, including Fast Track and priority review, which are intended to expedite or simplify the process for reviewing drugs.Even if a drug qualifies for one or more of these programs, the FDA may later decide that the drug no longer meets the conditions for qualification or that thetime period for FDA review or approval will not be shortened. Generally, drugs that may be eligible for these programs are those for serious or life-threateningconditions, those with the potential to address unmet medical needs and those that offer meaningful benefits over existing treatments. For example, FastTrack is a process designed to facilitate the development and expedite the review of drugs to treat serious diseases and fill an unmet medical need. Priorityreview is designed to give drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists, an expedited review withineight months from the completed submission as compared to a standard review time of twelve months from the completed submission for a standard newmolecular entity NDA. Although Fast Track and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequentmeetings with a sponsor of a Fast Track-designated drug and expedite review of the application for a drug designated for priority review.The GAIN Act is intended to provide incentives for the development of new QIDPs. A new drug that is designated as a QIDP after a request by thesponsor that is made before an NDA is submitted will be eligible, if approved, for an additional five years of exclusivity beyond any period of exclusivity towhich it would have previously been eligible. In addition, a QIDP will receive priority review and qualify for a Fast Track designation. QIDPs are defined asantibacterial or antifungal drugs intended to treat serious or life-threatening infections that are resistant to treatment, or that treat qualifying resistantpathogens identified by the FDA. Examples of pathogens that may be designated as a qualifying pathogen include MRSA, vancomycin-resistantEnterococcus and multi-drug resistant gram-negative bacteria. Omadacycline (both IV and oral formulations) has been designated as a QIDP for complicatedUTI, ABSSSI and CABP.24 Beyond GAIN ActIn addition to the GAIN Act, the United States Congress has initiated a significant number of legislative proposals to provide further incentives inanti-infective development. Such legislation includes the following: •The Antibiotic Development to Advance Patient Treatment Act of 2013, or ADAPT Act, was introduced in July 2014 to provide an acceleratedantibiotic development pathway; •The Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms Act of 2014, or DISARM Act, was introduced in January2015 to provide a new antibiotics reimbursement framework; and •The 21st Century Cures Act, signed into law in December 2016, established a new FDA limited population pathway for antimicrobial drugs thattreat serious or life-threatening infections for which there are unmet medical needs.Patent Term Restoration and Data ExclusivityDepending upon the timing, duration and specifics of FDA approval of the use of our drugs, some of our U.S. patents may be eligible for limited patentterm extension under the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years for a patentcovering an approved product as compensation for patent term lost during product development and the FDA regulatory review process. However, patentterm restoration cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date. The patent term restoration periodis generally one-half the time between the effective date of an IND, and the submission date of an NDA, plus the time between the submission date of an NDAand the approval of that application. Only one patent applicable to an approved drug is eligible for the extension, and the extension must be applied for priorto expiration of the patent and within applicable deadlines. The U.S. Patent and Trademark Office, or the USPTO, in consultation with the FDA, reviews andapproves the application for any patent term extension or restoration. In the future, we intend to apply for restoration of patent term for omadacycline beyondits current composition of matter expiration date, depending on the expected length of clinical trials and other factors involved in the submission of theomadacycline NDA.Data exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a five-yearperiod of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a newchemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible forthe action of the drug substance. During the exclusivity period, the FDA may not accept for review an Abbreviated New Drug Application, or ANDA, or a505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all thedata required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement.The FDCA also provides three years of data exclusivity for an NDA, 505(b) (2) NDA or supplement to an existing NDA if new clinical investigations, otherthan bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application, forexample, for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions associated with the new clinicalinvestigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity willnot delay the submission or approval of a full NDA. However, an applicant submitting a full NDA would be required to conduct or obtain a right of referenceto all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.Pediatric ExclusivityThe Best Pharmaceuticals for Children Act provides for an additional six months of exclusivity, which is added on to patent and exclusivity periods ineffect at the time the pediatric exclusivity aware is granted, if a sponsor conducts clinical trials in children in response to a written request from the FDA, or aWritten Request. If the Written Request does not include studies in neonates, the FDA is required to include its rationale for not requesting those studies. TheFDA may request studies on approved indications in separate Written Requests. The issuance of a Written Request does not require the sponsor to undertakethe described studies. To date, we have not received any Written Requests.Post-approval RequirementsOnce an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or ifproblems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the productor even complete withdrawal of the product from the market. After approval, some types of changes to the approved product, such as adding new indications,manufacturing changes and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing andsurveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit furthermarketing of a product25 based on the results of these post-marketing programs. The FDA and other authorities also strictly regulate the promotional claims that may be made aboutprescription products, and our product labeling, advertising, and promotion will be subject to continuing regulatory review. If approved, physiciansnevertheless may prescribe our products to their patients in a manner that is inconsistent with the approved label or that is off-label. Positive clinical trialresults for any approved products that are also subject to further review for additional indications increase the risk that the approved product may be used off-label. If we are found to have promoted off-label uses, we may be subject to significant liability, including sanctions, civil and criminal fines, and injunctionsprohibiting us from engaging in specified promotional conduct.Moreover, any drug products manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including,among other things: •record-keeping requirements; •reporting of adverse experiences with the drug; •providing the FDA with updated safety and efficacy information; •drug sampling and distribution requirements; •notifying the FDA and gaining its approval of specified manufacturing or labeling changes; •complying with certain electronic records and signature requirements; and •complying with FDA promotion and advertising requirements.Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments withthe FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and some state agencies for compliance with cGMPrequirements and other laws.From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing theapproval, manufacturing and marketing of products regulated by the FDA. In addition, FDA regulations and guidance are often revised or reinterpreted by theagency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDAregulations, guidance or interpretations changed or what the impact of such changes, if any, may be.Other Healthcare LawsWe may be subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreignjurisdictions in which we conduct our business. Furthermore, although we currently have no products approved for commercial sale, we may be subject tovarious federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws if any of our product candidatesmay in the future receive regulatory and marketing approval. Anti-kickback laws generally prohibit a prescription drug manufacturer from soliciting,offering, receiving, or paying any remuneration to generate business, including the purchase or prescription of a particular drug. Although the specificprovisions of these laws vary, their scope is generally broad and there may not be regulations, guidance or court decisions that apply the laws to particularindustry practices. There is therefore a possibility that our practices might be challenged under such anti-kickback laws. False claims laws prohibit anyonefrom knowingly and willingly presenting, or causing to be presented, any claims for payment for reimbursed drugs or services to third party payors (includingMedicare and Medicaid) that are false or fraudulent. Violations of “fraud and abuse” laws may be punishable by criminal or civil sanctions, including finesand civil monetary penalties, and/or exclusion from federal health care programs (including Medicare and Medicaid).Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceuticalmanufacturers with marketed products. The laws and regulations generally limit financial interactions between manufacturers and health care providersand/or require disclosure to the government of such interactions. Other laws may also affect the activities of pharmaceutical manufacturers, such as laws thatprotect the privacy and security of patient information. Many of these laws and regulations contain ambiguous requirements or require administrativeguidance for implementation. Given the lack of clarity in laws and their implementation, any future activities (if we obtain approval and/or reimbursementfrom federal healthcare programs for our product candidates) could be subject to the penalty provisions of the pertinent laws and regulations.26 Foreign RegulationIn addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales anddistribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities offoreign countries or economic areas, such as the EU, before we may commence clinical trials or market products in those countries or areas. The approvalprocess and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the timemay be longer or shorter than that required for FDA approval.Under EU regulatory systems, a company may submit marketing authorization applications under the centralized, decentralized or mutual recognitionprocedures, or under the purely national route of approval. The centralized procedure is compulsory for medicinal products produced by biotechnology orthose medicinal products containing new active substances for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders,diabetes, viral diseases, and designated orphan medicines, and is optional for other medicines that are highly innovative. Under the centralized procedure, amarketing application is submitted to the EMA, where it will be evaluated by the relevant scientific committee, in most cases the Committee for MedicinalProducts for Human Use, and a favorable opinion typically results in the grant by the European Commission of a single marketing authorization that is validfor all EU member states and, by extension (after national implementing measures), in Norway, Iceland and Liechtenstein. In general, an initial marketingauthorization is valid for five years, but once renewed is usually valid for an unlimited period. The decentralized procedure allows marketing authorizationapplications to be submitted simultaneously in two or more EU member states, whereas the mutual recognition procedure must be used if the product hasalready been authorized in at least one other EU member state. Both the decentralized and mutual recognition procedures provide for approval by one ormore “concerned” member states based on an assessment of an application performed by one-member state, known as the “reference” member state. Under thedecentralized approval procedure, an applicant submits an application, or dossier, and related materials to the reference member state and concerned memberstates. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application. Within 90days of receiving the reference member state’s assessment report, each concerned member state must approve the assessment report and related materials,unless they identify a serious risk to public health. Under the mutual recognition procedure, the concerned member states have the same 90-day period torecognize the marketing authorization in the reference member state. In either case, concerns about serious risks to public health escalate through therelevant EMA scientific committees, and the disputed points may eventually result in a consensus opinion from the Committee for Medicinal Products forHuman Use that is referred to the European Commission, whose decision is binding on all member states. The purely national procedure results in amarketing authorization in a single EU member state.In light of the United Kingdom’s vote in 2016 to leave the EU, the so-called Brexit vote, there may be changes forthcoming in the scope of the EUmarketing authorization approval procedure, as well as changes to the United Kingdom’s national medicines laws, as the terms of that exit are negotiatedbetween the United Kingdom and the EU. ReimbursementSignificant uncertainty exists regarding the coverage and reimbursement status of products approved by the FDA and other government authorities.Sales of our products will depend, in part, on the extent to which our products will be covered by third-party payors, such as government or government-sponsored health programs, including Medicaid and Medicare Part B and Part D, private health insurers and managed healthcare organizations. The processfor determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for setting the price of a drugproduct or for establishing the reimbursement rate that the payor will pay for the drug product once coverage is approved. Third-party payors may limitcoverage to specific drug products on an approved list, also known as a formulary, which might not include all of the FDA-approved drugs for a decision by athird-party payor not to cover our product candidates could reduce physician utilization of our products once approved. Moreover, a third-party payor’sdecision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursementmay not be available to enable us to maintain net price levels sufficient to realize an appropriate return on our investment in product development.Additionally, coverage and reimbursement for drug products can differ significantly from payor to payor. One third-party payor’s decision to cover aparticular drug product or service does not ensure that other payors will also provide coverage for the medical product or service, or will provide coverage atan adequate reimbursement rate. As a result, the coverage determination process will require us to provide scientific, clinical support and healthcarepharmacoeconomic rationale for the use of our products to each payor and or healthcare system separately and will be a time-consuming process.These third-party payors are increasingly reducing reimbursements for medical products and services. Additionally, the containment of healthcarecosts has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The U.S. government, state legislaturesand foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions onreimbursement and requirements for substitution of generic products.27 Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures,could further limit our net revenue and results. Decreases in third-party reimbursement for our product candidates or a decision by a third-party payor to notcover our product candidates could reduce physician usage of the product candidate and have a material adverse effect on our sales, results of operations andfinancial condition. We expect that the pharmaceutical industry will experience pricing pressures due to the increasing influence of managed care (andrelated implementation of managed care strategies to control utilization), additional federal and state legislative and regulatory proposals to regulate pricingof drugs, limit coverage of drugs or reduce reimbursement for drugs, public scrutiny and the Trump administration’s expressed desire to address the perceivedhigh cost of pharmaceuticals in the U.S. The report “Reforming Biopharmaceutical Pricing at Home and Abroad” issued by the White House in February2018 identified a wide range of potential reforms to address the cost of drugs. While we cannot predict what executive, legislative and regulatory proposalswill be adopted or other actions will occur, such events could have a material adverse effect on our business, financial condition and profitability.Within the United States, if we obtain appropriate approval in the future to market any of our current therapeutic candidates, we may be required toprovide discounts or rebates under government healthcare programs or to certain government and private purchasers in order to obtain coverage under federalhealthcare programs such as Medicaid. Participation in such programs may require us to track and report certain drug prices. We may be subject to fines andother penalties if we fail to report such price accurately. In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirementsgoverning drug pricing vary widely from country to country. For example, the EU provides options for its member states to restrict the range of medicinalproducts for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A memberstate may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the companyplacing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations forpharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU donot follow price structures of the United States and generally tend to be significantly lower.Health Care and Other ReformIn the United States, there have been and continue to be a number of significant legislative initiatives to contain healthcare costs. Federal and stategovernments continue to propose and pass legislation designed to reform delivery of, or payment for, health care, which include initiatives to reduce the costof healthcare. For example, in March 2010, the United States Congress enacted the Patient Protection and Affordable Care Act and the Health Care andEducation Reconciliation Act, or the Healthcare Reform Act, which expanded health care coverage through Medicaid expansion and the implementation ofthe individual mandate for health insurance coverage and which included changes to the coverage and reimbursement of drug products under governmenthealthcare programs. Under the Trump administration, there have been ongoing efforts to modify or repeal all or certain provisions of the Healthcare ReformAct. The Trump administration may also take executive action in the absence of legislative action. For example, in October 2017, the President announcedthat his administration will withhold the cost-sharing subsidies paid to health insurance exchange plans serving low-income enrollees. Actions by theadministration are widely expected to lead to fewer Americans having more comprehensive health insurance compliant with the Healthcare Reform Act, evenin the absence of a legislative repeal. Tax reform legislation was also enacted at the end of 2017 that includes provisions that will affect healthcare insurancecoverage and payment, such as the elimination of the tax penalty for individuals who do not maintain sufficient health insurance coverage beginning in2019 (the so-called “individual mandate”). In a November 2017 report, the Congressional Budget Office estimates that the elimination will increase thenumber of uninsured by 4 million in 2019 and 13 million in 2027. The Bipartisan Budget Act of 2018 contained various provisions that affect coverage andreimbursement of drugs, including an increase in the discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part Dbeneficiaries during the coverage gap from 50% to 70% starting in 2019. There have also been efforts by federal and state government officials or legislators to implement measures to regulate prices or payment forpharmaceutical products, including legislation on drug importation. Recently, there has been considerable public and government scrutiny ofpharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals. There have also been recent state legislative efforts to addressdrug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices.General legislative cost control measures may also affect reimbursement for our product candidates. The Budget Control Act, as amended, resulted inthe imposition of 2% reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through 2025 unless additionalCongressional action is taken. Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs thatmay be implemented and/or any significant taxes or fees that may be imposed on us could have an adverse impact on our results of operations.28 Adoption of new legislation at the federal or state level could affect demand for, or pricing of, our product candidates if approved for sale. We cannot,however, predict the ultimate content, timing or effect of any changes to the Healthcare Reform Act or other federal and state reform efforts. There is noassurance that federal or state health care reform will not adversely affect our future business and financial results.EmployeesAs of February 28, 2018, we had 83 total employees, 82 of whom are full-time employees, 39 of whom were primarily engaged in research anddevelopment activities. A total of seven employees have an M.D., Pharm.D, or Ph.D. degree. None of our employees are represented by a labor union, and weconsider our employee relations to be good.Financial and Segment InformationWe operate our business as a single segment, as defined by generally accepted accounting principles. Our financial information is included in theconsolidated financial statements and the related notes.Available InformationWe are a reporting company under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and file reports, proxy statements and otherinformation with the Securities and Exchange Commission, or the SEC. The public may read and copy any of our filings at the SEC’s Public Reference Roomat 100 F Street N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Because we make filings with the SEC electronically, you may access this information at the SEC’s Internet site: www.sec.gov. This site containsreports, proxies and information statements and other information regarding issuers that file electronically with the SEC.Our internet web site address is www.paratekpharma.com. We make available, free of charge at the “Investors” portion of our web site, annual reportson 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 Section 13(a) or15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Reports of beneficialownership filed pursuant to Section 16(a) of the Exchange Act are also available on our web site. Information in, or that can be accessed through, this web siteis not part of this Annual Report on Form 10-K. Item 1A.Risk FactorsInvesting in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and allinformation contained in this report before you decide to purchase our common stock. If any of the possible adverse events described below actually occurs,we may be unable to conduct our business as currently planned and our financial condition and operating results could be harmed. In addition, the tradingprice of our common stock could decline due to the occurrence of any of the events described below, and you may lose all or part of your investment.Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business.Risk Related to Financial ConditionWe have incurred significant losses since inception and anticipate that we will incur losses for the foreseeable future. We have no products approved forcommercial sale, and to date we have not generated any revenue or profit from product sales. We may never achieve or sustain profitability.We are a clinical stage biopharmaceutical company and we have not generated any revenue or profit from product sales. We completed the submissionof two NDAs to the FDA for our once-daily oral and IV formulations of omadacycline. In addition, our partner Allergan’s NDA was accepted by the FDA forthe treatment of moderate to severe acne in December 2017. We have not yet submitted any other product candidates for approval by regulatory authoritiesand we do not currently have rights to any significant products that have been approved for marketing in any territory. Our net loss for the year endedDecember 31, 2017 was $89.1 million. As of December 31, 2017, our accumulated deficit was $470.1 million. We expect to continue to incur losses for theforeseeable future as we continue our clinical development of, and seek regulatory approvals for, our product candidates, prepare to commercialize anyapproved products and add infrastructure and personnel to support our product development efforts and operations. The net losses and negative operatingcash flows incurred to date, together with expected future losses, have had, and likely will continue to have, an adverse effect on our stockholders’ equity andworking capital. The amount of future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue.29 Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timingor amount of increased expenses or when, or if, we will be able to generate any revenues or achieve profitability. For example, our expenses could increase ifwe are required by the FDA, or other regulatory agencies outside the United States, to perform studies in addition to those that we currently expect to perform,or if there are any delays in completing our currently planned clinical trials or in the development of any of our product candidates.To become and remain profitable, we must succeed in developing and commercializing products with significant market potential. This will require usto be successful in a range of challenging activities for which we are only in the pre-registration, pre-clinical and clinical stages, including developingproduct candidates, obtaining regulatory approval for them and manufacturing, marketing and commercializing approved products. We may never succeed inthese activities and may never generate revenue from product sales that is significant enough to achieve profitability. Even if we achieve profitability in thefuture, we may not be able to sustain profitability in subsequent periods. Our failure to become or remain profitable would depress the market value of ourcommon stock, could impair our ability to raise capital, expand our business, develop other product candidates or continue our operations and could causeinvestors to lose all or part of their investments.We will require substantial additional funding, which may not be available to us on acceptable terms, or at all, and, if not available, may require us todelay, scale back or cease our product development programs or operations.As of December 31, 2017, our cash, cash equivalents and marketable securities were $151.7 million. We will require substantial additional funding tocomplete the commercialization of omadacycline, fund the development of omadacycline in other indications, and to continue to advance the developmentof our other product candidates, and such funding may not be available on favorable terms or at all. Although it is difficult to predict our liquidityrequirements, based upon our current operating plan, we anticipate that our existing capital resources as well as the $50.0 million in proceeds from ourJanuary 2018 public offering of common stock, future contingent regulatory and commercial milestone payments from our collaborations with Allergan andZai, anticipated extension of our interest-only period for the Hercules Term Loan as defined in Note 14, Long-term Debt, and estimated omadacycline productsales will enable us to fund our operating expenses and capital expenditure requirements into late 2019. Because successful development of our productcandidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development and to commercialize our productcandidates.Our future funding requirements will depend on many factors, including but not limited to: •the progress of clinical development of omadacycline; •the scope, progress, timing, cost and results of research, preclinical development and clinical trials; •the costs, timing and outcome of seeking and obtaining FDA and non-U.S. regulatory approvals; •the costs associated with manufacturing and establishing sales, marketing and distribution capabilities; •the number and characteristics of other product candidates that we may pursue; our ability to maintain, expand and defend the scope of ourintellectual property portfolio, including the amount and timing of any payments we may be required to make in connection with the licensing,filing, defense and enforcement of any patents or other intellectual property rights; •our need to hire additional management, scientific, operations and medical personnel; •the effect of competing products that may limit market penetration of our product candidates; •our need to implement additional internal systems and infrastructure, including financial and reporting systems; and •the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing, or otherarrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under theseagreements.Until we generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cashneeds primarily through a combination of public or private equity offerings, debt or other structured financings and strategic collaborations. There can be noassurance that we would be successful in securing additional funds on acceptable terms. If additional funds are not available, we may be forced to ceaseoperations, significantly reduce operating expenses or delay, curtail or eliminate one or more of our development programs or our business operations.30 Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights.Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through the sale of equity or convertibledebt securities, which would dilute shareholder ownership interest. Additionally, the terms of these new securities may include liquidation or otherpreferences that adversely affect shareholders’ rights as common stockholders. Debt financing, if available at all, may involve agreements that includecovenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Ifwe raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights toour technologies, product candidates or future revenue streams or grant licenses on terms that are not favorable to us. We cannot assure you that we will beable to obtain additional funding if and when necessary. If we are unable to obtain adequate financing on a timely basis, we could be required to grant rightsto develop and market product candidates that we would otherwise prefer to develop and market ourselves.Our level of indebtedness and debt service obligations could adversely affect our financial condition, and may make it more difficult for us to fund ouroperations.On September 30, 2015, we entered into a Loan and Security Agreement, or the Loan Agreement, with Hercules Technology II, L.P. and HerculesTechnology III, L.P., together, Hercules, and certain other lenders and Hercules Technology Growth Capital, Inc. (as agent). We executed three amendmentsto the Loan Agreement subsequent to September 30, 2015, providing access to term loans with an aggregate principal amount of up to $60.0 million. As ofDecember 31, 2017, we have drawn down on the full $60.0 million available to us. The last amendment executed in June 2017 extended the date on whichwe are required to begin making monthly principal installments from January 1, 2019 to January 1, 2020, subject to our receipt of marketing approval for ourlead product candidate, omadacycline, or the Interest Only Period Extension Event. Beginning on January 1, 2019, or, if we achieve the Interest Only PeriodExtension Event, beginning on January 1, 2020, we will make payments in equal monthly installments of principal and interest, with the balance ofoutstanding loans due on the original maturity date of the Loan Agreement, as amended. All obligations under the Loan Agreement, as amended, are secured by substantially all of our existing property and assets, excluding our intellectualproperty. This indebtedness may create additional financing risk for us, particularly if our business or prevailing financial market conditions are notconducive to paying off or refinancing our outstanding debt obligations at maturity. This indebtedness could also have important negative consequences,including: •we will need to repay our indebtedness by making payments of interest and principal, which will reduce the amount of money available tofinance our operations, our research and development efforts and other general corporate activities; and •our failure to comply with the restrictive covenants in the Loan Agreement, as amended, could result in an event of default that, if not cured orwaived, would accelerate our obligation to repay this indebtedness, and Hercules could seek to enforce its security interest in the assetssecuring such indebtedness.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.Failure to satisfy our current and future debt obligations under the Loan Agreement, as amended, could result in an event of default and, as a result,Hercules could accelerate all of the amounts due. In the event of an acceleration of amounts due under the Loan Agreement, as amended, as a result of anevent of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness. In addition, Hercules couldseek to enforce its 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, as amended, 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: •dispose of certain assets; •change our lines of business; •engage in mergers or consolidations;31 •incur additional indebtedness; •create liens on assets; •pay dividends and make distributions or repurchase our capital stock; and •engage in certain transactions with affiliates.Risks Related to Regulatory Review and Approval of Our Product CandidatesIf we fail to obtain FDA approval of and to commercialize our most advanced product candidate, omadacycline, our business would be materially harmed.We have invested a significant portion of our time, financial resources and collaboration efforts in the development of our most advanced productcandidate, omadacycline. Accordingly, our ability to generate revenue and our future success depend substantially on our ability to successfully obtainregulatory approval for and commercialize omadacycline. Except for our collaboration with Allergan for our product candidate, sarecycline, we are notcurrently developing any of the other product candidates in our portfolio. Product candidates in later stages of clinical trials may fail to show the desiredsafety and efficacy despite having progressed through preclinical studies and initial clinical trials. If we are unable to obtain FDA approval for andsuccessfully commercialize omadacycline for ABSSSI, CABP or any other indication, or for any other product candidate, we may never realize productrevenue. As a result, our business, financial condition and results of operations would be materially harmed.Although we obtained SPA agreements for our Phase 3 clinical trials of omadacycline, these SPA agreements do not guarantee any particular outcomefrom regulatory review of these trials of omadacycline.Although we had SPA agreements with the FDA with respect to our Phase 3 clinical trial designs for omadacycline in both ABSSSI and CABP, SPAagreements are not a guarantee of approval of a product candidate or any permissible claims about the product candidate, and final determinations ofapprovability will not be made until the FDA completes its review of the entire NDA. Therefore, even if all the conditions of our SPA agreements appear to bemet, we cannot predict whether the FDA will interpret the data and results in the same way that we do, nor whether the agency will ultimately approveomadacycline for the treatment of ABSSSI and/or CABP. In addition, the FDA is afforded the ability to modify and ignore a SPA agreement, in light of otherfactors not necessarily related to omadacycline. If clinical trials for our product candidate, omadacycline, are prolonged, delayed or stopped, we may be unable to obtain regulatory approval andcommercialize omadacycline on a timely basis, which would require us to incur additional costs, raise additional capital and delay our receipt of anyproduct revenue.We conducted and completed three Phase 3 clinical studies. We have initiated sites for the first of two planned Phase 2 clinical studies evaluatingomadacycline for the treatment of UTI. The first study will evaluate the efficacy, safety, tolerability and pharmacokinetics of omadacycline in female patientswith cystitis, a common uncomplicated UTI. The second study, which we intend to initiate in the second half of 2018, will evaluate the efficacy, safety,tolerability and pharmacokinetics of omadacycline in patients with acute pyelonephritis, a common complicated UTI. The completion of these plannedclinical trials could be substantially delayed or prevented by several factors, including: •delay or failure to obtain sufficient supplies of the product candidate for our clinical trials; •delay or failure to obtain sufficient supplies of the comparator antibiotic for our clinical trials; •changes in the regulatory guidance for development in ABSSSI and CABP by the FDA or other regulatory agencies regarding the scope ordesign of our clinical trials; •the limited number of, and competition for, suitable sites to conduct our clinical trials, many of which may already be engaged in other clinicaltrial programs, including some that may be for the same indication as our product candidates; •any delay or failure to obtain regulatory approval or agreement to commence a clinical trial in any of the countries where enrollment isplanned; •clinical holds on, or other regulatory objections to, a new or ongoing clinical trial; •delay or failure to reach agreement on acceptable clinical trial agreement terms or clinical trial protocols with prospective sites or clinicalresearch organizations, or CROs, or local regulatory authorities, the terms of which can be subject to extensive negotiation and may varysignificantly among different sites or CROs; and •delay or failure to obtain IRB/ethics committee approval to conduct a clinical trial at a prospective site or within a specific region or country.32 The completion of our clinical trials could also be substantially delayed or prevented by several factors, including: •slower than expected rates of patient recruitment and enrollment; •failure of patients to complete the clinical trial; •unforeseen safety issues, including severe or unexpected drug-related adverse effects experienced by patients; •lack of omadacycline efficacy evidenced during clinical trials; •termination of our clinical trials by one or more clinical trial sites; •inability or unwillingness of patients or clinical investigators to follow our clinical trial protocols; •inability to monitor patients adequately during or after treatment by us and/or our CROs; •the need to repeat or terminate clinical trials as a result of inconclusive or negative results or unforeseen complications during clinical trialtesting; •delay or failure to obtain sufficient supplies of the product candidate for our clinical trials; and •delay or failure to obtain sufficient supplies of the comparator antibiotic for our clinical trials.In particular, our ability to enroll patients in our clinical trials in sufficient numbers and on a timely basis will be subject to a number of factors,including the size of the patient population needed, the nature of the protocol, the proximity of patients to clinical sites, the availability of effectivetreatments for the relevant indication and the eligibility criteria for the clinical trial. For example, in the Phase 2 clinical trials of omadacycline in UTI,patients who have previously taken potentially effective antibiotics for the treatment of an infection within 72 hours of receiving the first dose of studymedication will be excluded from the clinical trial. Depending upon a region’s or a clinical site’s standard of care for the administration of antibiotics, thiscould affect our ability to enroll patients in these clinical trials in a timely fashion.Changes in regulatory requirements and guidance may also occur, and we may need to amend clinical trial protocols to reflect these changes withappropriate regulatory authorities. Amendments may require us to resubmit clinical trial protocols to regulatory agencies/IRBs/ethics committees for re-examination, which may impact the costs, timing or successful completion of a clinical trial. For example, we stopped our previous Phase 3 clinical trial ofomadacycline after the FDA notified us that its guidance relating to the conduct of studies in complicated skin and skin structure infections, or cSSSI, wouldbe modified to change the eligibility criteria, revise the disease indication from cSSSI to ABSSSI and change the primary efficacy endpoint for clinical trialsin this indication from a TOC assessment to an ECR assessment. As a result of these changes, we chose to terminate enrollment in the previous Phase 3clinical trial and, following discussion with the FDA, designed two new Phase 3 clinical trials, one for ABSSSI and one for CABP, taking into account therevised FDA regulatory guidance. Our clinical trials may be suspended or terminated at any time by the FDA, other regulatory authorities, the IRB overseeingthe clinical trial at issue, any of our clinical trial sites with respect to that site or us due to a number of factors, including: •failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols; •unforeseen safety issues or any determination that a clinical trial presents unacceptable health risks; •lack of adequate funding to continue the clinical trial due to unforeseen costs or other business decisions; and •upon a breach or pursuant to the terms of any agreement with, or for any other reason by, current or future collaborators that have responsibilityfor the clinical development of any of our product candidates.In addition, clinical practices vary globally, and there is a lack of harmonization among the guidance provided by various regulatory bodies ofdifferent regions and countries with respect to the data that is required to receive marketing approval, which makes designing global trials increasinglycomplex. Differing regulatory approval requirements in different countries also make it more difficult for us to conduct unified global trials, which can leadto increased development costs and marketing delays or non-viability of our clinical trials. The approval procedure and the time required to obtain approvalalso varies among countries. Furthermore, regulatory agencies may have varying interpretations of the same data, and approval by one regulatory authoritydoes not ensure approval by regulatory authorities in other jurisdictions.Any failure or significant delay in completing clinical trials for our product candidates would adversely affect our ability to obtain regulatoryapproval and our commercial prospects and ability to generate product revenue will be diminished.33 The results of previous clinical trials may not be predictive of future results, and the results of our current and planned clinical trials may not satisfy therequirements of the FDA or non-U.S. regulatory authorities.We currently have no products approved for sale, and we may not ever have marketable products. Clinical failure can occur at any stage of clinicaldevelopment. Clinical trials may produce negative or inconclusive results, and we or any future partners may decide, or regulators may require us, to conductadditional clinical or preclinical testing which would delay submission of an NDA and regulatory approval. We will be required to demonstrate withsubstantial evidence through well-controlled clinical trials that our product candidates are safe and effective for use in a diverse population before we canseek regulatory approvals for their commercial sale. Success in early stage clinical trials does not mean that future larger registration clinical trials will besuccessful, because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety and efficacy to the satisfaction of the FDA andnon-U.S. regulatory authorities despite having progressed through early stage clinical trials. Product candidates that have shown promising results in early-stage (pre-Phase 3) clinical trials may still suffer significant setbacks in subsequent registration clinical trials.In addition, 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 trialmay not become apparent until the clinical trial is underway, well advanced or completed. Further, if omadacycline, sarecycline or our other potentialproduct candidates are found to be unsafe or lack efficacy, we will not be able to obtain regulatory approval for them and our business would be harmed. Anumber of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks inadvanced clinical trials, even after obtaining promising results in earlier stage clinical trials.Results in our randomized Phase 2 and Phase 3 clinical studies of omadacycline in cSSSI, ABSSSI and CABP evaluated omadacycline in serious skininfections and pneumonia, and may not be predictive of the results to be obtained in our on-going Phase 2 clinical studies in any other indications such asUTI. In some instances, there can be significant variability in safety and/or efficacy results between different clinical trials of the same product candidate dueto numerous factors, including changes in clinical trial protocols, differences in size, type and geographic distribution of the patient populations, adherenceto the dosing regimen and other clinical trial protocols and the rate of dropout among clinical trial participants. We do not know whether any Phase 2, Phase3 or other clinical trials we or any of our collaborators may conduct, or have conducted in the past, will demonstrate consistent or adequate efficacy andsafety to obtain regulatory approval to market our product candidates.Further, our and our partners’ product candidates may not be approved even if they achieve their primary endpoints in Phase 3 clinical trials orregistration trials. The FDA or other non-U.S. regulatory authorities may disagree with our clinical trial design and our interpretation of data from preclinicalstudies and clinical trials even when we have SPA agreements. In addition, any of these regulatory authorities may change requirements for the approval of aproduct candidate even after reviewing and providing comments or advice on a protocol for a pivotal Phase 3 clinical trial that has the potential to result inFDA or other agencies’ approval. In addition, any of these regulatory authorities may also approve a product candidate for fewer or more limited indicationsthan we request or may grant approval contingent on the performance of costly post-marketing clinical trials. In addition, the FDA or other non-U.S.regulatory authorities may not approve the labeling claims that we believe would be supported by the clinical data, or be necessary or desirable for thesuccessful commercialization of our product candidates. If an unforeseen safety issue arises, the FDA always has the option to initiate a REMS or addadditional warnings to the product label upon approval.The regulatory approval process is expensive, time consuming and uncertain and may prevent us or our partners from obtaining approvals for thecommercialization of our product candidates.The research, testing, manufacturing, labeling, approval, selling, marketing and distribution of drug products are subject to extensive regulation bythe FDA and other U.S. and non-U.S. regulatory authorities. Regulations differ from country to country, which will require us to expend additional resourcesin each market for which a separate regulatory approval is required. We are not permitted to market our product candidates in the United States or in othercountries until we receive approval of an NDA from the FDA or marketing approval from applicable regulatory authorities outside the United States. Ourprimary product candidates, omadacycline and sarecycline, are still in development and are subject to the risks of failure inherent in drug development.Neither we nor our partners have received marketing approval for any of our product candidates. Obtaining approval of an NDA can be a lengthy, expensiveand uncertain process. In addition, failure to comply with FDA and non-U.S. regulatory requirements may, either before or after product approval, if any,subject us to administrative or judicially imposed sanctions, including: •restrictions on the products, manufacturers or manufacturing process; •warning letters; •civil and criminal penalties; •injunctions;34 •suspension or withdrawal of regulatory approvals; •product seizures, detentions or import bans; •voluntary or mandatory product recalls and publicity requirements; •total or partial suspension of production; •imposition of restrictions on operations, including costly new manufacturing requirements; and •refusal to approve pending NDAs or supplements to approved NDAs.The FDA and foreign regulatory authorities also have substantial discretion in the drug approval process. The number of preclinical studies andclinical trials that will be required for regulatory approval varies depending on the product candidate, the disease or condition that the product candidate isdesigned to address, and the regulations applicable to any particular drug candidate. Regulatory agencies can delay, limit or deny approval of a productcandidate for many reasons, including: •a product candidate may not be deemed safe or effective; •the results may not confirm the positive results from earlier preclinical studies or earlier stage clinical trials; •regulatory agencies may not find the data from preclinical studies and clinical trials sufficient; •regulatory agencies might not approve our third-party manufacturer’s processes or facilities; or •regulatory agencies may change their approval policies or adopt new regulations.Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability to generate revenue from omadacycline orany other particular product candidate, which likely would result in significant harm to our financial position. Furthermore, any regulatory approval tomarket a product may be subject to limitations on the indicated uses for which we may market the product. These limitations may limit the size of the marketopportunity for the product.Even if we or our partners obtain regulatory approvals for our product candidates, the terms of approvals and ongoing regulation of our products maylimit how we manufacture and market our product candidates, which could materially impair our ability to generate revenue.Once regulatory approval has been granted, an approved product and its manufacturer and marketer are subject to ongoing review and regulation. Anyapproved product may only be promoted for its approved uses. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our productcandidates, among other things, the labeling, packaging, adverse event reporting, storage, advertising and promotion for the product will be subject toextensive regulatory requirements. In addition, approved products, manufacturers and manufacturers’ facilities are required to comply with extensive FDArequirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations, which include requirements relating toquality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. As such, we andour contract manufacturers will be subject to ongoing review and periodic inspections to assess compliance with cGMPs.Accordingly, assuming regulatory approval for one or more of our product candidates, we and others with whom we work will continue to expendtime, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control. Further, regulatory agencies mustapprove these manufacturing facilities before they can be used to manufacture our products. We and our partners will also be required to report adversereactions and production problems, if any, to the FDA and to comply with requirements concerning, among other things, advertising and promotion for ourproducts. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistentwith the information in the product’s approved label. Accordingly, we will not be able to promote our products for indications or uses for which they are notapproved. If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, orproblems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, it may impose restrictionson that product, us or our partners, including requiring withdrawal of the product from the market. If we fail to comply with the regulatory requirements of theFDA and other U.S. and non-U.S. regulatory authorities, or if previously unknown problems with our products, manufacturers or manufacturing processes arediscovered, we could be subject to significant penalties.If we are not able to maintain regulatory compliance, we would likely not be permitted to manufacture and market any future product candidates andmay not achieve or sustain profitability. Further, the cost of compliance with post-approval regulations may have a negative effect on our operating resultsand financial condition.35 Our product candidates may have undesirable side effects that may delay or prevent marketing approval, or, if approval is received, require them to betaken off the market, include safety warnings or otherwise limit their sales.Although our product candidates, omadacycline and sarecycline, have undergone or will undergo safety testing in humans and in laboratory animals,not all adverse effects of drugs can be predicted or anticipated from these preclinical safety and toxicology studies. Unforeseen side effects from either of ourproduct candidates could arise either during clinical development or, if approved by regulatory authorities, after the approved product has been marketed.Each of omadacycline and sarecycline are still in clinical development, and our other product candidates, which are in the pre-clinical phase, are notcurrently being further developed. Many of the most widely used antibiotics are associated with treatment-limiting adverse events, including in someinstances, kidney damage, allergic reactions or sudden cardiovascular death due to cardiac arrhythmia. Although, not tested statistically due to the typicallysmall trial size for Phase 1 and Phase 2 trials, these clinical trials to date for omadacycline and sarecycline appear to have shown a favorable safety profile.The results from the Phase 3 registration clinical trials may not confirm these preliminary observations. The results of future clinical trials may show that ourproduct candidates, including omadacycline and sarecycline, cause undesirable or unacceptable side effects, which could interrupt, delay or halt clinicaltrials, and result in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities, or result in marketing approval from theFDA and other regulatory authorities with restrictive label warnings or potential product liability claims. If any of our product candidates receive marketingapproval and we or others later identify undesirable or unacceptable side effects caused by such products: •regulatory authorities may require the addition of labeling statements, specific warnings, a contraindication or field alerts to physicians andpharmacies; •we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; •we may be subject to limitations on how we may promote the product; •sales of the product may decrease significantly; •regulatory authorities may require us or our partners to take our approved product off the market; •we may be subject to litigation or product liability claims; and •our reputation may suffer.Any of these events could prevent us, our current partners or our potential future partners from achieving or maintaining market acceptance of theaffected product or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significantrevenue from the sale of our products.Coverage and reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance. If there is not sufficientreimbursement for our products, it is less likely that our products will be widely used.Even if our product candidates are approved for sale by the appropriate regulatory authorities, market acceptance and sales of these products and ourpartners’ products will depend on coverage and reimbursement policies. Government authorities and third- party payors, such as private health insurers andhealth maintenance organizations, decide which drugs they will cover and establish reimbursement levels. Coverage may not be available and reimbursementmay not be adequate for any products that we or our partners develop and commercialize. Also, coverage and reimbursement policies may reduce the demandfor, or the price paid for, our or our partners’ products. Patients who are prescribed medications for the treatment of their conditions, and their prescribingphysicians, generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Patients are unlikely to use our orour partners’ products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of such products. Therefore, ifcoverage is not available or reimbursement is limited, we and our partners may not be able to successfully commercialize any of our approved products.36 The process for determining whether a third-party payor will provide coverage for a drug product typically is separate from the process for setting theprice of a drug product or for establishing the reimbursement rate that the payor will pay for the drug product once coverage is approved. Third-party payorsmay limit coverage to specific drug products on an approved list, also known as a formulary, which might not include all of the FDA-approved drugs for aparticular indication. Third-party payors frequently require drug companies to negotiate agreements that provide discounts or rebates from list prices. Wemay be required to provide such discounts and rebates to some third-party payors in relation to our product(s). There is no guarantee that we would be able tonegotiate agreements with third-party payors at price levels that are profitable to us, or at all. A. decision by a third-party payor not to cover our productcandidates could reduce physician utilization of our products once approved. Moreover, a third-party payor’s decision to provide coverage for a drug productdoes not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable us to maintainprice levels sufficient to realize an appropriate return on our investment in product development. Additionally, coverage and reimbursement for drugproducts can differ significantly from payor to payor. One third-party payor’s decision to cover a particular drug product or service does not ensure that otherpayors will also provide coverage for the medical product or service, or will provide coverage at an adequate reimbursement rate. As a result, the coveragedetermination process will require us to provide scientific and clinical support for the use of our products to each payor separately and will be a time-consuming process. Furthermore, some countries, other than the United States, have single-payer healthcare systems. In countries with such systems, apositive reimbursement determination is essential to the commercial viability of a drug product.Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.The United States and several foreign jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals tochange the healthcare system in ways that could affect our or our partners’ ability to sell any of our future approved products profitably. Among policymakersand payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containinghealthcare costs, improving quality and/or expanding access to healthcare. In the United States, the pharmaceutical industry has been a particular focus ofthese efforts and has been significantly affected by major legislative initiatives. We expect to experience pricing pressures in connection with the sale of anyproducts that we or our partners develop due to the trend toward managed healthcare, the increasing influence of health maintenance organizations andadditional legislative proposals.The U.S. government and individual states have aggressively pursued healthcare reform, as evidenced by the passing of the Healthcare Reform Actand the ongoing efforts to modify or repeal that legislation. The Healthcare Reform Act substantially changed the way healthcare is financed by bothgovernmental and private insurers and contains a number of provisions that affect coverage and reimbursement of drug products and/or that could potentiallyreduce the demand for pharmaceutical products such as increasing drug rebates under state Medicaid programs for brand name prescription drugs andextending those rebates to Medicaid managed care and assessing a fee on manufacturers and importers of brand name prescription drugs reimbursed undercertain government programs, including Medicare and Medicaid. Other aspects of healthcare reform, such as expanded government enforcement authorityand heightened standards that could increase compliance-related costs, could also affect our business. Modifications have been implemented under theTrump Administration and additional modifications or repeal may occur. See “Government Regulation – Health Care and Other Reform.” We cannot predictthe ultimate content, timing or effect of any changes to the Healthcare Reform Act or other federal and state reform efforts.Other legislative changes have been proposed and adopted in the United States since the Healthcare Reform Act was enacted. The Budget Control Act,as amended, resulted in the imposition of 2% reductions in Medicare (but not Medicaid) payments to providers in 2013 and will remain in effect through2025 unless additional Congressional action is taken.There is no assurance that federal or state health care reform or other legislative and regulatory initiatives will not adversely affect our business andfinancial results, and we cannot predict how future federal or state legislative, judicial or administrative changes relating to healthcare reform will affect ourbusiness.37 If we or our partners market products in a manner that violates fraud and abuse and other healthcare laws, or if we or our partners violate governmentprice reporting laws, we or our partners may be subject to administrative civil and/or criminal penalties.Within the United States, several other types of state and federal healthcare laws have been applied in recent years to restrict certain marketingpractices in the pharmaceutical industry. At such time, if ever, as we or any of our partners market any of our future approved products, some of our or ourpartner’s business activities could possibly be subject to challenge under one or more of these laws. The laws that may affect our ability to operate include: •federal false claims, false statements and civil monetary penalties laws prohibiting, among other things, any person from knowingly presenting,or causing to be presented, a false claim for payment of government funds or knowingly making, or causing to be made, a false statement to geta false claim paid; •federal healthcare program anti-kickback laws, which prohibit, among other things, persons from soliciting, receiving or providingremuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a goodor service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid; •the federal law known as HIPAA, which, in addition to privacy protections applicable to healthcare providers and other entities, prohibitsexecuting a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; •the FDCA, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketingsuch products for off-label use and regulates the distribution of samples; •federal laws that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certaindiscounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcareprograms; •the so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financialinteractions with physicians and teaching hospitals to the federal government for re-disclosure to the public; and •state law equivalents of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed byany third party payor, including commercial insurers, state laws regulating interactions between pharmaceutical manufactures and health careproviders, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from eachother in significant ways and often are not preempted by federal laws, thus complicating compliance efforts.Efforts to ensure that our and our partners’ business arrangements with third parties will comply with applicable healthcare laws and regulations mayinvolve substantial costs. It is possible that governmental authorities will conclude that our or our partners’ business practices may not comply with currentor future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws.Pharmaceutical and other healthcare companies have been prosecuted under these laws for a variety of promotional and marketing activities, such as:providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated averagewholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion; and submitting inflated best priceinformation to the Medicaid Drug Rebate Program to reduce liability for Medicaid rebates.Many of these laws and their implementing regulations contain ambiguous requirements or require administrative guidance for implementation.Given the lack of clarity in laws and their implementation, our activities could be subject to challenge. If our or our partners’ operations are found to be inviolation of any of these laws or any other governmental regulations that may apply to us, we or our partners may be subject to significant civil, criminal andadministrative penalties, including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, suchas Medicare and Medicaid, and the curtailment or restructuring of our operations, which could significantly harm our business.Outside the United States, foreign laws may also regulate our activities, or those of our collaboration partners, in order to prevent fraud and abuse inthe healthcare system38 Risks Related to Our BusinessWe face significant competition and if our competitors develop and market products that are more effective, safer or less expensive than our productcandidates, our commercial opportunities will be negatively impacted.The life sciences industry is highly competitive and subject to rapid and significant technological change. We are currently developing products that,if approved, will compete with other drugs and therapies that currently exist or are being developed. Products that we may develop in the future are alsolikely to face competition from other drugs and therapies, some of which we may not currently be aware. We have competitors both in the United States andinternationally, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies,universities and other research institutions. Many of our competitors have significantly greater financial, manufacturing, marketing, drug development,technical and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatoryapprovals, recruiting patients and manufacturing pharmaceutical products. These companies also have significantly greater research, development andmarketing capabilities than we do and may also have products that have been approved or are in late stages of development, and collaborative arrangementsin our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to acceleratediscovery and development of novel compounds or to in-license novel compounds that could make the product candidates that we develop obsolete or lesscompetitive. As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or FDA approval or discovering, developingand commercializing antibiotics before we do so for any of our product candidates.The GAIN Act is intended to provide incentives for the development of new QIDPs. These incentives may result in more competition in the market fornew antibiotics and may cause pharmaceutical and biotechnology companies with more resources than we have to shift their efforts toward the developmentof products that could be competitive with our product candidates.If approved by the FDA, omadacycline will compete with other antibiotics in the serious bacterial skin infection market. These include, but are notlimited to, vancomycin, marketed as a generic by Abbott Laboratories and others; linezolid, marketed as Zyvox by Pfizer Inc. and available as a generic;daptomycin, marketed as Cubicin by Merck Pharmaceuticals, Inc. and available as a generic; dalbavancin, approved in May 2014 and marketed as Dalvanceby Allergan; tedizolid, marketed as Sivextro by Merck Pharmaceuticals, Inc.; oritavancin, approved in August 2014 and marketed as Orbactiv by MelintaTherapeutics, Inc.; quinupristin/dalfopristin, marketed as Synercid by Pfizer, Inc.; tigecycline, marketed as Tygacil by Pfizer Inc. and available as a generic;telavancin, marketed as Vibativ by Theravance, Inc.; ceftaroline, marketed as Teflaro by Allergan; and generic trimethoprim/sulfamethoxazole andclindamycin.Further, we expect that product candidates currently in review with the FDA, or in Phase 3 clinical development, or that could enter Phase 3 clinicaldevelopment in the near future, may represent significant competition if approved. These include, but are not limited to, delafloxacin for CABP, submittedfor FDA review in October 2016 by Melinta Therapeutics, Inc.; CG-400549, under development by Crystal Genomics; GSK2140944, under development byGSK; nemonoxacin, under development by TaiGen Biotechnology; avarofloxacin, under development by Allergan; brilacidin, under development byCellceutix; and radezolid, under development by Melinta Therapeutics, Inc.If approved by the FDA, omadacycline will also compete with other antibiotics in the community-acquired pneumonia market. These includeazithromycin, marketed as Zithromax and Z-PAK by Pfizer Inc. and available as a generic; clarithromycin, marketed as Biaxin by Abbott Laboratories andavailable as a generic; moxifloxacin, marketed as Avelox by Bayer AG and available as a generic; levofloxacin, marketed as Levaquin by Johnson &Johnson and available as a generic; tigecycline, marketed as Tygacil by Pfizer Inc. and available as a generic; linezolid, marketed as Zyvox by Pfizer Inc. andavailable as a generic; ceftriaxone, marketed as Rocephin by F. Hoffman-La Roche Ltd and available as a generic; and ceftaroline, marketed as Teflaro byAllergan. We are also aware of various drugs that are or may eventually be under development for the treatment of CABP, delafloxacin and radezolid, underdevelopment by Melinta Therapeutics; solithromycin, under development by Cempra, Inc.; GSK2140944, under development by GSK; lefamulin, underdevelopment by Nabriva Therapeutics; nemanoxacin, under development by TaiGen Biotechnology; and avarofloxacin, under development by Allergan.A number of competitors exist in the UTI indication. Generic potential competitors include levofloxacin, ciprofloxacin,trimethoprim/sulfamethoxazole, ceftriaxone and amoxicillin/clavulanic acid. Several branded and generic injectable-only antibiotics are also used inhospitals, including imipenem/cilastatin, piperacillin/tazobactam, and gentamicin . A limited number of companies are developing new oral antibiotics forthe treatment of UTI infections, finafloxacin by MerLion Pharmaceuticals and sulopenem by Iterum Therapeutics.39 Many of our potential competitors have substantially greater financial, technical and human resources than we do, as well as greater experience in thediscovery and development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products.Our competitors’ drugs may be more effective, or more effectively marketed and sold, than any product candidate we may commercialize and may render ourproduct candidates obsolete or non-competitive before we can recover the expenses of our development and commercialization. We anticipate that we willface intense and increasing competition as new drugs enter the market and advanced technologies become available. Finally, the development of newtreatment methods for the diseases we are targeting could render our product candidates non-competitive or obsolete.We and our partner, Allergan, will also face competition in the acne markets where generic tetracyclines such as doxycycline and minocycline areavailable in every market around the world. Branded generic versions of tetracycline derivatives are sold by several companies.In addition, many universities and private and public research institutes may become active in our target indications. Smaller or early-stage companiesmay also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.We believe that our ability to successfully compete will depend on, among other things: •the results of our registration clinical trials, in particular our two Phase 2 registration clinical trials for omadacycline—one in cystitis, acommon uncomplicated UTI, and one in acute pyelonephritis, a common complicated UTI; •our and our partners’ ability to recruit and enroll patients for our and our partners’ clinical trials; •the efficacy, safety and reliability of our and our partners’ product candidates; •our and our partners’ ability to reliably manufacture any of our formulations; •the speed at which we and our partners develop our product candidates; •our and our partners’ ability to commercialize and market, or find partners to help or exclusively commercialize and market, any of our productcandidates that receive regulatory approval; •our and our partners’ ability to design and successfully execute appropriate clinical trials; •our and our partners’ ability to maintain a productive relationship with regulatory authorities; •the timing and scope of regulatory approvals; •the effectiveness of our, our current partners’ or any future partners’ marketing and sales capabilities; •the price of our products; •coverage and adequate levels of reimbursement under private and governmental health insurance plans, including Medicare; •our and our partners’ ability to protect and maintain intellectual property rights related to our product candidates; •our and our partners’ ability to manufacture and sell commercial quantities at a reasonable cost of any approved products to the market; and •acceptance of any approved products by physicians and other healthcare providers.If our competitors market products that are more effective, safer or less expensive than, or that reach the market sooner than, our or any of our partners’future products, if any, we may not achieve commercial success. In addition, the biopharmaceutical industry is characterized by rapid technological change.If we fail to stay at the forefront of technological change, we may be unable to compete effectively. Technological advances or products developed by ourcompetitors may render our technologies or product candidates obsolete, less competitive or not economical.In addition, in the event that our or any of our partners’ products receives regulatory approval, price competition may inhibit the acceptance of ourproducts, physicians may be reluctant to switch from existing products to our products, physicians may switch to other newly approved drug products, orphysicians may choose to reserve our products for use in limited circumstances.40 We rely and will continue to rely on outsourcing arrangements for manufacturing of our product candidates. Reliance on third- party manufacturers coulddelay approval or commercialization of our products.We do not currently own or operate manufacturing facilities for the production of any of our product candidates, nor do we intend to manufacture thepharmaceutical products that we plan to sell. We currently depend on third-party contract manufacturers for the supply of the active pharmaceuticalingredients for our product candidates, including drug substance for our preclinical research and clinical trials. We have entered into certain long-termmanufacturing and supply agreements. These include (i) a manufacturing and services agreement with CIPAN for the supply of starting materials for oursupply of omadacycline and crude omadacycline, (ii) an outsourcing agreement with Carbogen for the supply of active pharmaceutical ingredient for ouromadacycline products, (iii) a manufacturing and services agreement with Almac for the supply of omadacycline oral solid dosage tablets, and (iv) amanufacturing and services agreement with Patheon under which Patheon will manufacture, package and supply to us, omadacycline in injectable form. Weare currently in discussions with other third-party manufacturers and may enter into additional long-term supply agreements with them. We may not be ableto reach agreement with some of these contract manufacturers, or to identify and reach arrangement on satisfactory terms with other contract manufacturers, tomanufacture omadacycline or any of our other product candidates. Additionally, we anticipate that the facilities used by any contract manufacturer tomanufacture any of our product candidates will be the subject of inspections by regulatory agencies before the FDA and other regulatory authorities thatapprove an NDA or marketing authorization for the product candidate manufactured at that facility. We will depend on these third-party manufacturingpartners for compliance with the FDA’s manufacturing requirements for finished products. If our manufacturers cannot successfully manufacture material thatconforms to our specifications and the FDA and other regulatory authorities’ cGMP requirements, our product candidates will not be approved or, if alreadyapproved, may be subject to delays in release and/or product recalls. While third-party manufacturers of our product candidates, including omadacycline,have previously passed FDA and other regulatory agency inspections, we cannot provide assurance that they will pass such inspections in the future.Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product candidates itself, including: •the possibility of a breach of the manufacturing agreements by the third parties because of factors beyond our control; •the possibility of termination or nonrenewal of the agreements by the third parties before we are able to arrange for a qualified replacementthird-party manufacturer; •the possibility that we may not be able to secure a manufacturer or manufacturing capacity in a timely manner and on satisfactory terms in orderto meet our manufacturing needs; and •the possibility that the third parties may not be able to respond adequately to unexpected changes in demand forecasts that may result in eitherlost revenue or excessive inventory with decreasing shelf-life.Any of these factors could cause the delay of approval or commercialization of our products, cause us to incur higher costs or prevent us fromcommercializing our product candidates successfully. Furthermore, if any of our product candidates are approved and contract manufacturers fail tocontinuously meet FDA compliance standards or fail to deliver the required commercial quantities of finished product on a timely basis and at commerciallyreasonable prices, and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantiallyequivalent volumes and quality and on a timely basis, we would likely be unable to meet demand for our products and could lose potential revenue. It maytake one or more years to establish an alternative source of supply for our product candidates and to have any such new source approved by the FDA or anyother relevant regulatory authorities.If the FDA or other applicable regulatory authorities approve generic products that compete with any of our or any of our partners’ product candidates, orif existing generic antibiotics are viewed as being equally effective to our or any of our partners’ product candidates, the sales of our product candidateswould be adversely affected.Once an NDA or marketing authorization application outside the United States is approved, the product covered thereby becomes a “listed drug” thatcan, in turn, be cited by potential competitors in support of approval of an ANDA in the United States. Agency regulations and other applicable regulationsand policies provide incentives to manufacturers to create modified, non- infringing versions of a drug to facilitate the approval of an ANDA or otherapplication for generic substitutes in the United States and in nearly every pharmaceutical market around the world. These manufacturers might only berequired to conduct a relatively inexpensive study to show that their product has the same active ingredient(s), dosage form, strength, route of administrationand conditions of use, or labeling, as our product candidate and that the generic product is bioequivalent to ours, meaning it is absorbed in the body at thesame rate and to the same extent as our product candidate. These generic equivalents, which must meet the same quality standards as brandedpharmaceuticals, would be significantly less costly than ours to bring to market, and companies that produce generic equivalents are generally able to offertheir products at lower prices. Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product is typicallylost to the generic product. Accordingly,41 competition from generic equivalents to ours or any of our partners’ future products, if any, would materially adversely impact our future revenue,profitability and cash flows and substantially limit our ability to obtain a return on the investments we have made in our or any of our partners’ productcandidates, including omadacycline. For example, vancomycin has been available in generic form for many years, and Zyvox (linezolid) is now available ingeneric form. We cannot yet ascertain what impact these generic products and any future approved generic products will have on any sales of our products, ifapproved.The success of our business may be dependent on the actions of our collaborative partners.An element of our business and funding strategy is to enter into collaborative arrangements with established pharmaceutical and biotechnologycompanies who will finance or otherwise assist in the development, manufacture and marketing of products incorporating our technology, and who alsoprovide us with funding in the form of milestone payments for progress in clinical development or regulatory approval. For example, we have exclusivelylicensed rights to sarecycline for the treatment of acne in the United States to Allergan, and Allergan is responsible for all clinical development, registrationand commercialization in the United States of sarecycline for the treatment of acne. In addition, we have granted Allergan an exclusive license to developand commercialize sarecycline for the treatment of rosacea in the United States, which converted to a non-exclusive license in December 2014 after Allergandid not exercise its development option with respect to rosacea. There are currently no clinical trials in rosacea underway. In April 2017, Paratek BermudaLtd., a wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., entered into the Zai Collaboration Agreement, pursuant to which we granted Zai anexclusive license to develop, manufacture and commercialize omadacycline in the People’s Republic of China, Hong Kong, Macau and Taiwan for all humantherapeutic and preventative uses other than biodefense. Zai will be responsible for the development, manufacturing and commercialization of the licensedproduct in the Zai Territory, at its sole cost with certain assistance from Paratek Bermuda Ltd.Accordingly, our prospects will depend in part upon our ability to attract and retain collaborative partners and to develop technologies and productsthat achieve the criteria for milestone payments. When we collaborate with a third party for development and commercialization of a product candidate, wecan expect to relinquish some or all of the control over the future success of that product candidate to the third party in the respective territory. In addition,our collaborative partners may have the right to abandon research or development projects and terminate applicable agreements, including fundingobligations, prior to or upon the expiration of the agreed upon terms. We may not be successful in establishing or maintaining collaborative arrangements onacceptable terms or at all, collaborative partners may terminate funding before completion of projects, our product candidates may not achieve the criteria formilestone payments, our collaborative arrangements may not result in successful product commercialization, and we may not derive any revenue from sucharrangements. For example, we previously entered into a license and collaboration agreement with Novartis for the development of omadacycline, which wasterminated. To the extent that we are not able to develop and maintain collaborative arrangements, we would need substantial additional capital to undertakeresearch, development and commercialization activities on our own, we may be forced to limit the number of our product candidates we can commerciallydevelop or the territories in which we commercialize them, and we might fail to commercialize products or programs for which a suitable collaborator cannotbe found.Reliance on collaborative relationships poses a number of risks, including the following: •our collaborators may not perform their obligations as expected or in compliance with applicable laws; •the prioritization, amount and timing of resources dedicated by our collaborators to their respective collaborations with us is not under ourcontrol; •some product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own productcandidates or products; •our collaborators may elect not to proceed with the development of product candidates that we believe to be promising; •disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course ofdevelopment, might cause delays or termination of the research, development or commercialization of product candidates, might lead toadditional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; •some of our collaborators might develop independently, or with others, products that could compete with our products; •a delay in the development timelines for sarecycline and omadacycline would result in a potential loss of milestone payments and futureroyalties (if any) from the partnership under the Allergan Collaboration Agreement and the Zai Collaboration Agreement; and •if the rights to sarecycline in the U.S. are returned to us by Allergan, or the rights to omadacycline in the Zai Territory returned to us by Zai, wewill need to establish a new development and commercialization partnership to further sarecycline in the U.S. or omadacycline in the ZaiTerritory. There can be no assurance that we would be able to find such a partner.42 If we are not able to establish and sustain additional partnerships, we may have to alter our development and commercialization plans, which could harmour business.We anticipate that we will require additional funding to support commercialization of omadacycline and to continue the development of any of ourother product candidates. For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for thedevelopment and potential commercialization of those product candidates, as we have done with Allergan for sarecycline in the United States and Zai foromadacycline in the People’s Republic of China, Hong Kong, Macau and Taiwan.We face significant competition in seeking appropriate collaborators. Whether or not we reach a definitive agreement for a collaboration will depend,among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and theproposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by theFDA or similar regulatory authorities outside the United States, the potential market for the product candidate, the costs and complexities of manufacturingand delivering such product candidate to patients, the patent position protecting the product candidate, the potential of competing products, the need to seeklicenses or sub-licenses to third-party intellectual property and industry and market conditions generally. The collaborator may also consider alternativeproduct candidates or technologies and whether collaboration on an alternative product could be more attractive than a collaboration with us. We may alsobe restricted under future license agreements from entering into agreements on certain terms with potential collaborators. Collaborations are complex andtime-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceuticalcompanies that have resulted in a reduced number of potential future collaborators.We may not be able to negotiate collaborations on a timely basis, on acceptable terms or at all. If we are unable to do so, it may delay completion ofdevelopment and potential commercialization of our products. If we elect to increase our expenditures to fund development, registration orcommercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we donot have sufficient funds, we may not be able to further develop our product candidates or bring them to market and generate product revenue.Further, even if we are able to enter into collaborations, we must be able to sustain a mutually beneficial working relationship with our collaborators inorder to achieve the intended benefits of those collaborations. In the past, certain of our collaborators, including Novartis, have terminated their partneringrelationships with us due to delays and uncertainties in connection with the FDA regulatory pathway for approval of omadacycline for the ABSSSI and CABPindications. This past history may affect our ability to attract and enter into collaboration arrangements with future partners or collaborators for thedevelopment of omadacycline.We currently have no sales or distribution infrastructure with respect to our product candidates. If we are unable to develop our sales, marketing anddistribution capability on our own or through collaborations with marketing partners, we will not be successful in commercializing our productcandidates.While we recently entered into an arrangement with a third party to provide a contract field sales force, we currently have no sales or distributioncapabilities within our organization. In anticipation of omadacycline’s approval, we are in the process of establishing a sales and marketing organizationwith technical expertise and supporting distribution capabilities to commercialize omadacycline, or to outsource this function to a third party. Either of theseoptions would be expensive and time consuming. Some or all of these costs may be incurred in advance of any approval of omadacycline. In addition, wemay not be able to hire a sales force in the United States that is large enough or has adequate expertise in the medical markets that we intend to target. Anyfailure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization ofomadacycline.With respect to our existing and future product candidates, we may choose to collaborate with third parties that have direct sales forces andestablished distribution systems, either to augment our own sales force and distribution systems or as an alternative to our own sales force and distributionsystems. To the extent that we enter into co-promotion or other licensing arrangements, our product revenue and profitability may be lower than if we directlymarketed or sold any approved products. In addition, any revenue we receive will depend in whole or in part upon the efforts of these third parties, which maynot be successful and are generally not within our control. If we are unable to enter into these arrangements on acceptable terms or at all, we may not be ableto successfully commercialize any approved products. If we are not successful in commercializing any approved products, either on our own or throughcollaborations with one or more third parties, our future product revenue will suffer, and we may incur significant additional losses.43 Independent clinical investigators and CROs that we engage to conduct our clinical trials may not devote sufficient time or attention to our and ourpartners’ clinical trials or be able to repeat their past success.We expect to depend on independent clinical investigators and CROs to participate in and conduct our clinical trials, including our ongoing Phase 2studies in UTI. CROs may also assist us and our partners in the collection and analysis of data. There is a limited number of third-party service providers thatspecialize or have the expertise required to achieve our business objectives. Identifying, qualifying and managing performance of third-party serviceproviders can be difficult, time consuming and cause delays in our or our partners’ development programs. These investigators and CROs will not be ouremployees, and we will not be able to control, other than by contract, the amount of resources, including time, that they devote to our product candidates andclinical trials. If independent investigators fail to devote sufficient resources to the development of our product candidates, or if their performance issubstandard, it may delay or compromise the prospects for approval and commercialization of any product candidates that we and our partners develop. Inaddition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that thisinformation will be misappropriated. Further, the FDA requires that we and our partners comply with standards, commonly referred to as cGCP, forconducting, recording and reporting clinical trials to assure that data and reported results are credible and accurate and that the rights, safety, integrity andconfidentiality of clinical trial subjects are protected. Failure of clinical investigators or CROs to meet their obligations to us or comply with cGCP couldadversely affect the clinical development of our product candidates and harm our business.Our success is currently dependent on the successful development and commercialization of our most advanced product candidates, omadacycline andsarecycline.Our success is currently dependent on the successful development and commercialization of our most advanced product candidate, omadacycline,which is also being developed by Zai in the People’s Republic of China, Hong Kong, Macau and Taiwan, and sarecycline, which is currently beingdeveloped by Allergan. We are not currently developing any of our other product candidates that are in the pre-clinical phase. If omadacycline andsarecycline are not successfully developed and commercialized, we will not have any product candidates under development from which we might generaterevenue. We currently have no such plans to develop any other product candidates and will need additional financing to fund such development should wedecide to do so in the future. Even if approved, if omadacycline or sarecycline does not achieve broad market acceptance among physicians, patients, the medical community and third-party payors, our revenue generated from their sales will be limited.The commercial success of our product candidates will depend upon their acceptance among physicians, patients and the medical community. Thedegree of market acceptance of our product candidates will depend on a number of factors, including: •limitations or warnings contained in a product candidate’s FDA or foreign regulatory approved labeling; •changes in the standard of care for the targeted indications for any of our product candidates; •limitations in the approved clinical indications for our product candidates; •demonstrated clinical safety and efficacy compared to other products; •lack of significant adverse side effects; •sales, marketing, reimbursement and distribution support; •availability of coverage and adequate reimbursement from governmental or private third-party payors, such as Medicare or managed care plans; •the extent to which government or third-party payors implement utilization management techniques, such as unreasonably high copaymentformulary tiers, prior authorization or quantity limits for our product(s), or even refuse to provide reimbursement for our product(s); •timing of market introduction and perceived effectiveness of competitive products; •the degree of cost-effectiveness of our product candidates; •availability of alternative therapies at similar or lower cost, including generics and over-the-counter products; •the extent to which the product candidate is approved for inclusion on formularies of hospitals, and third-party payors, including managed careorganizations; •whether the product is designated under physician treatment guidelines as a therapy for particular infections; •adverse publicity about our product candidates or favorable publicity about competitive products;44 •convenience and ease of administration of our products; and •potential product liability claims.If our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, patients and the medical community, weand our partners may not generate sufficient revenue from these products, and we may not become or remain profitable. In addition, efforts to educate themedical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successfulEven if we obtain FDA approval of our current or any future product candidates, we or our partners may never obtain approval or commercialize ourproducts outside of the United States, which would limit our ability to realize their full market potential.In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements ofother countries regarding clinical trial design, safety and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities inother countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval proceduresvary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatoryapprovals could result in significant delays, difficulties and costs for us and may require additional preclinical studies or clinical trials. Satisfying these andother regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approvalin any country may delay or have negative effects on the process for regulatory approval in other countries. We and our partners do not have any productcandidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval ininternational markets. If we or our partners fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals,our target market will be reduced and our ability to realize the full market potential of our products will be harmed. Further, while we obtained SPAagreements with the FDA for our Phase 3 registration clinical trial designs for omadacycline in ABSSSI and CABP, these agreements are not binding with anyinternational regulatory authorities.Bacteria might develop resistance to any of our antibiotic product candidates, which would decrease the efficacy and commercial viability of thoseproduct candidates.Antibiotic resistance is primarily caused by the genetic mutation of bacteria resulting from suboptimal exposure to antibiotics where the drug does noteradicate all of the bacteria. While antibiotics have been developed to treat many of the most common infections, the extent and duration of their useworldwide has resulted in new mutated strains of bacteria resistant to current treatments. Our product candidate omadacycline is being developed to treatpatients infected with drug-resistant bacteria. If physicians, rightly or wrongly, associate the resistance issues of older generations of tetracyclines withomadacycline, physicians might not prescribe omadacycline for treating a broad range of infections. In addition, bacteria might develop resistance toomadacycline if such bacteria are improperly dosed or treated repeatedly with omadacycline over multiple years, causing the efficacy of omadacycline todecline, which would negatively affect our potential to generate revenue from omadacycline.Our business and operations would suffer in the event of computer system failures.Despite the implementation of security measures, our internal computer systems, and those of our CROs, our partners and other third parties on whichwe rely, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, fire, terrorism, war and telecommunication and electricalfailures. In addition, our systems safeguard important confidential personal data regarding our subjects. If a computer failure were to occur and causeinterruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data fromcompleted, ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover orreproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosureof confidential or proprietary information, we could incur liability and the further development of omadacycline and other product candidates could bedelayed.45 If any product liability lawsuits are successfully brought against us or any of our collaborative partners, we may incur substantial liabilities and may berequired to limit commercialization of our product candidates.We face an inherent risk of product liability lawsuits related to the testing of our product candidates in seriously ill patients and will face an evengreater risk if product candidates are approved by regulatory authorities and introduced commercially. Product liability claims may be brought against us orour partners by participants enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling any of our future approvedproducts. If we cannot successfully defend ourselves against any such claims, we may incur substantial liabilities. Regardless of merit or eventual outcome,liability claims may result in: •decreased demand for any of our future approved products; •injury to our reputation; •withdrawal of clinical trial participants; •termination of clinical trial sites or entire clinical trial programs; •significant litigation costs; •substantial monetary awards to or costly settlements with patients or other claimants; •product recalls or a change in the indications for which they may be used; •loss of revenue; •diversion of management and scientific resources from our business operations; and •the inability to commercialize our product candidates.If any of our product candidates are approved for commercial sale, we will be highly dependent upon consumer perceptions of us and the safety andquality of our products. We could be adversely affected if we are subject to negative publicity. We could also be adversely affected if any of our products orany similar products distributed by other companies prove to be, or are asserted to be, harmful to patients. Also, because of our dependence upon consumerperceptions, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similarproducts distributed by other companies could have a material adverse impact on our results of operations.We currently hold $10.0 million in product liability insurance coverage in the aggregate annually, with a per incident limit of $10.0 million, whichmay not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage when we begin the commercialization of ourproduct candidates. Insurance coverage is becoming increasingly expensive. As a result, we may be unable to maintain or obtain sufficient insurance at areasonable cost to protect us against losses that could have a material adverse effect on its business. These liabilities could prevent or interfere with ourproduct development and commercialization efforts. A successful product liability claim or series of claims brought against us, particularly if judgmentsexceed our insurance coverage, could decrease our cash resources and adversely affect our business, financial condition and results of operation.If we fail to attract and retain key management and scientific personnel, we may be unable to successfully develop or commercialize our productcandidates.Our industry has experienced a high rate of turnover of management personnel in recent years. We are to a certain extent dependent on the members ofour senior management team for our business success. The employment agreements with our senior management team can be terminated by us or them at anytime, with notice. The departure of any of our executive officers could result in a significant loss in the knowledge and experience that we, as an organization,possesses and could cause significant delays, or outright failure, in the execution of our strategies and development and approval of our product candidates.Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, development and clinical personnel.We may not be able to attract or retain such qualified personnel due to the intense competition for qualified personnel among biotechnology, pharmaceuticaland other businesses. If we are not able to attract and retain the necessary personnel to accomplish our business objectives, we may experience constraintsthat will impede significantly our development objectives and timelines, our ability to raise additional capital and our ability to implement our businessstrategy.46 We depend on various consultants and advisors for the success and continuation of our development efforts.We work extensively with various consultants and advisors, who provide advice and/or services in various business and development functions,including clinical development, operations and strategy, regulatory matters, legal and finance. The potential success of our drug development programsdepends, in part, on continued successful collaborations with certain of these consultants and advisors. Our consultants and advisors are not our employeesand may have commitments and obligations to other entities that may limit their availability to us. Typically, these advisors will not enter into non-competeagreements with us. If a conflict of interest arises between their work for us and their work for another entity, we may lose their services. We do not know if wewill be able to maintain such relationships or that such consultants and advisors will not enter into other arrangements with competitors, any of which couldhave a detrimental impact on our development objectives and our business.We will need to grow our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.As of February 28, 2018, we had 82 full-time employees. Assuming our development and commercialization plans and strategies develop, we expectto expand our employee base for managerial, operational, sales, marketing, financial and other resources. Future growth would impose significant addedresponsibilities on members of management, including the need to identify, recruit, maintain, motivate and integrate additional employees. Also, ourmanagement may need to divert a disproportionate amount of their attention away from our day-to-day activities and devote a substantial amount of time tomanaging these growth activities. We may not be able to effectively manage the expansion of our operations that may result in weaknesses in ourinfrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Ourexpected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of existingand additional product candidates. If our management is unable to effectively manage our expected growth, our expenses may increase more than expected,our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy. Our future financial performanceand our ability to commercialize omadacycline and our other product candidates and compete effectively with others in our industry will depend, in part, onour ability to effectively manage any future growth.Our and our partners’ business may become subject to economic, political, regulatory and other risks associated with international operations.Our business is subject to risks associated with conducting business internationally, in part due to a number of our suppliers and collaborative andclinical trial relationships being located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including: •economic weakness, including inflation or political instability, in particular foreign economies and markets; •differing regulatory requirements for drug approvals in foreign countries; •differing regulatory requirements for drug product pricing and reimbursement; •potentially reduced protection for intellectual property rights; •difficulties in compliance with non-U.S. laws and regulations; •changes in non-U.S. regulations and customs, tariffs and trade barriers; •changes in non-U.S. currency exchange rates and currency controls; •changes in a specific country’s or region’s political or economic environment; •trade protection measures, import or export licensing requirements or other restrictive actions by U.S. or non-U.S. governments; •negative consequences from changes in tax laws; •compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; •workforce uncertainty in countries where labor unrest is more common than in the United States; •difficulties associated with staffing and managing foreign operations, including differing labor relations; •production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and •business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters, including earthquakes, typhoons,floods and fires.47 These risks may materially adversely affect our ability to attain or sustain profitable operations.If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.Our research and development involves the use of potentially hazardous materials and chemicals. Our operations may have produced hazardous wasteproducts. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards mandated by local, stateand federal laws and regulations, the risk of accidental contamination or injury from these materials cannot be eliminated. We are also subject to numerousenvironmental, health and workplace safety laws and regulations and fire and building codes, including those governing laboratory procedures, exposure toblood-borne pathogens, use and storage of flammable agents and the handling of biohazardous materials. Although we have always maintained workers’compensation insurance as prescribed by the Commonwealth of Massachusetts to cover us for costs and expenses we may incur due to injuries to ouremployees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintaininsurance for environmental liability or toxic tort claims that may be asserted against us. Additional federal, state and local laws and regulations affecting ouroperations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws orregulations.Our employees, contractors, partners, principal investigators, CROs, consultants and vendors may engage in misconduct or other improper activities,including noncompliance with regulatory standards and requirements.We are exposed to the risk that our employees, contractors, partners, principal investigators, CROs, consultants and vendors may engage in fraudulentconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorizedactivities to us that violates: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, federal andstate healthcare fraud and abuse laws and regulations, laws that require the reporting of financial information or data timely, completely or accurately. Inparticular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud,misconduct, 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. Third-party misconduct could also involve theimproper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is notalways possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknownor unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with theselaws or regulations. If any such actions are instituted against us resulting from this misconduct, and we are not successful in defending ourselves or assertingour rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties,including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as Medicare andMedicaid, and the curtailment or restructuring of our operations, which could significantly harm our business.We enter into various contracts in the normal course of our business in which we indemnify the other party to the contract. In the event we have to performunder 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 agreementsthat contain indemnification provisions. With respect to our academic and other research agreements, we typically indemnify the institution and relatedparties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which wehave secured licenses, and from claims arising from our or our sub licensees’ exercise of rights under the agreement. With respect to our commercialagreements, we 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 indemnify them fromclaims 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, ourbusiness, financial condition and results of operations could be adversely affected. Similarly, if we are relying on a collaborator to indemnify us and thecollaborator is denied insurance coverage or does not have assets available to indemnify us, our business, financial condition and results of operations couldbe adversely affected.48 We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of former employers.Certain of our former employees were previously employed at universities or other biotechnology or pharmaceutical companies, includingcompetitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we ourselvesinadvertently or otherwise used or disclosed trade secrets or other proprietary information. Litigation may be necessary to defend against these claims. If wefail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key researchpersonnel or their work product could hamper or prevent us or a collaboration partner’s ability to develop or commercialize certain potential products, whichcould severely harm the business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distractionto management.Risks Related to Our Intellectual PropertyIf we are unable to obtain and enforce patent protection for our product candidates and related technology, our business could be materially harmed.Issued patents may be challenged, invalidated or circumvented. In addition, court decisions may introduce uncertainty in the enforceability or scopeof patents owned by biotechnology companies. The legal systems of certain countries do not favor the aggressive enforcement of patents, and the laws offoreign countries may not allow us to protect our inventions with patents to the same extent as do the laws of the United States. Because patent applicationsin the United States and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, and becausepublications of discoveries in scientific literature lag behind actual discoveries, or may not be the first to make the inventions claimed in issued patents orpending patent applications, or may not be the first to file for protection of the inventions set forth in our patents or patent applications. As a result, we maynot be able to obtain or maintain protection for certain inventions. If such inventions or related inventions are successfully patented by others, we may berequired to obtain licenses under third- party patents to market our product candidates, as described in greater detail below. Therefore, enforceability andscope of our patents in the United States and in foreign countries cannot be predicted with certainty, and, as a result, any patents that we own or license maynot provide sufficient protection against competitors. We may not be able to obtain or maintain patent protection from our pending patent applications, fromthose we may file in the future, or from those we may license from third parties. Moreover, even if we are able to obtain patent protection, such patentprotection may be of insufficient scope to achieve our business objectives.Our strategy depends on our ability to identify and seek and obtain patent protection for our discoveries. This process is expensive and timeconsuming, and we may not be able to file and prosecute successfully all necessary or desirable patent applications at a reasonable cost or in a timely manneror in all jurisdictions where protection may be commercially advantageous. Despite our efforts to protect our proprietary rights, unauthorized parties may beable to obtain and use information that we regard as proprietary. The issuance of a patent does not ensure that it is valid or enforceable, so even if we obtainpatents, they may not be valid or enforceable against third parties. In addition, the issuance of a patent does not give us the right to practice the patentedinvention. Third parties may have blocking patents that could prevent us from marketing our own patented product and practicing our own patentedtechnology. Third parties may also seek to market generic versions of any approved products by submitting ANDAs to the FDA in which they claim thatpatents owned or licensed by us are invalid, unenforceable and/or not infringed. Alternatively, third parties may seek approval to market their own productssimilar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuitsalleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid and/orunenforceable. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processessufficient to achieve our business objectives.The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factualconsiderations. The standards that the USPTO and its foreign counterparts use to grant patents are not always applied predictably or uniformly and canchange. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical orbiotechnology patents. The laws of some foreign countries do not protect proprietary information to the same extent as do the laws of the United States, andmany companies have encountered significant problems and costs in protecting their proprietary information in these foreign countries. Outside of the UnitedStates, patent protection must be sought in individual jurisdictions, further adding to the cost and uncertainty of obtaining adequate patent protectionoutside of the United States. Accordingly, additional patents protecting our technology may not issue in the United States or in foreign jurisdictions, and anypatents that do issue may not have claims of adequate scope to provide competitive advantage. Moreover, third parties may be able to successfully obtainclaims and such claims may be broad. The allowance of broader claims may increase the incidence and cost of patent interference proceedings, oppositionproceedings and/or reexamination proceedings, the risk of infringement litigation and the vulnerability of the claims to challenge. On the other hand, theallowance of narrower claims does not eliminate the potential for adversarial proceedings and may fail to provide a competitive advantage. Our issuedpatents may not contain claims sufficiently broad49 to protect us against third parties with similar technologies or products or provide us with any competitive advantage. Moreover, even after they have issued,our patents and any patent for which we have licensed or may license rights may be challenged, narrowed, invalidated or circumvented. If our patents areinvalidated or otherwise limited or expire prior to the commercialization of our product candidates, other companies may be better able to develop productsthat compete with our products which could adversely affect our competitive business position, business prospects and financial condition. The following areexamples of litigation and other adversarial proceedings or disputes that we could become a party to involving our patents or patents licensed to us: •we or our partners may initiate litigation or other proceedings against third parties to enforce our patent rights; •third parties may initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratoryjudgment that their product or technology does not infringe our patents or patents licensed to us; •third parties may initiate opposition or reexamination proceedings challenging the validity or scope of our patent rights, requiring us or ourpartners to participate in such proceedings to defend the validity and scope of our patents; •there may be a challenge or dispute regarding inventorship or ownership of patents currently identified as being owned by or licensed to us; •the USPTO may initiate an interference between patents or patent applications owned by or licensed to us and those of our competitors,requiring us or our collaborators to participate in an interference proceeding to determine the priority of invention, which could jeopardize ourpatent rights; or •third parties may submit ANDAs to the FDA seeking approval to market generic versions of our future approved products prior to expiration ofrelevant patents owned by or licensed to us, requiring us to defend our patents, including by filing lawsuits alleging patent infringement.These lawsuits and proceedings would be costly and could adversely affect our results of operations and divert the attention of our managerial andscientific personnel. A court or administrative body may decide that our patents are invalid or not infringed by a third party’s activity or that the scope ofcertain issued claims must be further limited. An adverse outcome in a litigation or proceeding involving our own patents could limit our ability to assert ourpatents against these or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitiveproducts. Any of these occurrences could adversely affect our competitive business position, business prospects and financial condition. An adverse outcomein a dispute involving inventorship or ownership of our patents could, for example, subject us to additional royalty obligations and expand the number ofproduct candidates that are subject to the royalty and other obligations of our license agreement with Tufts.The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequatelyprotect our rights or permit us to gain or keep our competitive advantage. For example: •others may be able to develop a platform that is similar to, or better than, ours in a way that is not covered by the claims of our patents; •others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of our patents; •we might not have been the first to make the inventions covered by our pending patent applications; •we might not have been the first to file patent applications for these inventions; •others may independently develop similar or alternative technologies or duplicate any of our technologies; •we may be unable to effectively protect our trade secrets; •any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable; •we may not develop additional proprietary technologies that are patentable; or •the patents of others may have an adverse effect on our business.50 Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.Our and our partners’ success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Other entities mayhave or obtain patents or proprietary rights that could limit our ability to manufacture, use, sell, offer for sale or import our future approved products or impairour competitive position. Patents that we believe we do not infringe, but that we may ultimately be found to infringe, could be issued to third parties. Inaddition, to the extent that a third party develops new technology that covers our product candidates, we and our partners may be required to obtain licensesto that technology, which licenses may not be available or may not be available on commercially reasonable terms. Third parties may have or obtain validand enforceable patents or proprietary rights that could block us from developing product candidates using our technology. Our failure to obtain a license toany technology that we require may materially harm our business, financial condition and results of operations. Moreover, our or our partners’ failure tomaintain a license to any technology that we requires may also materially harm our business, financial condition and results of operations. Furthermore, wewould be exposed to a threat of litigation.In the pharmaceutical industry, significant litigation and other proceedings regarding patents, patent applications, trademarks and other intellectualproperty rights have become commonplace. The types of situations in which we may become a party to such litigation or proceedings include: •we or our partners may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third partiesor to obtain a judgment that our products or processes do not infringe those third parties’ patents; •if our competitors file patent applications that claim technology also claimed by us, we or our collaborators may be required to participate ininterference or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially providea third party with a dominant patent position; •if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and ourcollaborators will need to defend against such proceedings; •if third parties initiate litigation claiming that our brand names infringe their trademarks, we and our collaborators will need to defend againstsuch proceedings; and •if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe ormisappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and weand our collaborators would need to defend against such proceedings.These lawsuits would be costly and could affect our results of operations and divert the attention of our managerial and scientific personnel. There is arisk that a court would decide that we or our partners are infringing the third party’s patents and would order us or our collaborators to stop the activitiescovered by the patents. In that event, we or our partners may not have a viable alternative to the technology protected by the patent and may need to haltwork on the affected product candidate. In addition, there is a risk that a court will order us or our partners to pay the other party damages. An adverseoutcome in any litigation or other proceeding could subject us to significant liabilities to third parties and require us to cease using the technology that is atissue or to license the technology from third parties. We may not be able to obtain any required licenses on commercially acceptable terms or at all. Any ofthese outcomes could have a material adverse effect on our business.The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may not always be clear to industryparticipants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts,and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our products or methods either do notinfringe the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity is difficult. Forexample, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed byissued patents. Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing theseproceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek alicense, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not havesufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, do not develop or obtain non-infringingtechnology, fail to defend an infringement action successfully or has infringed patents declared invalid, we may incur substantial monetary damages,encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.51 The cost of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able tosustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. Uncertainties resulting fromthe initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.Patent litigation and other proceedings may also absorb significant management time.If we or our partners fail to comply with our obligations under our intellectual property licenses with third parties, we could lose license rights that areimportant to our business.We are currently party to an intellectual property license agreement with Tufts. The license agreement imposes, and we expect that future licenseagreements may impose, various diligence, milestone payment, royalty, insurance and other obligations on us. For example, we are required to use our bestefforts to effect introduction of licensed products under the agreement into the United States commercial market. If we fail to comply with our obligationsunder the license, Tufts may have the right to terminate the license agreement, in which event we might not be able to market any product that is covered bythe agreement, such as omadacycline. Termination of the license agreement or reduction or elimination of our licensed rights may result in us having tonegotiate a new or reinstated license with less favorable terms. If Tufts were to terminate its license agreement with us for any reason, our business could bematerially harmed. In the event that we are unable to maintain the Tufts license, we may lose the ability to exclude third parties from offering substantiallyidentical products for sale and may even risk the threat of a patent infringement lawsuit from our former licensor based on our continued use of its intellectualproperty. Either of these events could adversely affect our competitive business position and harm our business.Under our license agreement with Tufts, we are responsible for prosecution and maintenance of the licensed patents and patent applications, includingpayment of necessary government fees. In the event that any of the licensed patents or patent applications unintentionally lapse or are otherwise materiallydiminished in value, our relationship with Tufts could be harmed. This could result in termination of the license, loss of the rights to control prosecution ofthe licensed patents and patent applications and/or liability to Tufts for any loss.If we or our partners are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and productscould be adversely affected.In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, know-how and confidential andproprietary information. To maintain the confidentiality of trade secrets and proprietary information, our policy is to enter into confidentiality agreementswith our employees, consultants, collaborators and others upon the commencement of their relationships with us. These agreements require that allconfidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us bekept confidential and not disclosed to third parties. Our agreements with employees and our personnel policies also provide that any inventions conceivedby the individual in the course of rendering services to us shall be our exclusive property. However, we may not obtain these agreements in all circumstances,and individuals with whom we have these agreements may not comply with their terms. In the event of unauthorized use or disclosure of our trade secrets orproprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidentialinformation. To the extent that our employees, consultants or contractors use technology or know-how owned by third parties in their work for us, disputesmay arise between us and those third parties as to the rights in related inventions. To the extent that an individual who is not obligated to assign rights inintellectual property to us is rightfully an inventor of intellectual property, we may need to obtain an assignment or a license to that intellectual propertyfrom that individual. Such assignment or license may not be available on commercially reasonable terms or at all.Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information. The disclosure of our trade secretswould impair our competitive position and may materially harm our business, financial condition and results of operations. Costly and time consuminglitigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection couldadversely affect our competitive business position. In addition, others may independently discover trade secrets and proprietary information, and theexistence of our own trade secrets affords no protection against such independent discovery.As is common in the biotechnology and pharmaceutical industries, we employ individuals who were previously or concurrently employed at researchinstitutions and/or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject to claims thatthese employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers or thatpatents and applications we have filed to protect inventions of these employees, even those related to one or more of our product candidates, are rightfullyowned by their former or concurrent employer. Litigation may be necessary to defend against these claims. Even if we are successful in defending againstthese claims, litigation could result in substantial costs and be a distraction to management.52 Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirementsimposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the USPTOand various foreign patent offices at various points over the lifetime of the patents and/or applications. We have systems in place to remind us to pay thesefees, and we rely on our outside counsel to pay these fees when due. Additionally, the USPTO and various foreign patent offices require compliance with anumber of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms andother professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance withrules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent orpatent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a materialadverse effect on our business. In addition, we are responsible for the payment of patent fees for patent rights that we have licensed from other parties. If anylicensor of these patents does not itself elect to make these payments, and we fail to do so, we may be liable to the licensor for any costs and consequences ofany resulting loss of patent rights.If we do not obtain protection under the Hatch-Waxman Amendments and similar foreign legislation by extending the term of patents covering each of ourproduct candidates, our business may be materially harmed.Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, one or more of our U.S. patents may beeligible for limited patent term extension under the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent term extension of up tofive years for a patent covering an approved product as compensation for effective patent term lost during product development and the FDA regulatoryreview process. However, we may not receive an extension if we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patentsor otherwise fail to satisfy applicable requirements. Moreover, the length of the extension could be less than our request. If we are unable to obtain patentterm extension or the term of any such extension is less than we request, the period during which we can enforce our patent rights for that product may notextend beyond the current patent expiration dates and our competitors may obtain approval to market competing products sooner. As a result, our revenuecould be reduced, possibly materiallyRisks Related to Our Common Stock.The trading price of our common stock is volatile.The trading price of our common stock could be subject to significant fluctuations. Market prices for securities of clinical-stage pharmaceutical,biotechnology and other life sciences companies have historically been particularly volatile. Some of the factors that may cause the trading price of ourcommon stock to fluctuate include: •our ability to obtain regulatory approvals for omadacycline or other product candidates, and delays or failures to obtain such approvals; •failure of any of our product candidates, if approved, to achieve commercial success; •issues in manufacturing our approved products, if any, or product candidates; •the results of our current and any future clinical trials of our product candidates; •the entry into, or termination of, key agreements, including key commercial partner agreements; •the initiation of, material developments in, or conclusion of litigation to enforce or defend any of our intellectual property rights or defendagainst the intellectual property rights of others; •announcements by commercial partners or competitors of new commercial products, clinical progress or the lack thereof, significant contracts,commercial relationships or capital commitments; •adverse publicity relating to the antibiotics market, including with respect to other products and potential products in such market; •the introduction of technological innovations or new therapies that compete with our potential products; •the loss of key employees; •changes in estimates or recommendations by securities analysts, if any, who cover our common stock; •general and industry-specific economic conditions that may affect our research and development expenditures;53 •changes in the structure of healthcare payment systems; and •period-to-period fluctuations in our financial results, including, in particular, our use of cash in operations.Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance ofindividual companies. These broad market fluctuations may also adversely affect the trading price of our common stock.In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securitieslitigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, whichcould significantly harm our profitability and reputation.We do not anticipate that we will pay any cash dividends in the foreseeable future.On May 14, 2014, we announced that our Board of Directors had approved a special cash dividend of $15.96 per share. Cash was distributed for thisdividend to our stockholders of record at the close of business on May 26, 2014. On October 14, 2014, we announced that our Board of Directors hadapproved a special dividend of $8.01 per share. Cash was distributed for this dividend to our stockholders of record at the close of business on October 24,2014.Other than future special dividends of any royalty income we may receive pursuant to the Purdue Collaboration Agreement, we expect that we willretain our future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be your solesource of gain, if any, for the foreseeable future.Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts byour stockholders to replace or remove our management.Provisions in our certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisions include aclassified board of directors, a prohibition on actions by written consent of our stockholders and the ability of the board of directors to issue preferred stockwithout stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the DelawareGeneral Corporate Law, or DGCL, which prohibits stockholders owning in excess of 15% of our voting stock from merging or combining with us. Althoughwe believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board ofdirectors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent anyattempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board ofdirectors, which is responsible for appointing the members of management.Future sales of shares by existing stockholders could cause the trading price of our common stock to decline.If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of ourcommon stock could decline. As of February 28, 2018, approximately 3.0 million shares of common stock are held by our directors, executive officers andother affiliates and are subject to volume limitations under Rule 144 under the Securities Act. In addition, approximately 2.4 million shares of common stockthat are subject to outstanding options and restricted stock units as of February 28, 2018 will become eligible for sale in the public market to the extentpermitted by the provisions of various vesting agreements and Rule 144 under the Securities Act. If these additional shares are sold, or if it is perceived thatthey will be sold, in the public market, the trading price of our common stock could decline.Because our merger resulted in an ownership change under Section 382 of the Internal Revenue Code for Transcept, Transcept’s pre-merger net operatingloss carryforwards and certain other tax attributes are subject to limitations. The net operating loss carryforwards and other tax attributes of the formerParatek entity and us may also be subject to limitations as a result of ownership changes.If a corporation undergoes an “ownership change” within the meaning of Section 382 of the Internal Revenue Code of 1986, as amended, or Section382, the corporation’s net operating loss carryforwards and certain other tax attributes arising from before the ownership change are subject to limitations onuse after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certainstockholders that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Merger resulted in anownership change for Transcept and, accordingly, Transcept’s net operating loss carryforwards and certain other tax attributes are subject to limitations ontheir use after the Merger. Old Paratek’s net operating loss carryforwards may also be subject to limitation as a result of prior shifts in equity ownership and/orthe Merger. Additional ownership changes in the future could result in additional limitations on Transcept’s, Old54 Paratek’s and our net operating loss carryforwards. Consequently, even if we achieve profitability, we may not be able to utilize a material portion ofTranscept’s, Old Paratek’s or our net operating loss carryforwards and other tax attributes, which could have a material adverse effect on cash flow and resultsof operations.If securities or industry analysts do not publish research or reports or publish inaccurate or unfavorable research about us, the trading price and tradingvolume of our common stock could decline.The trading market for our common stock is influenced by the research and reports that securities or industry analysts publish about us, our businessand our common stock. As of December 31, 2017, we had research coverage by 10 securities analysts. If the analysts who cover us downgrades our commonstock or publishes inaccurate or unfavorable research regarding us or our business model, technology or stock performance, the trading price of our commonstock would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in thefinancial markets, which in turn could cause the trading price or trading volume of our common stock to decline. Moreover, the unpredictability of ourfinancial results likely reduces the certainty, and therefore reliability, of the forecasts by securities or industry analysts of our future financial results, addingto the potential volatility of the trading price of our common stock.Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’sattention and affect our ability to attract and retain qualified board members.The trading market for our common stock is influenced by the research and reports that securities or industry analysts publish. As a public company,we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and The Nasdaq Global Marketrules. The requirements of these rules and regulations have increased and will continue to significantly increase our legal and financial compliance costs,including costs associated with the hiring of additional personnel, making some activities more difficult, time-consuming or costly, and may also placeundue strain on our personnel, systems and resources. The Exchange Act requires, among other things, that we file annual, quarterly and current reports withrespect to our business and financial condition.The Sarbanes-Oxley Act requires, among other things, that we maintain disclosure controls and procedures and internal control over financialreporting. Ensuring that we have adequate internal financial and accounting controls and procedures in place, as well as maintaining these controls andprocedures, is a costly and time-consuming effort that needs to be re-evaluated frequently. Section 404 of the Sarbanes-Oxley Act, or Section 404, requiresthat we annually evaluate our internal control over financial reporting to enable management to report on, and our independent auditors to audit as of the endof each fiscal year, the effectiveness of those controls. In connection with the Section 404 requirements, both we and our independent registered publicaccounting firm test our internal controls and could, as part of that documentation and testing, identify material weaknesses, significant deficiencies or otherareas for further attention or improvement.Implementing any appropriate changes to our internal controls may require specific compliance training for our directors, officers and employees,require the hiring of additional finance, accounting and other personnel, entail substantial costs to modify our existing accounting systems, and take asignificant period of time to complete. These changes may not, however, be effective in maintaining the adequacy of our internal controls, and any failure tomaintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating costs and couldmaterially impair our ability to operate our business. Moreover, adequate internal controls are necessary for us to produce reliable financial reports and areimportant to help prevent fraud. As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investorconfidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline.Various rules and regulations applicable to public companies make it more difficult and more expensive for us to maintain directors’ and officers’liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to maintain coverage. If we are unable to maintainadequate directors’ and officers’ liability insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may bedeemed independent for purposes of The Nasdaq Global Market rules, will be significantly curtailed. Item 1B.Unresolved Staff CommentsNone. 55 Item 2.PropertiesOur headquarters are located in Boston, Massachusetts, where we occupy approximately 12,000 square feet of office space under a lease that expires in2021. We also rent approximately 19,000 square feet of office space in King of Prussia, Pennsylvania on a monthly basis under a lease that expires in 2024.Item 3.Legal ProceedingsIntermezzo Patent Litigation In July 2012, the Company received notifications from three companies, Actavis Elizabeth LLC, or Actavis Elizabeth, Watson Laboratories, Inc.—Florida, or Watson, and Novel Laboratories, Inc., or Novel, in September 2012, from each of Par Pharmaceutical, Inc. and Par Formulations Private Ltd.,together, the Par Entities, in February 2013 from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd., together, Dr. Reddy’s, and in July 2013from TWi Pharmaceuticals, Inc., or Twi, stating that each has filed with the FDA an ANDA, that references Intermezzo. Refer to Item 3, “Legal Proceedings”,of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 9, 2016, for a full description of thehistory of this litigation. The United States District Court for the District of New Jersey, or the New Jersey District Court, held a consolidated trial between December 1, 2014and December 15, 2014 involving Paratek, Purdue Pharma, and their patent infringement claims against Actavis Elizabeth, Novel, and Dr. Reddy’s. The NewJersey District Court then received post-trial briefing and held a February 13, 2015 post-trial hearing. On March 27, 2015, the New Jersey District Courtissued an order and accompanying opinion finding that: (a) the asserted claims of U.S. Patent Nos. 7,682,628, 8,242,131, and 8,252,809, are invalid asobvious; (b) Actavis Elizabeth, Novel, and Dr. Reddy’s infringe the ‘131 patent; (c) Novel infringes the ‘628 patent; and (d) Novel and Dr. Reddy’s infringethe ‘809 patent. On April 9, 2015, the New Jersey District Court entered final judgment consistent with the March 27, 2015 opinion and order referencedabove. The Company and Purdue Pharma jointly appealed the New Jersey District Court’s final judgment as to the '131 patent to the United States Court ofAppeals for the Federal Circuit on May 6, 2015. On January 8, 2016, the United States Court of Appeals for the Federal Circuit affirmed the decision of theNew Jersey District Court, and no opinion accompanied the judgment. On September 14, 2016, the defendants filed a warrant of satisfaction of judgment inthe New Jersey District Court for the costs having been fully paid to the defendants.Patent Term Adjustment Suit In January 2013, the Company filed suit in the Eastern District of Virginia against the United States Patent and Trademark Office, or the USPTO,seeking recalculation of the patent term adjustment of the ’131 Patent. Purdue Pharma has agreed to bear the costs and expenses associated with thislitigation. In June 2013, the judge granted a joint motion to stay the proceedings pending a remand to the USPTO, in which the USPTO is expected toreconsider its patent term adjustment award in light of decisions in a number of appeals to the Federal Circuit, including Novartis AG v. Lee 740 F.3d 593(Fed. Cir. 2014), or the Novartis decision. Since having issued final rules implementing the Novartis decision, the USPTO has been working through the civilaction cases and issuing remand decisions. The Company’s case was on remand until the USPTO made its decision on the recalculation of the patent termadjustment. On September 28, 2016, the USPTO issued a decision that the patent term adjustment is 1,038 days, from which the ‘131 Patent expiration wouldbe March 26, 2029.Other Legal ProceedingsFrom time to time the Company is involved in legal proceedings arising in the ordinary course of business. The Company believes there is no otherlitigation pending that could have, individually, or in the aggregate, a material adverse effect on its results of operations or financial condition. TheCompany does not believe that any of the above matters will result in a liability that is probable or estimable at December 31, 2017.Item 4.Mine Safety DisclosuresNone. 56 PART IIItem 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock is traded on The Nasdaq Global Market under the symbol “PRTK.”The following table sets forth the range of high and low sales prices of our common stock for the quarterly periods indicated as reported by TheNasdaq Global Market. Sales Price High Low Year ended December 31, 2016 First quarter $19.45 $12.05 Second quarter $18.92 $12.05 Third quarter $14.34 $12.39 Fourth quarter $15.70 $9.80 Year ended December 31, 2017 First quarter $19.40 $13.95 Second quarter $25.95 $18.45 Third quarter $29.00 $18.70 Fourth quarter $26.10 $17.20 The closing price of our common stock as reported by The Nasdaq Global Market on February 28, 2018 was $13.10 per share. As of February 28, 2018,there were 31,443,149 holders of record of our common stock.Stock Performance GraphThe following graph compares cumulative total return of our common stock with the cumulative total return of (i) The Nasdaq Global Select Index,and (ii) The Nasdaq Biotechnology Index. The graph assumes (a) $100 was invested on December 31, 2011 in each of our Common Stock, the stockscomprising The Nasdaq Global Select Index and the stocks comprising The Nasdaq Biotechnology Index, and (b) the reinvestment of dividends. Thecomparisons shown in the graph are based on historical data and the stock price performance shown in the graph is not necessarily indicative of, or intendedto forecast, future performance of our stock. Prior to the Reverse Merger on October 30, 2014, the stock of Transcept traded under the symbol “TSPT” on TheNasdaq Global Market and any comparison with Transcept’s historical stock prices may not be meaningful.This performance graph shall not be deemed "soliciting material" or to be "filed" with the Securities and Exchange Commission, or the SEC, forpurposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities under thatSection, and shall not be deemed incorporated by reference into any filing of Paratek Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, orthe Securities Act.57 Dividend PolicyOther than future special dividends of any royalty income we may receive pursuant to the collaboration agreement entered into with Purdue Pharma,L.P., or Purdue Pharma, or the Purdue Collaboration Agreement, we do not anticipate that we will pay any additional cash dividends on our common stock inthe foreseeable future.Recent Sales of Unregistered SecuritiesSet forth below is information regarding securities sold by us during 2017 that were not registered under the Securities Act. Also included is theconsideration, if any, received by us for the securities and information relating to the section of the Securities Act, or rule of the SEC under which exemptionfrom registration was claimed.On June 27, 2017, we entered into the third amendment to the Loan Agreement with Hercules. In connection with the amendment, we issued toHercules Capital, Inc. a warrant to purchase our common stock, or the Additional Warrant. The Additional Warrant is exercisable for an aggregate of 5,374shares of our common stock at an exercise price of $23.26 per share. The Additional Warrant’s total relative fair value of $0.1 million was determined using aBlack-Scholes option-pricing model, as described in Note 10, Common Stock, in the accompanying notes to the consolidated financial statements, and wasincluded as a discount to the Term Loan, as defined in Note 14, Long-term Debt. The exercise price and the number of shares are subject to adjustment upon amerger event, reclassification of the shares of common stock, subdivision or combination of the shares of common stock or certain dividends payments. TheAdditional Warrant is exercisable at any time until the earlier of five years from issuance and the consummation of a Public Acquisition, as defined in theAdditional Warrant agreement, and will be exercised automatically on a net issuance basis if not exercised prior to the termination date and if the then-current fair market value of one share of common stock is greater than the exercise price then in effect.58 No underwriters were involved in the foregoing sales of securities. The securities were issued to investors in reliance upon the exemption from theregistration requirements of the Securities Act, as set forth in Section 4(a)(2), relative to transactions by an issuer not involving any public offering. Thepurchaser of securities described above represented to us in connection with its purchase that it was an “accredited investor” as defined in Rule 501 ofRegulation D promulgated under the Securities Act and was acquiring the securities for its own account for investment purposes only and not with a view to,or for sale in connection with, any distribution thereof. The purchaser received written disclosures that the securities had not been registered under theSecurities Act and that any resale must be made pursuant to a registration statement or an available exemption from such registration.Securities authorized for issuance under equity compensation plansThe following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2017: Plan Category Number ofSecurities tobe IssuedUponExercise ofOutstandingOptions,Warrantsand Rights Weighted-AverageExercisePrice ofOutstandingOptions,Warrantsand Rights Number ofSecuritiesRemainingAvailable forFutureIssuanceUnder EquityCompensationPlans(1) Equity compensation plans approved by stockholders(1) 4,314,605 (2) $11.79 (3) 50,753 (4)Equity compensation plans not approved by stockholders 546,833 (5) 21.57 (6) 363,167 (7)Total 4,861,438 $12.89 413,920 (1)The number of authorized shares under the 2015 Equity Incentive Plan, or the 2015 Plan, will automatically increase on January 1 of each year,for the period commencing on (and including) January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to 5% ofthe total number of shares of common stock outstanding on December 31st of the preceding calendar year. Notwithstanding the foregoing, theBoard of Directors of the Company may act prior to January 1st of a given year to provide that there will be no January 1st increase in the ShareReserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of common stock than wouldotherwise occur. (2)Includes 3,101,274 shares relating to outstanding options, 1,128,503 relating to restricted stock units and 84,828 warrants outstanding. (3)Represents the weighted-average exercise price of outstanding options, warrants and rights. (4)Includes 36,539 shares available under the 2009 Employee Stock Purchase Plan, or the ESPP. All shares cancelled or forfeited during the yearsended December 31, 2017 and 2016 under the 2006 and 2014 Plans became available for grant under the 2015 Plan. (5)Includes 507,633 shares relating to outstanding options and 39,200 relating to restricted stock units under the 2015 Inducement Plan and the2017 Inducement Plan. (6)Represents the weighted-average exercise price of outstanding options and rights. (7)Includes 73,167 shares that remain available for grant under the 2015 Inducement Plan that the Company does not currently anticipate issuingas of December 31, 2017.Issuer Purchases of Equity SecuritiesThere were no repurchases of our common stock during the fourth quarter of 2017.Item 6.Selected Financial DataPrior to October 30, 2014 we were known as Transcept Pharmaceuticals, Inc., or Transcept. On October 30, 2014, Transcept completed a businesscombination with privately-held Paratek Pharmaceuticals, Inc., or Old Paratek, in accordance with the terms of the Agreement and Plan of Merger andReorganization, dated as of June 30, 2014, by and among Transcept, Tigris Merger Sub, Inc., or Merger Sub, Tigris Acquisition Sub, LLC, or Merger LLC,and Old Paratek, or the Merger Agreement, pursuant to which Merger Sub merged with and into Old Paratek, with Old Paratek surviving as a wholly-ownedsubsidiary of Transcept, followed by the merger of Old Paratek with and into Merger LLC, with Merger LLC surviving as a wholly-owned subsidiary ofTranscept, these mergers59 together, the Merger. For accounting purposes, Transcept was deemed to be the acquired entity in the Merger, and the Merger was accounted for as a reverseacquisition. In connection with the Merger, we changed our name to Paratek Pharmaceuticals, Inc. and effected a 1-for-12 reverse stock split of our commonstock. Our consolidated financial statements reflect the historical results of Old Paratek prior to the Merger and that of the combined company following theMerger, and do not include the historical results of Transcept Pharmaceuticals, Inc. prior to the completion of the Merger. All share and per share disclosureshave been retroactively adjusted to reflect the exchange of shares in the Merger, and the 1-for-12 reverse split of our common stock on October 30, 2014.The following selected financial data has been derived from our audited consolidated financial statements. The information below is not necessarilyindicative of the results of future operations and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Conditionand Results of Operations,” and Item 1A, “Risk Factors,” of this Annual Report on Form 10-K, and the consolidated financial statements and related notesthereto included in Item 8, “Financial Statements and Supplementary Data”, of this Annual Report on Form 10-K, in order to fully understand factors thatmay affect the comparability of the information presented below. All per share amounts reflect the conversion of Old Paratek common stock to our commonstock on October 30, 2014 at the rate of 0.0675 shares of common stock, after giving effect to the 1-for-12 reverse stock split, for each share of Old Paratekcommon stock outstanding on October 30, 2014. Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands, exceptper share and data) Consolidated Statements of Operations Data: Revenue $12,616 $29 $— $4,342 $478 Operating expenses: Research and development 60,072 83,460 50,765 5,014 4,631 General and administrative 36,965 26,400 19,988 5,848 3,387 Merger-related costs — — — 1,278 — Impairment of intangible assets 743 — 2,860 — — Change in fair value of contingent consideration (584) (345) (3,560) — — Total operating expenses 97,196 109,515 70,053 12,140 8,018 Loss from operations (84,580) (109,486) (70,053) (7,798) (7,540)Non-operating (expense) income, net (3,736) (2,150) (807) (10,037) 2,887 Net loss (88,316) (111,636) (70,860) (17,835) (4,653)Unaccreted dividends on convertible preferred stock — — — (1,927) (6,766)Provision for income taxes 753 — — — — Net loss attributable to common stockholders $(89,069) $(111,636) $(70,860) $(19,762) $(11,419)Net loss per share, basic and diluted $(3.32) $(5.51) $(4.29) $(7.82) $(185.13)Weighted average common shares outstanding, basic and diluted 26,827,253 20,253,082 16,501,912 2,528,595 61,680 As of December 31, 2017 2016 Selected Consolidated Balance Sheet Data: Cash, cash equivalents and marketable securities $151,723 $128,038 Total assets 163,698 135,732 Working capital 143,697 111,688 Current liabilities 16,789 20,412 Long-term obligations, less current portion 64,431 43,728 Common stock and additional paid-in capital 552,748 451,970 Accumulated deficit (470,112) (380,362)Total stockholders’ equity 82,478 71,592 60 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain statements that are notstrictly historical and are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a highdegree of risk and uncertainty. Actual results may differ materially from those projected in the forward-looking statements due to other risks anduncertainties. All forward-looking statements included in this section are based on information available to us as of the date hereof, and we assume noobligation to update any such forward-looking statement, except as required by law.Company OverviewWe are a clinical stage biopharmaceutical company focused on the development and commercialization of innovative therapeutics based upontetracycline chemistry. We have used our expertise in biology and tetracycline chemistry to create chemically diverse and biologically distinct smallmolecules derived from the minocycline core structure. We have generated innovative small molecule therapeutic candidates based upon medicinalchemistry-based modifications, according to structure-based activity, of all positions of the core tetracycline molecule. These efforts have yielded moleculeswith broad-spectrum antibiotic properties and narrow-spectrum antibiotic properties, and molecules with potent anti-inflammatory properties to fit specifictherapeutic applications. This proprietary chemistry platform has produced many compounds that have shown interesting characteristics in various invitro and in vivo efficacy models. Omadacycline and sarecycline are examples of molecules that were synthesized from this chemistry discovery platform. Ourtwo lead product candidates are the antibacterials omadacycline and sarecycline.If approved, omadacycline will be the first in a new class of aminomethylcycline antibiotics. Omadacycline is a broad-spectrum, well-tolerated, once-daily oral and intravenous, or IV, antibiotic. We believe that omadacycline has the potential to become the primary antibiotic choice of physicians for use asa broad-spectrum monotherapy antibiotic for acute bacterial skin and skin structure infections, or ABSSSI, community-acquired bacterial pneumonia, orCABP, urinary tract infection, or UTI, and other serious community-acquired bacterial infections where resistance is of concern. We believe omadacycline, ifapproved, will be used in the emergency room, hospital and community care settings. We have designed omadacycline to provide potential advantages overexisting antibiotics, including activity against resistant bacteria, broad-spectrum antibacterial activity, oral and IV formulations with once-daily dosing, nodosing adjustments for patients on concomitant medications, and a generally safe and well tolerated profile.In the fall of 2013, the U.S. Food and Drug Administration, or the FDA, agreed to the design of our omadacycline Phase 3 studies for ABSSSI andCABP through the Special Protocol Assessment, or SPA, process. In addition, the FDA confirmed that positive data from the individual studies for ABSSSIand CABP would be sufficient to support approval of omadacycline for each indication and for both oral and IV formulations in the United States. Inaddition to Qualified Infectious Disease Product, or QIDP, designation, on November 4, 2015, the FDA granted Fast Track designation for the development ofomadacycline in ABSSSI, CABP, and complicated urinary tract infection, or complicated UTI. Fast Track designation facilitates the development andexpedites the review of drugs that treat serious or life-threatening conditions and that fill an unmet medical need. In February 2016, we reached agreementwith the FDA on the terms of the omadacycline pediatric program associated with the Pediatric Research Equity Act. The FDA has granted Paratek a waiverfor conducting studies with omadacycline in children less than eight years old due to the risk of teeth discoloration, a known class effect of tetracyclines. Inaddition, the FDA has granted a deferral on conducting studies in children eight years and older until safety and efficacy is established in adults. In May2016, we received confirmation from the FDA that the oral-only ABSSSI study design was acceptable and consistent with the currently posted guidance forthe industry. In September 2017, both the oral and IV formations of omadacycline were granted an additional QIDP designation by the FDA for the treatmentof uncomplicated urinary tract infection, or uncomplicated UTI.Scientific advice received through the centralized procedure in Europe confirmed general agreement on the design and choice of comparators of thePhase 3 clinical trials for ABSSSI and CABP and noted that approval based on a single study in each indication could be possible but would be subjectto more stringent statistical standards than Market Authorization Applications, or MAA, programs that conduct two pivotal Phase 3 studies per indication.We believe that the inclusion of the second Phase 3 oral-only study in ABSSSI strengthens the data package for submission of an MAA filing for approval inthe European Union, or the EU. To date, we have conducted more than 20 Phase 1 studies of omadacycline to characterize the effects of the drug on humans including how it isabsorbed, metabolized, and excreted. These Phase 1 studies also included evaluation in special populations like hepatic and renal failure patients. We havealso conducted and completed three successful Phase 3 clinical studies. Our first two Phase 3 clinical studies were for the treatment of ABSSSI (OASIS-1) andCABP (OPTIC). Both studies utilized initiation of IV therapy with transitions to oral-based treatment on clinical response. Our third Phase 3 clinical study(OASIS-2) was an oral-only administration of omadacycline in ABSSSI compared to oral-only linezolid. All three Phase 3 clinical studies resulted inomadacycline demonstrating positive efficacy results and a generally favorable safe and well tolerated profile. We included these clinical data in the NewDrug Application, or NDA, submission to the FDA for the treatment of ABSSSI and CABP on February 2, 2018. We plan to include these clinical data in theMAA submission to the European Medicines Agency, or the EMA, in the second half of 2018.61 In the two pivotal Phase 3 studies in ABSSSI (OASIS-1 and OASIS-2), omadacycline successfully met the primary endpoint for the FDA bydemonstrating statistical non-inferiority based upon the Early Clinical Response, or ECR, assessment at 48 to 72 hours after the first dose of study medicationin the modified intent-to-treat, or mITT, population (all randomized subjects without a baseline sole gram-negative causative pathogen). In the same twopivotal Phase 3 studies in ABSSSI, omadacycline also successfully met the primary endpoint for the EMA by demonstrating statistical non-inferiority basedupon the investigator’s assessment of clinical outcome at the post therapy evaluation, or PTE, visit (7 to 14 days after the subject’s last day of study therapy),in the mITT and the clinically evaluable, or CE, population (defined as all mITT subjects who received study medication, had a qualifying ABSSSI, anassessment of outcome, and met all other evaluability criteria). Clinical success at the PTE assessment was based on resolution of the infection such thatfurther antibacterial therapy was not needed, and the subject was alive and did not meet any clinical failure or indeterminate criteria.In May 2016, we initiated our first oral-only and IV-to-oral study of omadacycline dosed for five days in a Phase 1b clinical study in patients with aUTI. This Phase 1b UTI study was completed. Data from this study showed that omadacycline achieved proof of principle, by demonstrating highconcentration levels of omadacycline in urine, across IV-to-oral and oral-only dosing regimens. The QIDP designation, which is designed to speed thedevelopment of novel antibiotics for the treatment of pathogens with the potential to pose a serious threat to public health, provides an opportunity for morefrequent interactions with the FDA, and a priority review of the supplemental new drug application for omadacycline in uncomplicated UTI once submitted.We have initiated sites for the first of our two planned Phase 2 clinical trials evaluating omadacycline for the treatment of UTI. The first study will evaluatethe efficacy, safety, tolerability and pharmacokinetics of omadacycline in female patients with cystitis, a common uncomplicated UTI. The second study,which we plan to initiate in the second half of 2018, will evaluate the efficacy, safety, tolerability and pharmacokinetics of omadacycline in patients withacute pyelonephritis, a common complicated UTI. We plan to enroll approximately 200 patients in each study at multiple sites. In October 2016, we announced that we entered into a Cooperative Research and Development Agreement with the U.S. Army Medical ResearchInstitute of Infectious Diseases to study omadacycline against pathogenic agents causing infectious diseases of public health and biodefense importance.These studies are designed to confirm humanized dosing regimens of omadacycline in order to study the efficacy of omadacycline against biodefensepathogens, including Yersinia pestis, or plague, and Bacillus anthracis, or anthrax. Funding support for the trial has been made available through the DefenseThreat Reduction Agency, or DTRA/ Joint Science and Technology Office and Joint Program Executive Office for Chemical and Biological Defense / JointProject Manager Medical Countermeasure Systems / BioDefense Therapeutics.Our second antibacterial product candidate, sarecycline, also known as Seysara™ in the U.S. is a new, once-daily, tetracycline-derived compounddesigned for use in the treatment of acne and rosacea. We believe that, based upon the data generated to-date, sarecycline possesses favorable anti-inflammatory activity, plus narrow-spectrum antibacterial activity relative to other tetracycline-derived molecules, oral bioavailability, does not cross theblood-brain barrier, and favorable pharmacokinetic properties that we believe make it particularly well-suited for the treatment of inflammatory acne in thecommunity setting. We have exclusively licensed U.S. development and commercialization rights to sarecycline for the treatment of acne to Allergan plc, orAllergan, while retaining development and commercialization rights in the rest of the world.In March 2017, Allergan announced that two Phase 3 studies of sarecycline for the treatment of moderate to severe acne vulgaris met their 12-week primary efficacy endpoints. In addition, a nine-month long-term safety extension study was completed. The safety results from the long-term study aregenerally consistent with results from the two 12-week studies. Based on these clinical data, Allergan submitted an NDA to the FDA, which was accepted inDecember 2017 for the treatment of moderate to severe acne.Allergan currently holds a nonexclusive license to develop and commercialize sarecycline for the treatment of rosacea in the United States. There arecurrently no clinical trials with sarecycline in rosacea underway.To date, we have devoted a substantial amount of our resources to research and development efforts, including conducting clinical trials foromadacycline, protecting our intellectual property and providing general and administrative support for these operations. We completed the submission oftwo NDAs to the FDA for our once-daily oral and IV formulations of omadacycline. In addition, our partner Allergan submitted an NDA to the FDA, whichwas accepted in December 2017 for the treatment of moderate to severe acne. We have not yet submitted any other product candidates for approval byregulatory authorities. We do not currently have rights to any products that have been approved for marketing in any territory. We have not generated anyrevenue from product sales and to date have financed our operations primarily through sale of our common and convertible preferred stock, debt financings,strategic collaborations, and grant funding.62 In April 2017, Paratek Bermuda Ltd., a wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., and Zai Lab (Shanghai) Co., Ltd., or Zai, enteredinto a License and Collaboration Agreement, or the Zai Collaboration Agreement pursuant to which the Company granted Zai an exclusive license todevelop, manufacture and commercialize omadacycline in the People’s Republic of China, Hong Kong, Macau and Taiwan, or the Zai territory, for all humantherapeutic and preventative uses, other than biodefense. Zai will be responsible for the development, manufacturing and commercialization of the licensedproduct in the Zai territory, at its sole cost with certain assistance from the Company. Under the terms of the Zai Collaboration Agreement, Paratek BermudaLtd. earned an upfront, nonrefundable license payment of $7.5 million during the year ended December 31, 2017.We have incurred significant losses since our inception in 1996. Our accumulated deficit at December 31, 2017 was $470.1 million and our net lossfor the year ended December 31, 2017 was $89.1 million. A substantial amount of our net losses resulted from costs incurred in connection with our researchand development programs and general and administrative costs associated with our operations. The net losses and negative operating cash flows incurred todate, together with expected future losses, have had, and likely will continue to have, an adverse effect on our stockholders’ equity and working capital. Theamount of future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate offsetting revenue, if any. We expectto continue to incur significant expenses and operating losses for the foreseeable future.We do not expect to generate revenue from product sales unless and until we or either of our partners, Allergan or Zai, successfully completedevelopment and obtain marketing approval for one or more of our product candidates. Accordingly, we anticipate that we will need to raise additionalcapital in order to complete the development and commercialization of omadacycline and to advance the development of our other product candidates. Untilwe can generate a sufficient amount of product revenue to finance our cash requirements, we expect to finance our future cash needs primarily through acombination of public and private equity offerings, debt or other structured financings and strategic collaborations. We may be unable to raise capital whenneeded or on attractive terms, which would force us to delay, limit, reduce or terminate our development programs or commercialization efforts. We will needto generate significant revenue to achieve and sustain profitability, and we may never be able to do so.Financial Operations OverviewRevenueWe have not yet generated any revenue from product sales. All of our revenue to date has been derived from license fees, milestone payments, royaltyincome, reimbursements for research, development and manufacturing activities under licenses and collaborations, grant payments received from theNational Institute of Health, or NIH, and other non-profit organizations. If the FDA approves our NDA for omadacycline on the projected timeline, we intendto begin selling the product by the first quarter of 2019Collaboration revenue represents upfront fees and milestone payments received in connection with our collaboration agreements. Royalty revenuerepresents fifty percent of Intermezzo royalty income received pursuant to the royalty sharing agreement, or the Royalty Sharing Agreement, entered into byus in October 2016 with the Special Committee of our Board of Directors.Research and Development ExpenseResearch and development expenses consisted primarily of costs directly incurred by us for the development of our product candidates, whichinclude: •expenses incurred under agreements with clinical research organizations, or CROs, and investigative sites that conduct our clinical trials; •the cost of acquiring and manufacturing preclinical and clinical study materials and developing manufacturing processes; •direct employee-related expenses, including salaries, benefits, travel and stock-based compensation expense of our research and developmentpersonnel; •allocated facilities, depreciation, and other expenses, which include rent and maintenance of facilities, insurance and other supplies; and •costs associated with preclinical activities and regulatory compliance.Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of theprogress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.63 We cannot determine with certainty the duration and completion costs of the current or future clinical trials of our product candidates or if, when, or towhat extent we will generate revenues from the commercialization and sale of any of our product candidates for which we or any partner obtain regulatoryapproval. We may never succeed in achieving regulatory approval for any of our product candidates. The duration, costs and timing of clinical trials anddevelopment of our product candidates will depend on a variety of factors, including: •the scope, rate of progress, and expense of our ongoing, as well as any additional, clinical trials and other research and development activities; •future clinical trial results; •potential changes in government regulation; and •the timing and receipt of any regulatory approvals.A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costsand timing associated with the development of that therapeutic candidate. For example, if the FDA, or another regulatory authority, were to require us toconduct clinical trials beyond those that we currently anticipate will be required for the completion of the clinical development of product candidates, or ifwe experience significant delays in the enrollment in any clinical trials, we could be required to expend significant additional financial resources and time onthe completion of clinical development.We manage certain activities, such as clinical trial operations, manufacture of clinical trial material, and preclinical animal toxicology studies,through third-party contract organizations. The only costs we track by each product candidate are external costs such as services provided to us by CROs,manufacturing of preclinical and clinical drug product, and other outsourced research and development expenses. We do not assign or allocate to individualdevelopment programs internal costs such as salaries and benefits, facilities costs, lab supplies and the costs of preclinical research and studies. Our externalresearch and development expenses for omadacycline and other projects during 2017, 2016 and 2015, are as follows: Year Ended December 31, (in thousands) 2017 2016 2015 Omadacycline $41,786 $71,709 $43,654 Other external research and development — — 100 Total external costs 41,786 71,709 43,754 Other research and development costs 18,286 11,751 7,011 Total $60,072 $83,460 $50,765 General and Administrative ExpenseGeneral and administrative expense consists primarily of salaries and other related costs for personnel and professional, legal and consulting fees.Interest ExpenseInterest expense represents interest incurred on the Loan Agreement (as defined below), as amended, entered into with Hercules (as defined below) andthe adjustment of our marketable securities to amortized cost.Interest IncomeInterest income represents interest earned on our money market funds and marketable securities.64 Results of OperationsComparison of the Years Ended December 31, 2017 and 2016 Year Ended December 31, 2017 2016 Change Revenue Collaboration and royalty revenue $12,616 $29 $12,587 Total revenue 12,616 29 12,587 Operating expenses: Research and development 60,072 83,460 (23,388)General and administrative 36,965 26,400 10,565 Impairment of intangible assets 743 — 743 Changes in fair value of contingent consideration (584) (345) (239)Total operating expenses 97,196 109,515 (12,319)Loss from operations (84,580) (109,486) 24,906 Other income and expenses: Interest income 1,377 1,069 308 Interest expense (5,079) (3,223) (1,856)Other gains (and losses), net (34) 4 (38)Net loss (88,316) (111,636) 23,320 Provision for income taxes 753 — 753 Net loss attributable to common stockholders $(89,069) $(111,636) $22,567 RevenueRevenue for the year ended December 31, 2017 consists of a $5.0 million milestone payment earned from Allergan with sarecycline (Seysara™) NDAacceptance, a $7.5 million upfront payment received as part of the Zai Collaboration Agreement and $0.1 million of revenue earned under the RoyaltySharing Agreement. Revenue for the year ended December 31, 2016 consists of revenue earned under the Royalty Sharing Agreement.Research and Development ExpenseResearch and development expenses were $60.1 million for the year ended December 31, 2017, compared to $83.5 million for the year endedDecember 31, 2016. The decrease was driven primarily by lower clinical study costs associated with the completion of our Phase 3 program foromadacycline. This decrease is partially offset by higher employee compensation costs, NDA preparation and related user fees, and an increase in medicalaffairs activity.We anticipate that our research and development expenses will increase in future periods as a result of our Phase 2 UTI program, augmenting ourmedical affairs team prior to our anticipated launch of omadacycline, if approved by the FDA, building up commercial supply, expanding our manufacturingcapacity, and securing secondary suppliers to ensure a robust supply chain for the years beyond launch. General and Administrative Expense General and administrative expenses were $37.0 million for the year ended December 31, 2017, compared to $26.4 million for the year endedDecember 31, 2016. The increase was driven primarily by higher employee compensation costs as we continue to expand our commercial team, costsassociated with pre-commercial activities, and business development efforts.We anticipate that our general and administrative expenses will increase in future periods as we prepare for commercial launch of omadacycline and, ifapproved in the U.S., to support commercialization efforts. Impairment of Intangible AssetsWe recorded an impairment charge of $0.7 million during the year ended December 31, 2017. No such impairment was recorded during the year endedDecember 31, 2016. The impairment charge was recorded in connection with an expected decline in Intermezzo sales.65 Changes in Fair Value of Contingent ObligationsDuring the years ended December 31, 2017 and 2016, we recorded a $0.6 million decrease and $0.3 million decrease, respectively, in the fair value ofour contingent obligation to former Transcept stockholders. The decrease in the fair value of our contingent obligation reflects a corresponding decline inprojected Intermezzo sales.Other Income and Expenses Interest expense for the year ended December 31, 2017 represents interest incurred on the Loan Agreement, as amended, of $4.9 million and the netamortization of our marketable securities of $0.2 million. Interest income for the year ended December 31, 2017 represents interest earned on our moneymarket funds and marketable securities of $1.4 million. Interest expense for the year ended December 31, 2016 represents interest incurred on the LoanAgreement, as amended, of $2.6 million as well as net amortization of our marketable securities of $0.6 million. Interest income for the year ended December31, 2016 represents $1.0 million of interest earned on our money market funds and marketable securities.Comparison of the Years Ended December 31, 2016 and 2015 Year Ended December 31, (in thousands) 2016 2015 Change Revenue Royalty revenue $29 $— $29 Total revenue 29 — 29 Operating expenses: Research and development 83,460 50,765 32,695 General and administrative 26,400 19,988 6,412 Impairment of intangible assets — 2,860 (2,860)Changes in fair value of contingent consideration (345) (3,560) 3,215 Total operating expenses 109,515 70,053 39,462 Loss from operations (109,486) (70,053) (39,433)Other income and expenses: Interest income 1,069 — 1,069 Interest expense (3,223) (770) (2,453)Other (losses) and gains, net 4 (37) 41 Net loss $(111,636) $(70,860) $(40,776) RevenueRevenue for the year ended December 31, 2016 consists of revenue received under the Royalty Sharing Agreement. We did not earn revenue duringthe year ended December 31, 2015. Research and Development Expense The increase in research and development expense for the year ended December 31, 2016 was primarily the result of our ongoing clinical developmentof omadacycline. During the year ended December 31, 2016, we incurred approximately $43.8 million in expense associated with Phase 3 studies for thetreatment of ABSSSI and CABP, including an oral-only Phase 3 study, which represents an increase of $19.6 million compared to $24.2 million in the sameperiod in prior year. This increase is associated primarily with strong enrollment performance in both the ABSSSI and CABP registration studies andinitiation of a Phase 3 ABSSSI oral-only study, resulting in an increased recognition of expenses related to study start-up, CRO fees, investigator fees, andcosts associated with clinical sites and laboratories. We also incurred $9.6 million in production costs for omadacycline registration batches andmanufacturing process validation work, which represents a decrease of $0.9 million compared to the same period in prior year. In addition, we incurred $20.4million in costs related to omadacycline research and development activities, including Phase 1 studies, and $9.7 million in salaries and benefits, includingstock-based compensation, which represents an increase of $9.5 million and $4.5 million, respectively, compared to the same period in prior year. 66 General and Administrative Expense The increase in general and administrative costs for the year ended December 31, 2016 was primarily due to growth in our corporate infrastructure tosupport a public company. Salaries and benefits, including stock-based compensation, increased $6.4 million for the year ended December 31, 2016.Impairment of Intangible Assets We recorded impairment charges of $2.9 million against our intangible assets, Intermezzo and TO-2070 product rights, during the year endedDecember 31, 2015. Intermezzo products rights were impaired by $2.8 million as a result of the outcome of litigation that invalidated several Intermezzopatents as obvious and triggered an evaluation of the carrying value and related contingent liability in light of an expected decline in Intermezzo sales. TO-2070 product rights were impaired by $0.1 million due to significant uncertainty concerning the ability of Shin Nippon Biomedical Laboratories Ltd., orSNBL, to find a potential partner to co-develop the rights as of December 31, 2015 and triggered an evaluation of the carrying value and related contingentliability. Refer to Note 8, Intangible Assets, Net, in the accompanying notes to the consolidated financial statements for additional information. No suchimpairment was recorded during the year ended December 31, 2016.Changes in Fair Value of Contingent Obligations We recorded a $0.3 million reduction in the fair value of our contingent obligations to former Transcept stockholders during the year ended December31, 2016. A decrease of $0.2 million is attributable to the results of lower projected future sales of the Intermezzo product due to generic market entry. Theremainder is due to the elimination of the contingent obligation for the TO-2070 license rights, as no payments were received by us pursuant to thetermination of the license agreement with the Company entered into with SNBL, or SNBL License Agreement, prior to the second anniversary of the Merger. The reduction in fair value of contingent obligation of $3.6 million for the year ended December 31, 2015 was identified in conjunction with theoutcome of litigation that invalidated several Intermezzo patents as obvious and triggered an evaluation of the carrying value of the Intermezzo productrights and related contingent obligations in light of an expected decline in Intermezzo sales. In addition, during the fourth quarter, we were made aware of theunlikelihood that SNBL will find a potential partner to co-develop the TO-2070 license rights. This significant uncertainty triggered an evaluation of thecarrying value of the TO-2070 product rights and related contingent obligation to former Transcept stockholders.Other Income and Expenses Interest income represents $1.0 million of interest earned on our money market funds and marketable securities during the year ended December 31,2016. We began investing in marketable securities during the year ended December 31, 2016. Interest expense, net for the year ended December 31, 2016represents a full year of interest incurred on the Term Loan, as defined in Note 14, Long-term Debt, and the Loan Agreement amendments entered into enteredinto with Hercules on September 30, 2015 and December 12, 2016, respectively, of $2.6 million as well as net amortization of our marketable securities of$0.6 million. Interest expense for the year ended December 31, 2015 represents the accretion of interest expense on the Intermezzo Reserve plus three monthsof interest incurred on the Term Loan.Liquidity and Capital Resources We completed an underwritten offering on May 5, 2015 of 3,089,000 shares of our common stock at a public offering price of $24.50 per share, whichincluded 229,000 shares of our common stock issued upon the exercise, in part, by the underwriters of an option to purchase additional shares. The netproceeds received by us, after underwriting discounts and commissions and other offering expenses, were $70.4 million. We also completed an underwrittenoffering on June 27, 2016 of 4,887,500 shares of our common stock at a public offering price of $13.00 per share, which included 637,500 shares of ourcommon stock issued upon the exercise, in full, by the underwriters of an option to purchase additional shares. The net proceeds received by us, afterunderwriting discounts and commissions and other estimated offering expenses, were $59.3 million.On September 30, 2015, we entered into a Loan and Security Agreement, or the Loan Agreement, with Hercules Technology II, L.P. and HerculesTechnology III, L.P, together, Hercules, and certain other lenders and Hercules Technology Growth Capital, Inc. (as agent). We executed three amendments tothe Loan Agreement subsequent to September 30, 2015, providing access to term loans with an aggregate principal amount of up to $60.0 million. As ofDecember 31, 2017, we have drawn down on the full $60.0 million available to us. The last amendment executed in June 2017 extended the date on whichwe are required to begin making monthly principal installments from January 1, 2019 to January 1, 2020, subject to our receipt of marketing approval for ourlead product candidate, omadacycline, or the Interest Only Period Extension Event. Beginning on January 1, 2019, or, if we achieve the Interest67 Only Period Extension Event, beginning on January 1, 2020, we will make payments in equal monthly installments of principal and interest, with the balanceof outstanding loans due on the original maturity date of the Loan Agreement, as amended. To date, we have issued to each of Hercules Technology II, L.P.and Hercules Technology III, L.P., a warrant to purchase 16,346 shares of our common stock (32,692 shares of common stock in total) at an exercise price of$24.47 per share and a warrant to purchase 18,574 shares of our common stock (37,148 shares of common stock in total) at an exercise price of $13.46 pershare. We also have issued a warrant to Hercules Capital, Inc. that is exercisable for an aggregate of 5,374 shares of our common stock at an exercise price of$23.26 per share.In October 2015 and February 2017, we entered into Controlled Equity OfferingSM Sales Agreements, or the 2015 Sales Agreement and 2017 SalesAgreement, respectively, with Cantor Fitzgerald & Co., or Cantor, under which we could, at our discretion, from time to time sell shares of our common stock,with a sales value of up to $50.0 million under each Sales Agreement through Cantor. We provided Cantor with customary indemnification rights, and Cantorwas entitled to a commission at a fixed rate of 3% of the gross proceeds per share sold. Sales of the shares of our common stock under the Sales Agreementswere to be made in transactions deemed to be “at the market offerings”, as defined in Rule 415 under the Securities Act. We have sold all $50.0 million ofshares of our common stock under the 2015 Sales Agreement. We received $36.9 million in proceeds, after deducting commissions of $1.1 million, from thesale of 2,326,119 shares of common stock under the 2015 Sales Agreement during the year ended December 31, 2017. We received $47.7 million in proceeds,after deducting commissions of $1.5 million, from the sale of 2,102,315 shares of common stock, as of February 28, 2018, under the 2017 Sales Agreement.As of February 28, 2018, no amount remains available for sale under the 2015 Sales Agreement and $0.8 million remains available for sale under the 2017Sales Agreement.On December 12, 2016, we filed a registration statement on Form S-3 with the SEC, which was declared effective on December 20, 2016, to sell certainof our securities in an aggregate amount of up to $225.0 million. Additionally, on December 2, 2017, we filed a registration statement on Form S-3 with theSEC, which was declared effective on December 8, 2017, to sell certain of our securities in an aggregate amount of up to $250.0 million.On October 16, 2015, we filed a registration statement on Form S-3 with the SEC, which was declared effective on October 29, 2015, to sell certain ofour securities in an aggregate amount of up to $100.0 million. Under this shelf registration statement, we completed an underwritten offering on January 22,2018 of 3,205,128 shares of our common stock, resulting in total proceeds of $50.0 million. Offering expenses incurred were approximately $0.2 million.We have used and we intend to continue to use the net proceeds from the above offerings, as well as the Loan Agreement as amended, together withour existing capital resources, to fund our ongoing and future clinical studies of omadacycline, to fund commercial launch readiness, and for working capitaland other general corporate purposes. As of December 31, 2017, we had cash, cash equivalents and marketable securities of $151.7 million.The following table summarizes our cash provided by and (used in) operating, investing and financing activities (in thousands): Year Ended December 31, 2017 2016 2015 Net cash used in operating activities $(78,574) $(94,098) $(54,682)Net cash used in investing activities (42,002) (74,757) (603)Net cash provided by financing activities 103,030 90,515 90,731Operating ActivitiesCash used in operating activities for the year ended December 31, 2017 of $78.6 million is primarily the result of our $89.1 million net loss, $4.2million increase in accounts payable and accrued expenses due to completion of our Phase 3 IV-to-oral CABP study and end of enrollment in our Phase 3oral-only study in ABSSSI and a $4.8 million decrease in prepaid expenses mainly associated with the clinical development of omadacycline. This is offsetpartially by a $0.8 million decrease in other liabilities and other assets due to the cancellation of a VAT letter of credit during 2017. The remainder representsthe net impact of $18.7 million in non-cash items, including $18.2 million in depreciation, amortization and stock-based compensation expense, $0.4million in non-cash interest expense, a $0.7 million impairment charge and decrease in fair value of contingent consideration of $0.6 million. Cash used in operating activities for the year ended December 31, 2016 of $94.1 million is primarily the result of our $111.6 million net loss offset inpart by a $2.1 million increase in accounts payable and accrued expenses, and a $5.0 million decrease in prepaid expenses mainly associated with the clinicaldevelopment of omadacycline, and a net decrease in the Intermezzo reserve of $2.4 million representing final payout, with the exception of unpaid legal fees,on the second anniversary of the Merger. The remainder represents the net impact of $13.0 million in non-cash items, including $13.1 million indepreciation, amortization and stock-based compensation expense, $0.2 million in non-cash interest expense, and a $0.3 million decrease in contingentobligations to former Transcept stockholders.68 Cash used in operating activities for the year ended December 31, 2015 of $54.7 million is primarily the result of our $70.9 million net loss offset inpart by a $14.0 million increase in accounts payable and accrued expenses mainly associated with the clinical development of omadacycline. The remainderof the increase represents the net impact of $5.6 million in non-cash items, offset by a $3.6 million reduction in contingent obligations to former Transceptstockholders. Investing Activities Cash used in investing activities for the ended December 31, 2017, is primarily the result of purchasing $180.3 million of short-term marketablesecurities (U.S. treasury and government agency securities) and $1.4 million of fixed asset purchases, offset by proceeds by sales and maturities of marketablesecurities of $138.7 million, $0.3 million of fixed asset disposals, and a decrease in restricted cash of $0.7 million. Cash used in investing activities for the ended December 31, 2016, is primarily the result of purchasing $135.8 million of short-term marketablesecurities (U.S. treasury and government agency securities), partially offset by proceeds by maturities of marketable securities of $60.1 million. The remainderrepresents an increase in restricted cash of $1.6 million offset by $0.7 million of fixed asset purchases. Net cash used in investing activities for the year ended December 31, 2015 is the result of purchases of fixed assets and a decrease in restricted cashrepresenting payments made from the Intermezzo Reserve.Financing ActivitiesNet cash provided by financing activities for 2017 is primarily comprised of the following: •$82.8 million from the sale of 4,332,126 shares of common stock under the 2015 and 2017 Sales Agreements with Cantor; •$19.9 million, net of issuance costs, on the Hercules Loan Agreement, as amended; and •$0.3 million in proceeds from the exercise of stock options. Net cash provided by financing activities for 2016 is primarily comprised of the following: •$59.3 million from an underwritten offering of 4,887,500 shares of common stock; •$11.6 million from the sale of 860,014 shares of common stock under the 2015 Sales Agreement with Cantor; and •$19.6 million, net of issuance costs, on the Hercules Term Loan. Net cash provided by financing activities for 2015 is primarily comprised of the following •$70.4 million from an underwritten offering of 3,089,000 shares of common stock; •$19.2 million, net of issuance costs, on the Hercules Term Loan beginning in the fourth quarter of 2015; and •$1.0 million in proceeds received from the sale of 44,782 shares of common stock to Hercules.Future Funding RequirementsWe have not generated any revenue from product sales. We do not know when, if ever, we will generate any revenue from product sales. We do notexpect to generate any revenue from product sales unless and until either we or either of our partners, Allergan or Zai, obtain regulatory approval of andcommercialize one or more of our product candidates. Subject to obtaining regulatory approval of any of our product candidates, we anticipate that we willneed substantial additional funding in connection with our continuing operations to support pre-launch and commercial activities associated with our leadproduct candidate, omadacycline.We have not obtained regulatory approval of any product candidates. We expect to continue to incur significant expenses and increasing operatinglosses for the foreseeable future as we: •conduct additional clinical trials of omadacycline; •seek regulatory approvals for omadacycline;69 •establish a sales, marketing and distribution infrastructure and increases to our manufacturing demand and capabilities to commercializeomadacycline; and add personnel to support our product development and planned commercialization efforts.Based upon our current operating plan, we anticipate that our cash, cash equivalents and available for sale securities of $151.7 million as of December31, 2017 as well as the $50.0 million in proceeds from our January 2018 public offering of common stock, future contingent regulatory and commercialmilestone payments from our collaborations with Allergan and Zai, anticipated extension of our interest-only period for the Hercules Term Loan as defined inNote 14, Long-term Debt, and estimated omadacycline product sales will enable us to fund our operating expenses and capital expenditure requirements intolate 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than wecurrently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, and theunknown extent to which we will enter into collaborations with third parties to participate in the development and commercialization of our productcandidates, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures associated with our current andanticipated clinical trials. Our future capital requirements will depend on many factors, including: •the progress of clinical development of omadacycline; •the number and characteristics of other product candidates that we pursue; •the scope, progress, timing, cost and results of research, preclinical development and clinical trials; •the costs, timing and outcome of seeking and obtaining FDA and non-U.S. regulatory approvals; •the costs associated with manufacturing and establishing sales, marketing and distribution capabilities; •our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any paymentswe may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual propertyrights; •our need and ability to hire additional management, scientific and medical personnel; •the effect of competing products that may limit market penetration of our product candidates; •our need to implement additional internal systems and infrastructure, including financial and reporting systems; and •the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing or otherarrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under thesearrangements.Until we can generate a sufficient amount of product revenue to finance our cash requirements, we expect to finance our future cash needs primarilythrough a combination of public and private equity offerings, debt or other structured financings and strategic collaborations. We do not have any committedexternal sources of funds other than contingent milestone payments and royalties under the Allergan Collaboration Agreement and the Zai CollaborationAgreement, which are terminable by Allergan and Zai, respectively, upon prior written notice. To the extent that we raise additional capital through the saleof equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation orother preferences that adversely affect stockholders’ rights. Additional debt financing, if available, may involve agreements that include covenants limitingor restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additionalfunds through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may haveto relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not befavorable 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 orterminate our product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer todevelop and market ourselves.Off-Balance Sheet ArrangementsAs of December 31, 2017, we do not have any off-balance sheet arrangements.70 Critical Accounting Policies and Significant Judgments and EstimatesOur management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have beenprepared in accordance with generally accepted accounting principles of the United States of America. The preparation of these financial statements requiresus to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilitiesin our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to, among other items, intangible assets,goodwill, contingent liabilities, stock-based compensation arrangements, clinical accruals, useful lives for depreciation and amortization of long-lived assetsand valuation allowances on deferred tax assets. Actual results could differ from those estimates. We base our estimates on historical experience and onvarious other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carryingvalue of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions orconditions.While our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies, to the consolidatedfinancial statements included in Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K, we believe that the followingaccounting policies are the most critical to assist stockholders and investors reading the consolidated financial statements in fully understanding andevaluating our financial condition and results of operations.Revenue RecognitionWe enter into product development agreements with collaborators for the research and development of therapeutic products. The terms of theseagreements may include nonrefundable signing and licensing fees, funding for research, development and manufacturing, milestone payments, and royaltieson any product sales derived from collaborations. We assess these multiple elements in accordance with the Financial Accounting Standards Board, or FASBASC 605 Revenue Recognition, in order to determine whether particular components of the arrangement represent separate units of accounting.Deliverables under the arrangement will be separate units of accounting provided that a delivered item has value to the customer on a stand-alonebasis and if the arrangement does not include a general right of return relative to the delivered item and delivery or performance of the undelivered item isconsidered probable and substantially in the control of the vendor. The fair value of deliverables under the arrangement may be derived using a best estimateof selling price if vendor-specific objective evidence and third-party evidence are not available.We recognize upfront license payments as revenue upon delivery of the license only if the license has stand-alone value and the fair value of theundelivered performance obligations can be determined. If the fair value of the undelivered performance obligations could be determined, such obligationsare accounted for separately as the obligations are fulfilled. If the license is considered to either not have stand-alone value or have stand-alone value but thefair value of any of the undelivered performance obligations cannot be determined, the arrangement is accounted for as a single unit of accounting, and thelicense payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations will beperformed.Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we determine the period over which theperformance obligations will be performed and revenue will be recognized. If we are not able to reasonably estimate the timing and the level of effort tocomplete our performance obligations under an arrangement, then we recognize revenue under the arrangement on a straight-line basis over the period thatwe expected to complete our performance obligations, which is reassessed at each subsequent reporting period.We also adopted guidance that permits the recognition of revenue contingent upon the achievement of a milestone in its entirety, in the period inwhich the milestone is achieved, only if the milestone meets certain criteria and is considered to be substantive. As such, we plan to recognize revenue in theperiod in which the milestone is achieved, only if the milestone is considered to be substantive based on the following criteria: a.The milestone is commensurate with either of the following:The vendor’s performance to achieve the milestone.The enhancement of the value of the delivered item or items as a result of a specific outcome resulting from the vendor’s performance to achieve themilestone. b.The milestone relates solely to past performance. c.The milestone is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within thearrangement.71 We also record deferred revenue when payments are received in advance of the culmination of the earnings process. This revenue is recognized infuture periods when the applicable revenue recognition criteria have been met.Allergan plcWe determined whether the performance obligations under the collaborative research and license agreement, we entered into with Allergan, or theAllergan Collaboration Agreement, could be accounted for separately or as a single unit of accounting. We determined that the license, participation onsteering committees and research and development services performance obligations during the research period of the Allergan Collaboration Agreementrepresented a single unit of accounting. As we could not reasonably estimate its level of effort, we recognized revenue from the upfront payment, milestonepayment and research and development services payments using the contingency-adjusted performance model over the expected development period. Thedevelopment period was completed in June 2010. Under this model, when a milestone was earned or research and development services were rendered,revenue was immediately recognized on a pro-rata basis in the period the milestone was achieved or services were delivered based on the time elapsed fromthe effective date of the agreement. Thereafter, the remaining portion was recognized on a straight-line basis over the remaining development period. Wehave determined that each potential future clinical, regulatory and commercialization milestone is substantive. In making this determination, pursuant to theaccounting guidance on revenue recognition for milestone payments, we considered and concluded that each individual milestone: (i) relates solely to thepast performance of the intellectual property to achieve the milestone; (ii) is reasonable relative to all of the deliverables and payment terms in thearrangement; and (iii) is commensurate with the enhanced value of the intellectual property as a result of the milestone achievement. As our obligationsunder this arrangement have been completed, all future milestones, which are all considered substantive, will be recognized as revenue when achieved.Also, at our discretion, we may provide manufacturing process development services to Allergan in exchange for full-time equivalent based costreimbursements. We determined that the manufacturing process development services are considered a separate unit of accounting as (i) they are set at ourdiscretion, (ii) they have stand-alone value, as these services could be performed by third parties, and (iii) the full-time equivalent rate paid for such servicesrendered is considered fair value. Therefore, we recognize cost reimbursements for manufacturing process development services as revenue as the services areperformed.During the year ended December 31, 2017, we recognized revenue of $5.0 million as a milestone payment earned from Allergan upon NDAsubmission of sarecycline to the FDA. No such revenue was recognized for the year ended December 31, 2016.Zai Lab (Shanghai) Co., Ltd.During the year ended December 31, 2017, we entered into the Zai Collaboration Agreement, pursuant to which Paratek Bermuda Ltd. granted Zai anexclusive license to develop, manufacture and commercialize omadacycline in the People’s Republic of China, Hong Kong, Macau and Taiwan for all humantherapeutic and preventative uses other than biodefense. Zai is responsible for the development, manufacturing and commercialization of the licensedproduct in the Zai Territory, at its sole cost with certain assistance from Paratek Bermuda Ltd. Refer to Note 4, License and Collaboration Agreements, forfurther details surrounding the Zai Collaboration Agreement.We evaluated the Zai Collaboration Agreement under ASC Subtopic 605-25, “Multiple Element Arrangements”. We determined that there were fivedeliverables under the Zai Collaboration Agreement: (i) an exclusive license to develop, manufacture and commercialize omadacycline in the Zai Territory;(ii) an initial transfer of technology; (iii) a transfer of certain materials and materials know-how (iv) an additional transfer of materials; and (v) participationon a joint steering committee, or JSC, and joint development committee, or JDC. We determined that all five deliverables listed above had value to us on astand-alone basis and therefore five units of accounting were identified. We determined, however, that the best estimate for the selling price of the initialtransfer of technology, transfer of certain materials and materials know-how, the additional transfer of materials and participation on the JSC and JDC were allinconsequential. As such, we recognized the total arrangement consideration as revenue during the year ended December 31, 2017. Under the ZaiCollaboration Agreement, Zai will pay taxes incurred in the Zai Territory by us on our behalf and deduct these taxes from the payments due to us.Withholding and other value-added taxes of $0.8 million were incurred on the $7.5 million upfront payment. As such, we received $6.7 million, net of taxes,during the year ended December 31, 2017. These taxes were paid by Zai on behalf of us.72 Purdue Pharma L.P.On October 28, 2016, in satisfaction of our payment obligation of the proceeds of sale or disposition of the Intermezzo assets to the former Transceptstockholders under the Merger Agreement, we executed a royalty sharing agreement, or the Royalty Sharing Agreement, with the Special Committee of ourBoard of Directors, a committee established in connection with the Merger. Under the Royalty Sharing Agreement, we agreed to pay to the former Transceptstockholders fifty percent of all royalty income received by us pursuant to the Purdue Collaboration Agreement, net of all costs, fees and expenses incurredby us in connection with the Purdue Collaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income tothe Transcept stockholders. We recognize all royalty income received from Purdue Pharma upon the sale of Intermezzo.For the years ended December 31, 2017 and 2016, we recognized $0.1 million and $29,000, respectively, of royalty revenue from our PurdueCollaboration Agreement. No royalty revenue was recognized for the years ended December 31, 2015 and 2014. We will continue to recognize royaltyrevenue upon the sale of the relevant products, provided there are no remaining performance obligations under the arrangement.We did not enter into any significant multiple element arrangements during the years ended December 31, 2016 and 2015. We did not materiallymodify any of our other existing multiple element arrangements during the years ended December 31, 2017, 2016 or 2015.Marketable Securities We consider all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cashequivalents include cash held in banks and amounts held primarily in interest-bearing money market accounts. Cash equivalents are carried at cost, whichapproximates their fair market value. We determine the appropriate classification of marketable securities at the time of purchase and reevaluate such designation at each balance sheetdate. We classified all of our marketable securities at December 31, 2017 as “available-for-sale” pursuant to ASC 320, Investments – Debt and EquitySecurities. Investments not classified as cash equivalents are presented as either short-term or long-term investments based on both their maturities as well asthe time period we intend to hold such securities. Available-for-sale securities are maintained by an investment manager and consist of U.S. treasury andgovernment agency securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses included in other comprehensiveincome (loss) as a component of stockholders’ equity until realized. Any premium or discount arising at purchase is amortized or accreted to interest expenseor income over the life of the instrument. Realized gains and losses are determined using the specific identification method and are included in other incomeor expense. There were no material realized gains or losses on marketable securities recognized for the years ended December 31, 2017 and 2016. We review marketable securities for other-than-temporary impairment whenever the fair value of a marketable security is less than the amortized costand evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairmentsof investments are recognized in the consolidated statements of operations and comprehensive loss if we have experienced a credit loss, has the intent to sellthe marketable security, or if it is more likely than not that we will be required to sell the marketable security before recovery of the amortized cost basis.Evidence considered in this assessment includes reasons for the impairment, compliance with our investment policy, the severity and duration of theimpairment and changes in value subsequent to the end of the period. There were no other-than-temporary impairments of investments recognized for theyears ended December 31, 2017 and 2016.Accrued ExpensesAs part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses. This process involvesreviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed for us and estimating thelevel of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. Themajority of our service providers invoice us periodically in arrears for services performed or when contractual milestones are met. We make estimates of ouraccrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. Weperiodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. Examples of estimated expenses include feespaid to: •CROs, in connection with clinical trials; •contract manufacturing organizations, or CMOs, with respect to clinical material supply;73 •vendors in connection with preclinical development and operational activities; and •legal and other professional service providers.We base our expenses on our estimates of the services received and efforts expended pursuant to contractual arrangements with CROs, professionalservice firms and other vendors. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in unevenpayment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment ofexpense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. Ifthe actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Although we donot expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differs fromthe actual status and timing of services performed, we may report amounts that are too high or too low in any particular period. To date, there have been nomaterial differences from our estimates to the amount actually incurred.Research and Development ExpensesWe charge costs of our research and development to expense as incurred. Research and development expenses consist of the costs incurred inperforming research and development activities, including personnel-related costs, stock-based compensation, facilities, research-related overhead, clinicaltrial costs, contracted services, manufacturing, license fees and other external costs. We account for nonrefundable advance payments for goods and servicesthat will be used in future research and development activities as expenses when the service has been performed or when the goods have been received ratherthan when the payment is made.Stock-Based CompensationWe account for our stock-based awards in accordance with ASC 718, Compensation—Stock Compensation, or ASC 718, which requires all stock-based payments to employees, including grants of employee stock options, modifications to existing stock options, and restricted stock unit awards, to berecognized as expense based on their fair values. We recognize the compensation cost of awards subject to performance-based vesting conditions over therequisite service period, to the extent achievement of the performance condition is deemed probable relative to targeted performance. If achievement of theperformance condition is not probable, but the award will vest based on the service condition, we recognize the expense over the requisite service period. Weaccount for stock-based awards to non-employees using the fair value method on a straight-line basis over the associated service period of the award inaccordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees.We estimate the fair value of our stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requiresthe input of highly subjective assumptions, including (1) the expected volatility of our stock, (2) the expected term of the award, (3) the risk-free interest rateand (4) expected dividends. Due to the lack of a public market for our common stock prior to the completion of the Merger on October 30, 2014, andresulting lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of agroup of similar companies that are publicly traded. For these analyses, we have selected companies with characteristics that we believe are comparable toours, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life ofthe stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies' shares during the equivalentperiod as the calculated expected term of our stock-based awards. During 2015, we began to blend our stock price history, for the length of time we havemarket data for our stock, with the historical volatility of the group of similar public companies for the expected term of each grant to estimate volatility. Wehave estimated the expected life of our employee stock options as the average of the midpoints between vesting exercise date for each vesting-trance and thecontractual term of the options as the last available exercise date of the option. The risk-free interest rates for periods within the expected life of the option arebased on the U.S. Treasury yield curve in effect during the period the options were granted.As of January 1, 2017, we adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-BasedPayment Accounting, or ASU 2016-09. In connection with the adoption, we made an accounting policy change. Prior to adoption, we estimated forfeitures atthe time of grant and revised those estimates in subsequent periods if actual forfeitures differed from the estimates. We used historical data to estimate pre-vesting option forfeitures to the extent that actual forfeitures differed from our estimates, the difference was recorded as a cumulative adjustment in the periodthe estimates were revised. Upon adoption, we recognize the effect of forfeitures in compensation cost when they occur. We recorded a cumulative-effectcatch-up adjustment to equity of $0.7 million upon adoption. See Note 2, Summary of Significant Accounting Policies, to our consolidated financialstatements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for a description of recentaccounting pronouncements applicable to our business.74 Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by us as of the specifiedeffective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact onour financial position or results of operations upon adoption. Between May 2014 and May 2016, the FASB issued three ASUs changing the requirements for recognizing and reporting revenue, or together, hereinreferred to as the Revenue ASUs: (i) ASU No. 2014-09, Revenue from Contracts with Customers, or ASU 2014-09, (ii) ASU No. 2016-08, Principal versusAgent Considerations (Reporting Revenue Gross versus Net), or ASU 2016-08, and (iii) ASU No. 2016-12, Narrow-Scope Improvements and PracticalExpedients, or ASU 2016-12. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improvethe operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedientsand improvements on the previously narrow scope of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts withCustomers (Topic 606): Deferral of the Effective Date, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years,and interim periods within, beginning after December 15, 2017. All subsequent ASUs related to ASU 2014-09, including ASU 2016-08 and ASU 2016-12,assumed the deferred effective date enforced by ASU 2015-14. Early adoption of the Revenue ASUs is permitted for annual periods, and interim periodswithin, beginning after December 15, 2016. A reporting entity may apply the amendments in the Revenue ASUs using either a modified retrospectiveapproach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. The Company adopted ASC 606, Revenue from Contracts with Customers, or ASC 606, as of January 1, 2018 using the full retrospective approach.The Company is evaluating the complete impact of the adoption of ASC 606 on its consolidated financial position and results of operations and currentlydoes not expect ASC 606 to have a material impact on revenue previously recognized under the Company’s Allergan, Zai and Purdue CollaborationAgreements. The Company implemented appropriate changes to its internal controls to support revenue recognition, including controls to monitor theprobability of achievement of contingent milestone payments, and additional revenue-related disclosures under the new standard. Upon adoption of ASC 606, the accounting for contingent milestone payments under the Company’s collaboration agreements changed. ASC 606does not contain guidance specific to milestone payments, thereby requiring contingent milestone payments to be considered in accordance with the overallmodel of ASC 606 as variable consideration. Revenue from contingent milestone payments may be recognized earlier under ASC 606 than under ASC605, Revenue Recognition, based on an assessment at each reporting date of the probability of achievement of the underlying milestone event. Thisassessment may, in certain circumstances, result in the recognition of revenue related to a contingent milestone payment before the milestone event has beenachieved. The Company will recognize all future milestone payments in accordance with ASC 606. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendment requires a lessee to recognize assets and liabilities forleases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term. This ASU is effective for fiscal years beginning after December15, 2018, including those interim periods within those fiscal years. We are currently evaluating the impact the adoption of the ASU will have on ourconsolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), which simplifies certain elements of cash flowclassification. The new standard clarifies certain aspects of the statement of cash flows, including the classification of contingent consideration paymentsmade after a business combination and several other clarifications not currently applicable to the Company. The new standard also clarifies that an entityshould determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cashflows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, theappropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The ASU is effective forannual periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on our consolidated statements ofcash flows upon adoption. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, or ASU 2016-16. The amendments in ASU2016-16 require an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory at the time that the transfer occurs.Current guidance does not require recognition of tax consequences until the asset is eventually sold to a third party. ASU 2016-16 is effective for fiscal years,and interim periods within, beginning after December 15, 2017. Early adoption is permitted as of the first interim period presented in a year. A reportingentity must apply the amendments in75 ASU 2016-16 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year ofadoption. We are evaluating the impact of the adoption of ASU 2016-16 on January 1, 2018 to our consolidated financial position and results of operations.We do not expect the adoption of ASU 2016-16 to have a material impact on our consolidated financial position or results of operations. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, or ASU 2016-18. The amendments in ASU 2016-18 require an entity toreconcile and explain the period-over-period change in total cash, cash equivalents and restricted cash within its statements of cash flows. ASU 2016-18 iseffective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted. A reporting entity must apply theamendments in ASU 2016-18 using a full retrospective approach. We expect the adoption to have an impact on our consolidated statement of cash flows as,upon adoption, it will include our restricted cash balance in the cash and cash equivalents reconciliation of operating, investing and financing activities. In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, or ASU 2017-04. The amendments in ASU 2017-04 eliminate the current two-step approach used to test goodwill for impairment and require an entity to apply a one-step quantitative test and record theamount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated tothe reporting unit. ASU 2017-04 is effective for fiscal years, including interim periods within, beginning after December 15, 2019 (upon the first goodwillimpairment test performed during that fiscal year). Early adoption is permitted for interim or annual goodwill impairment tests performed on testing datesafter January 1, 2017. A reporting entity must apply the amendments in ASU 2017-04 using a prospective approach. We do not expect the adoption of ASU2017-04 to have a material impact to our consolidated financial position or results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope Modification Accounting. The new standardis intended to reduce the diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of ashare-based payment award. The new standard will be effective beginning January 1, 2019. The adoption of this standard is not expected to have a materialimpact on our consolidated financial position or results of operations upon adoption.Contractual Obligations and CommitmentsThe following table summarizes our contractual obligations as of December 31, 2017 and the effect such obligations are expected to have on ourliquidity and cash flow in future years (in thousands): Total Less than1 year 1 to 3years 3 to 5years More than5 years Operating lease obligations $5,804 $1,084 $3,298 $1,422 $— Licenses 275 25 50 50 150 Long-term debt 60,000 — 60,000 — Total contractual cash obligations $66,079 $1,109 $63,348 $1,472 $150 LeasesWe lease our Boston, Massachusetts and King of Prussia, Pennsylvania office spaces under non-cancelable operating leases expiring in 2021 and2024, respectively.We entered into the original King of Prussia and Boston leases in January 2015 and April 2015, respectively. The lease terms under the originalagreements were for six and four years, respectively. Each agreement had one renewal option for an extended term. The King of Prussia and Boston leaseterms under the original agreements began in June 2015 and July 2015, respectively. We executed an amended lease agreement on our Boston office space in July 2016. The amended lease agreement added 4,153 rentable square feet ofoffice space and extended the original lease term by two years. The total revised lease commitment of $3.4 million is over a remaining four-year lease term. Inaccordance with the amended lease agreement, we paid a security deposit of $0.1 million. We are required to make additional payments under the facilityoperating leases for taxes, insurance, and other operating expenses incurred during the lease period. In addition, the lease provided an incentive from thelandlord of up to $0.2 million in tenant improvements. We capitalized all leasehold improvements as fixed assets. Accordingly, we also recorded a relatedfinancing obligation in “other long-term liabilities” on our consolidated balance sheet. These amounts will be treated as a reduction to rent expense over thelease term. Subsequent to the amended lease agreement, we will record monthly rent expense of approximately $54,000 for the Boston office space. 76 We executed an amended lease agreement on our King of Prussia office space in October 2016. The amended lease agreement is for 19,708 rentablesquare feet of office space, for a total commitment of $3.3 million with respect to which lease payments became due beginning once we took control of suchoffice space during the first quarter of 2017. The total lease commitment is over a seven-year and seven-month lease term. The amended lease agreementcontains rent escalation and a partial rent abatement period, which is accounted for as rent expense under the straight-line method. We are required to makeadditional payments under the facility operating leases for taxes, insurance, and other operating expenses incurred during the operating lease period.LicensesUnder a license agreement with Tufts University, or Tufts, we are required to make aggregate regulatory milestone payments of up to $300,000associated with the first Phase 3 clinical trials, filing of an NDA, and approval of its first product candidate, $150,000 of which has been paid. We are alsoobligated to pay Tufts a minimum royalty payment in the amount of $25,000 per year. We also agreed to pay Tufts royalties based on gross sales of products,as defined in the agreement, ranging in the low single digits depending on the applicable field of use for such product sale. Also, if we enter into a sublicenseunder the agreement, based on the applicable field of use for such product, we agreed to pay Tufts a percentage, ranging from 10% to 14 % (ten percent tofourteen percent) for compounds other than omadacycline, and a percentage in the single digits for the compound omadacycline, of that portion of anysublicense issue fees or maintenance fees received by us that are reasonably attributable to the sublicense of the rights granted to us under the Tufts LicenseAgreement and the lesser of a percentage, ranging from the low tens to the high twenties based on the applicable field of use for such product, of the royaltypayments made to us by the sublicensee or the amount of royalty payments that would have been paid by us to Tufts if we had sold the products. We paid asublicense issue fee in the low six figures to Tufts during the year ended December 31, 2017 upon earning the $7.5 million upfront payment under the ZaiCollaboration Agreement.In September 2009, we and Novartis International Pharmaceutical Ltd., or Novartis, entered into a Collaborative Development, Manufacture andCommercialization License Agreement, or the Novartis Agreement, which provided Novartis with a global, exclusive patent and technology license for thedevelopment, manufacturing and marketing of omadacycline. The Novartis Agreement was terminated by Novartis without cause in June 2011 and thetermination was effective 60 days later. We and Novartis subsequently entered in a letter agreement in January 2012, or the Novartis Letter Agreement, asamended, pursuant to which we reconciled shared development costs and expenses and granted Novartis a right of first negotiation with respect tocommercialization rights of omadacycline following approval of omadacycline from the FDA, EMA, or any regulatory agency, but only to the extent we hadnot previously granted such commercialization rights related to omadacycline to another third party as of any such approval. We also agreed to pay Novartisa 0.25% royalty based on annual net sales of our omadacycline products. The amended Novartis Letter Agreement resulted in a long-term liability in theamount of $3.6 million for the year ended December 31, 2017 and 2016 included within “Other Long-Term Liabilities” on our consolidated balance sheet.There are no other payment obligations to Novartis under either the Novartis Agreement or the amended Novartis Letter Agreement.Long-Term Debt On September 30, 2015, we entered into the Loan Agreement with Hercules and certain other lenders and Hercules Technology Growth Capital, Inc.(as agent). We executed three amendments to the Loan Agreement subsequent to September 30, 2015, providing access to term loans with an aggregateprincipal amount of up to $60.0 million. As of December 31, 2017, we have drawn down on the full $60.0 million available to us. The last amendmentexecuted in June 2017 extended the date on which we are required to begin making monthly principal installments from January 1, 2019 to January 1, 2020,subject to our receipt of marketing approval for our lead product candidate, omadacycline. Beginning on January 1, 2019, or, if we achieve the Interest OnlyPeriod Extension Event, beginning on January 1, 2020, we will make payments in equal monthly installments of principal and interest, with the balance ofoutstanding loans due on the original maturity date of the Loan Agreement, as amended.To date, we have issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P., a warrant to purchase 16,346 shares of our commonstock (32,692 shares of common stock in total) at an exercise price of $24.47 per share and a warrant to purchase 18,574 shares of our common stock (37,148shares of common stock in total) at an exercise price of $13.46 per share. We also have issued a warrant to Hercules Capital, Inc. that is exercisable for anaggregate of 5,374 shares of our common stock at an exercise price of $23.26 per share. As of December 31, 2017 and 2016, we have recorded a long-term debt obligation of $59.2 million, net of debt discount of $0.8 million and $39.0million, net of debt discount of $1.1 million, respectively. Debt issuance costs are presented on the consolidated balance sheet as a direct deduction from therelated debt liability rather than capitalized as an asset in accordance with ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifyingthe Presentation of Debt Issuance Costs, or ASU 2015-03.77 Contract Service ProvidersIn the course of normal business operations, we also have agreements with contract service providers to assist in the performance of research anddevelopment, clinical trials, manufacturing and other activities for operating purposes which are cancelable at any time by us, generally upon 30 days’ priorwritten notice. These payments are not included in this table of contractual obligations.We could also enter into additional collaborative research, contract research, manufacturing, supplier and contractor agreements in the future, whichmay require upfront payments and/or long-term commitments of cash.Commercial Supply AgreementsCIPANIn November 2016, we entered into a manufacturing and services agreement with CIPAN – Companhia Industrial Produtora de Antibióticos, or CIPAN.The agreement provides the terms and conditions under which CIPAN will manufacture and supply to us increased quantities of minocycline starting materialand crude omadacycline, or the CIPAN Products, for purification into omadacycline and, subsequently, for use in our products that contain omadacycline asthe active pharmaceutical ingredient. Under this agreement, we are obligated to pay a CIPAN Product price in the high three-digit U.S. Dollar range perkilogram for minocycline starting material and in the four-digit or five-digit U.S. Dollar range per kilogram for crude omadacycline, based on the annualvolume of crude omadacycline that we order, subject to adjustments as set forth in the agreement. CIPAN will also perform certain services related todevelopment, technology transfer and manufacturing of the CIPAN Products as provided in one or more statements of work, which shall set forth the feespayable by us to CIPAN for such services.Our agreement with CIPAN will remain in effect for a fixed initial term, after which the agreement will continue, with respect to each CIPAN Product,for successive renewal terms unless either we or CIPAN have given written notice of termination within a certain period prior to the expiration of either theinitial or then-current renewal term. The agreement may also be terminated under certain other circumstances, including by either party due to a materialuncured breach by the other party or the other party’s insolvency.CarbogenIn December 2016, we entered into an outsourcing agreement with CARBOGEN AMCIS AG, or Carbogen. The agreement provides for the terms andconditions under which Carbogen will manufacture and supply to us the active pharmaceutical ingredient for our omadacycline product in bulk quantities, orthe Carbogen Product. Under this agreement, we are responsible for the cost and supply of crude omadacycline that Carbogen requires to manufacture theCarbogen Products and perform related services. We are obligated to initially pay Carbogen an amount in the low seven-digit U.S. Dollar range per batch ofCarbogen Product that we order, depending on the size of the campaign, and the price may be adjusted in accordance with the terms of the agreement. Wemay also request that Carbogen perform certain services related to the Carbogen Product, for which we will pay reasonable compensation to Carbogen.Our agreement with Carbogen will remain in effect for a fixed initial term and both parties are obligated to use diligent efforts to come to a subsequentlong-term agreement to replace this agreement no later than the end of such initial term. If we have not executed a replacement agreement with Carbogen bysuch time, this agreement will automatically be extended for a fixed period of time. We may terminate this agreement by delivering notice of termination toCarbogen prior to the expiration of the initial or subsequent term. The agreement may also be terminated under certain other circumstances, including byeither party due to a material uncured breach by the other party or the other party’s insolvency.AlmacIn December 2016, we entered into a manufacturing and services agreement with Almac Pharma Services Limited, or Almac. The agreement providesfor the terms and conditions under which Almac will manufacture, package and supply to us omadacycline oral solid dosage tablets in bulk form, or theAlmac Products. Under this agreement, we are required to use commercially reasonable efforts to timely provide Almac with the active pharmaceuticalingredient needed to manufacture the Almac Products and perform related services. We are obligated to pay a supply price in the five-digit range in GreatBritain Pounds per batch of the Almac Products, subject to adjustments as provided in the agreement. We will also negotiate with Almac, as part of eachindividual scope of work, the reasonable costs for the services to be performed for us by Almac.78 Our agreement with Almac will remain in effect for a fixed initial term, after which the agreement will continue for successive renewal terms unlesseither we or Almac have given written notice of termination within a certain period prior to the expiration of the initial or then-current renewal term. Theagreement may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or the otherparty’s insolvency.PatheonIn July 2017, we entered into a master manufacturing services agreement and corresponding product agreement with Patheon UK Limited, orPatheon. The agreements provide for the terms and conditions under which Patheon will manufacture, package and supply to us, omadacycline in injectableform, or the Patheon Products. Under these agreements, we are required to deliver to Patheon the active pharmaceutical ingredient needed to manufacture thePatheon Products. We are obligated to pay a supply price in the six-digit dollar range per batch of the Patheon Products, subject to adjustments as provided inthe agreements. If our omadacycline product is approved, we will also be subject to an annual minimum purchase requirement in the six-digit euro range. Ifwe desire for Patheon to conduct additional services other than those expressly set forth in the agreements, those would be subject to additional fees.Our agreements with Patheon will remain in effect for a fixed initial term, after which they will continue for successive renewal terms unless either weor Patheon have given written notice of termination within a certain period prior to the expiration of the applicable initial or then-current renewal term. Theagreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach of the other party or theother party’s insolvency.Item 7A.Quantitative and Qualitative Disclosures About Market RiskWe do not enter into financial instruments for trading or speculative purposes. Our cash, cash equivalents and investments balance as of December 31,2017 consisted of cash and cash equivalents and U.S. treasury and government agency securities. The goals of our investment policy are preservation ofcapital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments withoutassuming significant risk. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of interest rates,particularly because our investments are in short-term marketable securities. Due to the short-term duration of our investment portfolio and the low-riskprofile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our portfolio. Wehave the ability and intention to hold our investments until maturity and, therefore, we would not expect our operating results or cash flows to be affected toany significant degree by the effect of a sudden change in market interest rates on our investment portfolio.We engage CROs and contract manufacturers on a global scale. We may be subject to fluctuations in foreign currency rates in connection with certainof these agreements. We currently do not hedge any such foreign currency exchange rate risk. Transactions denominated in currencies other than U.S. dollarsare recorded based on exchange rates at the time such transactions arise and were less than 10% of total liabilities as of December 31, 2017. 79 Item 8.Financial Statements and Supplementary Data Index to Financial Statements PageReports of Independent Registered Public Accounting Firms 81Consolidated Balance Sheets 83Consolidated Statements of Operations and Comprehensive Loss 84Consolidated Statements of Stockholders’ Equity 85Consolidated Statements of Cash Flows 86Notes to Consolidated Financial Statements 87 80 Report of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Paratek Pharmaceuticals, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Paratek Pharmaceuticals, Inc. (the Company) as of December 31, 2017 and 2016, therelated consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period endedDecember 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations andits cash flows for each of the two years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company'sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 6, 2018 expressed an unqualifiedopinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin 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 reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the 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 financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2016.Boston, MassachusettsMarch 6, 201881 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMThe Board of Directors and StockholdersParatek Pharmaceuticals, Inc.We have audited the accompanying consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows of ParatekPharmaceuticals, Inc. for the year ended December 31, 2015. Paratek Pharmaceuticals, Inc.’s management is responsible for these consolidated financialstatements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditprovides a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of the operations and cash flows ofParatek Pharmaceuticals, Inc. for the year ended December 31, 2015, in conformity with accounting principles generally accepted in the United States ofAmerica./s/ CohnReznick LLP Vienna, VirginiaMarch 9, 201682 Paratek Pharmaceuticals, Inc.Consolidated Balance Sheets(in thousands, except for share and par value) December 31, 2017 2016 Assets Current assets Cash and cash equivalents $35,416 $52,962 Marketable securities 116,307 75,076 Restricted cash 162 817 Accounts receivable 5,041 — Other receivables 848 323 Prepaid and other current assets 2,712 2,922 Total current assets 160,486 132,100 Long-term restricted cash 250 250 Fixed assets, net 1,711 1,188 Intangible assets, net 142 1,015 Goodwill 829 829 Other long-term assets 280 350 Total assets $163,698 $135,732 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $3,555 $4,418 Other accrued expenses 10,874 6,372 Accrued contract research 2,360 9,566 Current portion of Intermezzo reserve — 56 Total current liabilities 16,789 20,412 Long-term debt 59,186 38,974 Contingent obligations 71 655 Other liabilities 5,174 4,099 Total liabilities 81,220 64,140 Commitments and contingencies (Note 16) Stockholders’ equity Preferred stock: Undesignated preferred stock: $0.001 par value; 5,000,000 authorized; no shares issued and outstanding — — Common stock, $0.001 par value, 100,000,000 shares authorized, 27,941,015 and23,358,637 issued and outstanding at December 31, 2017 and 2016, respectively 28 23 Additional paid-in capital 552,720 451,947 Accumulated other comprehensive loss (158) (16)Accumulated deficit (470,112) (380,362)Total stockholders’ equity 82,478 71,592 Total liabilities and stockholders’ equity $163,698 $135,732 The accompanying notes are an integral part of these consolidated financial statements. 83 Paratek Pharmaceuticals, Inc.Consolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share amounts) Year Ended December 31, 2017 2016 2015 Revenue Collaboration and royalty revenue $12,616 $29 $— Total revenue 12,616 29 — Operating expenses: Research and development 60,072 83,460 50,765 General and administrative 36,965 26,400 19,988 Impairment of intangible assets 743 — 2,860 Changes in fair value of contingent consideration (584) (345) (3,560)Total operating expenses 97,196 109,515 70,053 Loss from operations (84,580) (109,486) (70,053)Other income and expenses: Interest income 1,377 1,069 — Interest expense (5,079) (3,223) (770)Other gains (and losses), net (34) 4 (37)Net loss (88,316) (111,636) (70,860)Provision for income taxes 753 — — Net loss attributable to common stockholders $(89,069) $(111,636) $(70,860)Other comprehensive loss Unrealized loss on available-for-sale securities, net of tax (142) (16) — Other comprehensive loss (142) (16) — Comprehensive loss $(89,211) $(111,652) $(70,860)Net loss per share attributable to common stockholders: Basic and diluted net loss per common share $(3.32) $(5.51) $(4.29)Weighted average common shares outstanding Basic and diluted 26,827,253 20,253,082 16,501,912 The accompanying notes are an integral part of these consolidated financial statements. 84 Paratek Pharmaceuticals, Inc.Consolidated Statements of Stockholders’ Equity(in thousands, except share amounts) Common Stock AdditionalPaid-in Accumulatedothercomprehensive Accumulated TotalStockholders’ Shares Amount Capital income (loss) Deficit Equity Balances at December 31, 2014 14,417,936 $14 $293,076 $— $(197,866) $95,224 Exercise of stock options 56,897 1 246 — — 247 Issuance of common stock, net of expenses 3,133,782 2 71,277 — — 71,279 Issuance of warrants for common stock — — 288 — — 288 Stock-based compensation expense — — 5,062 — — 5,062 Net loss — — — — (70,860) (70,860)Balances at December 31, 2015 17,608,615 $17 $369,949 $— $(268,726) $101,240 Exercise of stock options 2,508 — 11 — — 11 Issuance of common stock, net of expenses 5,747,514 6 70,924 — — 70,930 Issuance of warrants for common stock — — 271 — — 271 Unrealized loss on available-for-sale securities, net of tax — — — (16) — (16)Stock-based compensation expense — — 10,792 — — 10,792 Net loss — — — — (111,636) (111,636)Balances at December 31, 2016 23,358,637 $23 $451,947 $(16) $(380,362) $71,592 Exercise of stock options 66,455 — 320 — — 320 Issuance of common stock, net of expenses 4,332,126 5 82,791 — — 82,796 Vesting of restricted stock unit awards 183,797 — — — — — Issuance of warrants for common stock — — 79 — — 79 Retroactive adjustment to beginning accumulated deficit and additional paid-in capital resulting from adoption of ASU 2016-09 — — 681 (681) — Unrealized loss on available-for-sale securities, net of tax — — — (142) — (142)Stock-based compensation expense — — 16,902 — — 16,902 Net loss — — — — (89,069) (89,069)Balances at December 31, 2017 27,941,015 $28 $552,720 $(158) $(470,112) $82,478 The accompanying notes are an integral part of these consolidated financial statements. 85 Paratek Pharmaceuticals, Inc.Consolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2017 2016 2015 Net loss $(89,069) $(111,636) $(70,860)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,268 2,303 714 Stock-based compensation expense 16,902 10,792 5,062 Noncash interest expense 406 241 548 Impairment of intangible assets 743 — 2,860 Change in fair value of contingent consideration (584) (345) (3,560)Other gains, net — — 17 Changes in operating assets and liabilities Accounts receivable, prepaid, and other current assets (4,833) 4,960 (2,705)Accounts payable and accrued expenses (4,223) 2,062 14,021 Other liabilities and other assets 816 (2,475) (779)Net cash used in operating activities (78,574) (94,098) (54,682)Investing activities Purchase of fixed assets (1,117) (690) (856)Purchase of marketable securities (180,289) (135,799) — Proceeds from maturities of marketable securities 131,250 60,106 — Proceeds from sales of marketable securities 7,499 — — Decrease in restricted cash 655 1,626 253 Net cash used in investing activities (42,002) (74,757) (603)Financing activities Proceeds from exercise of stock options 320 11 247 Proceeds from issuance of long-term debt, net of costs 19,915 19,574 19,205 Proceeds from issuance of common stock, net 82,795 70,930 71,279 Net cash provided by financing activities 103,030 90,515 90,731 Net increase (decrease) in cash (17,546) (78,340) 35,446 Cash at beginning of year 52,962 131,302 95,856 Cash at end of year $35,416 $52,962 $131,302 Supplemental disclosure of noncash financing activities Fair value of warrants issued $79 $271 $288 Supplemental disclosure of cash flow information Cash paid for interest $3,705 $1,582 $292 The accompanying notes are an integral part of these consolidated financial statements.86 Paratek Pharmaceuticals, Inc.Notes to Consolidated Financial Statements 1.OrganizationParatek Pharmaceuticals, Inc., or the Company or Paratek, is a Delaware corporation with its corporate office in Boston, Massachusetts and an office inKing of Prussia, Pennsylvania. The Company is a clinical stage biopharmaceutical company focused on the development and commercialization of innovative therapeutics basedupon tetracycline chemistry. The Company has used its expertise in biology and tetracycline chemistry to create chemically diverse and biologicallydistinct small molecules derived from the minocycline core structure. The Company’s two lead product candidates are the antibacterials omadacycline andsarecycline.Prior to October 30, 2014, the name of the Company was Transcept Pharmaceuticals, Inc., or Transcept. On October 30, 2014, Transcept completed abusiness combination with privately-held Paratek Pharmaceuticals, Inc., or Old Paratek, in accordance with the terms of the Agreement and Plan of Mergerand Reorganization, dated as of June 30, 2014, by and among Transcept, Tigris Merger Sub, Inc., or Merger Sub, Tigris Acquisition Sub, LLC, or MergerLLC, and Old Paratek, or the Merger Agreement, pursuant to which Merger Sub merged with and into Old Paratek, with Old Paratek surviving as a wholly-owned subsidiary of Transcept, followed by the merger of Old Paratek with and into Merger LLC, with Merger LLC surviving as a wholly-owned subsidiaryof Transcept (the Company refers to these mergers together as the Merger). Immediately following the Merger, Transcept changed its name to “ParatekPharmaceuticals, Inc.”, and Merger LLC changed its name to “Paratek Pharma, LLC.” Following the completion of the Merger, the business conducted byParatek Pharmaceuticals Inc. became primarily the business conducted by Paratek.The Company has incurred significant losses since inception in 1996. The Company has generated an accumulated deficit of $470.1 million throughDecember 31, 2017 and will require substantial additional funding in connection with the Company’s continuing operations to support commercial activitiesassociated with its lead product candidate, omadacycline. Based upon the Company’s current operating plan, it anticipates that cash, cash equivalents andavailable for sale marketable securities of $151.7 million as of December 31, 2017, together with the $50.0 million in proceeds received in January 2018 fromthe sale of 3,205,128 shares of common stock, will enable the Company to fund operating expenses and capital expenditure requirements through at least thenext twelve months from the filing date of this Annual Report on Form 10-K. The Company expects to finance future cash needs primarily through acombination of public or private equity offerings, debt or other structured financings, strategic collaborations and grant funding. The Company is subject torisks common to companies in the biopharmaceutical industry, including, but not limited to, risks of failure of preclinical studies and clinical trials, the needto obtain additional financing to fund the future development of the Company’s product candidates, the need to obtain compliant product from third partymanufacturers, the need to obtain marketing approval for the Company’s product candidates, the need to successfully commercialize and gain marketacceptance of product candidates, the risks of manufacturing product with an external supply chain, dependence on key personnel, and compliance withgovernment regulations. 2.Summary of Significant Accounting PoliciesBasis of PresentationThe consolidated financial statements have been prepared in accordance with U.S. GAAP as found in the Accounting Standards Codification, or ASC,and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB, and pursuant to the rules and regulations of the SEC.Accounts payable and accrued expenses were reclassified on the Company’s balance sheet as of December 31, 2016 to conform to the current presentation..Principles of ConsolidationThe accompanying audited condensed consolidated financial statements include the results of operations of Paratek Pharmaceuticals, Inc. and itswholly-owned subsidiaries, Paratek Pharma, LLC, Paratek Securities Corporation, Transcept Pharma, Inc., Paratek UK, Ltd, Paratek Bermuda, Ltd., andParatek Ireland Limited. All significant intercompany accounts and transactions have been eliminated in consolidation.87 Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management of the Company to make certain estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on management’s bestknowledge of current events and actions the Company may undertake in the future. Management considers many factors in selecting appropriate financialaccounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements.Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operationalchanges, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to berepresentative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes andmanagement must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially fromthose estimated amounts used in the preparation of the financial statements. Estimates are used in accounting for, among other items, intangible assets,goodwill, contingent liabilities, stock-based compensation arrangements, clinical accruals, useful lives for depreciation and amortization of long-lived assetsand valuation allowances on deferred tax assets. Actual results could differ from those estimates. The Company evaluates its estimates on an ongoing basis.Changes in estimates are reflected in reported results in the period in which they become known by the Company’s management.Cash and Cash Equivalents and Marketable SecuritiesThe Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cashand cash equivalents include cash held in banks and amounts held primarily in interest-bearing money market accounts. Cash equivalents are carried at cost,which approximates their fair market value.The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at eachbalance sheet date. The Company classified all of its marketable securities at December 31, 2017 as “available-for-sale” pursuant to ASC 320, Investments –Debt and Equity Securities. Investments not classified as cash equivalents are presented as either short-term or long-term investments based on both theirmaturities as well as the time period the Company intends to hold such securities. Available-for-sale securities are maintained by an investment manager andconsist of U.S. treasury and government agency securities. Available-for-sale securities are carried at fair value with the unrealized gains and losses includedin other comprehensive income (loss) as a component of stockholders’ equity until realized. Any premium or discount arising at purchase is amortized oraccreted to interest expense or income over the life of the instrument. Realized gains and losses are determined using the specific identification method andare included in other income or expense. There were no material realized gains or losses on marketable securities recognized for the years endedDecember 31, 2017 and 2016.The Company reviews marketable securities for other-than-temporary impairment whenever the fair value of a marketable security is less than theamortized cost and evidence indicates that a marketable security’s carrying amount is not recoverable within a reasonable period of time. Other-than-temporary impairments of investments are recognized in the consolidated statements of operations and comprehensive loss if the Company has experienced acredit loss, has the intent to sell the marketable security, or if it is more likely than not that the Company will be required to sell the marketable securitybefore recovery of the amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company’sinvestment policy, the severity and duration of the impairment and changes in value subsequent to the end of the period. There were no other-than-temporaryimpairments of investments recognized for the years ended December 31, 2017 and 2016.Fair Value of Financial InstrumentsThe Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used indetermining the reported fair values. FASB ASC 820, Fair Value Measurements and Disclosures, or ASC 820, establishes a hierarchy of inputs used inmeasuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs beused when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained fromsources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that market participants would use in pricingthe asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuationinputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair valuehierarchy are described below:Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to accessat the measurement date.Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs areobservable, either directly or indirectly.88 Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement andunobservable.To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair valuerequires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized inLevel 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair valuemeasurement.Restricted CashCash accounts with any type of restriction are classified as restricted cash. If restrictions are expected to be lifted in the next twelve months, therestricted cash account is classified as current.Concentration of Credit RiskFinancial instruments that subject the Company to credit risk consist primarily of cash, restricted cash, and accounts receivable. The Company placesits cash in an accredited financial institution and this balance is above federally insured amounts. The Company has no off-balance sheet concentrations ofcredit risk such as foreign currency exchange contracts, option contracts or other hedging arrangements. For the year ended December 31, 2017, revenueconsisted of upfront fees and milestone payments received in connection with the Company’s collaboration agreements with Allergan and Zai Lab(Shanghai) Co., Ltd., or Zai, and royalty income pursuant to the royalty sharing agreement, or the Royalty Sharing Agreement, entered into by the Companyin October 2016 with the Special Committee of the Company’s Board of Directors, or the Special Committee. Revenue for the year ended December 31,2016 represents royalty income under the Royalty Sharing Agreement. For the year ended December 31, 2017, Allergan and Zai represented approximately40% and 59%, respectively, of collaboration and royalty income. Allergan represented approximately 99% of “Accounts receivable” on the Company’sconsolidated balance sheet as of December 31, 2017.Fixed AssetsFixed assets, including leasehold improvements, are recoded at cost and depreciated when placed into service using the straight-line method, based ontheir estimated useful lives as follows: Estimateduseful LifeIn Years Laboratory equipment 5 Office equipment 5 Computer equipment 3 Computer software 3 In addition, leasehold improvements are depreciated over the shorter of their estimated useful lives or the term of the respective lease on a straight-linebasis.Costs for capital assets not yet placed into service have been capitalized as construction-in-progress and will be depreciated in accordance with theabove guidelines once placed into service. The Company reviews its long-lived assets for impairment whenever events or changes in business circumstancesindicate that the carrying amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment testis based on a comparison of the undiscounted cash flow to the recorded value of the asset. If impairment is indicated, the asset will be written down to itsestimated fair value on a discounted cash flow basis. Upon sale or retirement, the asset cost and related accumulated depreciation are removed from therespective accounts, and any related gain or loss is reflected in results of operations. Repair and maintenance costs are expensed as incurred.Valuation of Other Long-Lived Intangible AssetsThe Company’s finite-lived intangible assets are stated at cost less accumulated amortization. The Company calculates amortization expense by thestraight-line method using estimated useful lives of the related assets, which range from three to thirteen years. The Company reviews finite-lived assets forimpairment whenever events or changes in circumstances occur that indicate that the carrying amount of an asset (or asset group) may not be recoverable. TheCompany’s impairment review is based on an estimate of the undiscounted cash flows at the lowest level for which identifiable cash flows exist andimpairment occurs when the book value of the asset exceeds the estimated future undiscounted cash flows generated by the asset. When an impairment isindicated, a charge is recorded for the difference between the book value of the asset and its fair value. Depending on the asset, estimated fair value may bedetermined either by use of a discounted cash flow model, or by reference to estimated selling values of assets in a similar condition.89 In accordance with the Company’s policy, the Company reviews the estimated useful lives of its long-lived intangible assets on an ongoing basis. Valuation of GoodwillThe Company tests for goodwill impairment annually, on October 1, unless there are indications during an interim period that these assets are morelikely than not to have become impaired. The first step of the goodwill impairment test is to compare the fair value of a reporting unit to its carrying amountto determine if there is potential impairment. If the fair value of the reporting unit is less than its carrying value, the second step of the goodwill impairmenttest is performed to measure the amount of impairment loss.The second step of the goodwill impairment test compares the implied fair value of a reporting unit’s goodwill with the carrying amount of thatgoodwill. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amountequal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if thereporting unit had been acquired in a business combination and the fair value was the purchase price paid to acquire the reporting unit.Determining the fair value of a reporting unit under the first step of the goodwill impairment test and determining the fair value of individual assetsand liabilities of a reporting unit (including unrecognized intangible assets) under the second step of the goodwill impairment test is inherently subjective innature and often involves the use of significant estimates and assumptions based on known facts and circumstances at the time we perform the valuation. Theuse of different assumptions, inputs and judgments or changes in circumstances could materially affect the results of the valuation and could have asignificant impact on whether or not an impairment charge is recognized and the magnitude of any such charge. The Company did not record an impairmentcharge relating to goodwill for the years ended December 31, 2017, 2016 and 2015.Accrued ExpensesThe Company’s process of determining accrued expense for a financial period-end involves reviewing open contracts and purchase orders,communicating with personnel to identify services that have been performed for the Company and estimating the level of service performed and theassociated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’sservice providers invoice periodically in arrears for services performed or when contractual milestones are met. The Company estimates accrued expenses at afinancial period-end based on facts and circumstances known at that time and may periodically confirm the accuracy of estimates with its service providersand make adjustments if necessary.Contingent ConsiderationContingent consideration arising from a business combination is included as part of the purchase price and is recognized at fair value as of theacquisition date. Subsequent to the acquisition date, the Company measures contingent consideration arrangements at fair value for each period until thecontingency is resolved. These changes in fair value are recognized in the consolidated statements of operations. Changes in fair values reflect newinformation about the likelihood of the payment of the contingent consideration and the passage of time.LeasesThe Company leases its facilities under non-cancelable operating leases that expire at various dates through 2024. The leases contain rent escalationand rent holiday, which are being accounted for as rent expense under the straight-line method. Deferred rent is included in accounts payable and otheraccrued expenses in the consolidated balance sheet. During 2016, the Company recorded a lease incentive obligation on the consolidated balance sheetsrepresenting a landlord incentive to reimburse the Company up to $0.2 million for construction on additional lease space in accordance with the Company’sexecuted amended lease agreement at its Boston office location. These amounts are treated as reduction to rent expense over the lease term.Revenue RecognitionThe Company enters into product development agreements with collaborators for the research and development of therapeutic products. The terms ofthese agreements may include nonrefundable signing and licensing fees, funding for research, development and manufacturing, milestone payments androyalties on any product sales derived from collaborations. The Company assesses these multiple elements in accordance with the FASB, AccountingStandards Codification, or ASC 605, Revenue Recognition, in order to determine whether particular components of the arrangement represent separate unitsof accounting.90 The Company recognizes upfront license payments as revenue upon delivery of the license only if the license has stand-alone value. If the licensedoes not have stand-alone value, the revenue under the arrangement is recognized as revenue over the estimated period of performance.Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, the Company determines the periodover which the performance obligations will be performed and revenue will be recognized. If the Company cannot reasonably estimate the timing and thelevel of effort to complete its performance obligations under the arrangement, then revenue under the arrangement is recognized on a straight-line basis overthe period that the Company expects to complete its performance obligations, which is reassessed at each subsequent reporting period.The Company’s collaboration agreements may include additional payments upon the achievement of performance-based milestones. As milestonesare achieved, a portion of the milestone payment, equal to the percentage of the total time that the Company has performed the performance obligations todate over the total estimated time to complete the performance obligations, multiplied by the amount of the milestone payment, is recognized as revenueupon achievement of such milestone. The remaining portion of the milestone will be recognized over the remaining performance period. If the Company hasno future obligations under the collaboration agreement, the milestone payments are recognized as revenue in the period the milestone is received.Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counterpartyperformance are not included in the Company’s revenue model until the performance conditions are met. The Company entered into a License and Collabortation Agreement with Zai, or the Zai Collaboration Agreement, in April 2017, pursuant to whichParatek Bermuda Ltd. granted Zai an exclusive license to develop, manufacture and commercialize omadacycline in the People’s Republic of China, HongKong, Macau and Taiwan for all human therapeutic and preventative uses other than biodefense. Zai is responsible for the development, manufacturing andcommercialization of the licensed product in the Zai Territory, at its sole cost with certain assistance from Paratek Bermuda Ltd. Refer to Note 4, License andCollaboration Agreements, for further details surrounding the Zai Collaboration Agreement. In satisfaction of the Company’s payment obligation of the proceeds of sale or disposition of the Intermezzo assets to the former Transceptstockholders under the Merger Agreement, the Company executed the Royalty Sharing Agreement in October 2016. Under the Royalty Sharing Agreement,the Company agreed to pay to the former Transcept stockholders fifty percent of all royalty income received by the Company pursuant to the collaborationagreement with Purdue Pharma, L.P., or Purdue Pharma, or the Purdue Collaboration Agreement, net of all costs, fees and expenses incurred by the Companyin connection with the Purdue Collaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income to theTranscept stockholders. The Company recognizes all royalty income received from Purdue upon the sale of Intermezzo.The Company also adopted guidance that permits the recognition of revenue contingent upon the achievement of a milestone in its entirety, in theperiod in which the milestone is achieved, only if the milestone meets certain criteria and is considered to be substantive. As such, the Company plans torecognize revenue in the period in which the milestone is achieved, only if the milestone is considered to be substantive based on the following criteria: a.The milestone is commensurate with either of the following: •The vendor’s performance to achieve the milestone. •The enhancement of the value of the delivered item or items as a result of a specific outcome resulting from the vendor’s performance toachieve the milestone. b.The milestone relates solely to past performance. c.The milestone is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within thearrangement.For the year ended December 31, 2017, the Company recognized revenue under the Zai Collaboration Agreement of $7.5 million, which represents anupfront payment made by Zai upon execution of the Zai Collaboration Agreement. The Company also recognized revenue of $5.0 million as a milestonepayment earned from Allergan upon NDA acceptance of sarecycline by the FDA. The Company did not enter into any significant multiple elementarrangements during the years ended December 31, 2016 and 2015. The Company did not materially modify any of its other existing multiple elementarrangements during the years ended December 31, 2017, 2016 or 2015.91 For the years ended December 31, 2017 and 2016, , Company recognized $0.1 million and $29,000, respectively, of royalty revenue from the PurdueCollaboration Agreement. No royalty revenue was recognized for the year ended December 31, 2015. The Company will continue to recognize royaltyrevenue upon the sale of the relevant products, provided there are no remaining performance obligations under the arrangement.The Company records deferred revenue when payments are received in advance of the culmination of the earnings process. This revenue is recognizedin future periods when the applicable revenue recognition criteria have been met. Research and Development ExpensesResearch and development expenses are charged to expense as incurred. Research and development expenses consist of the costs incurred inperforming research and development activities, including personnel-related costs, stock-based compensation, facilities, research-related overhead, clinicaltrial costs, contracted services, manufacturing, license fees and other external costs. The Company accounts for nonrefundable advance payments for goodsand services that will be used in future research and development activities as expenses when the service has been performed or when the goods have beenreceived rather than when the payment is made.Income TaxesThe Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities forthe expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred taxassets 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 effectfor 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 inthe period that includes the enactment date.The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. Inmaking such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporarydifferences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that the Company would beable to realize our deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax assetvaluation allowance, which would reduce the provision for income taxes.The Company records uncertain tax positions in accordance with Accounting Standards Codification 740, Income Taxes, or ASC 740, on the basis of atwo-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technicalmerits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount oftax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanyingconsolidated statement of operations. The Company has not recorded interest and penalties related to any unrecognized tax benefits in the years endedDecember 31, 2017, 2016 and 2015. Stock-Based Compensation The Company accounts for its stock-based awards in accordance with ASC 718, Compensation—Stock Compensation, or ASC 718, which requires allstock-based payments to employees, including grants of stock options, modifications to existing stock options, and restricted stock unit awards, to berecognized as expense based on their fair values. The Company recognizes the compensation cost of awards subject to performance-based vesting conditionsover the requisite service period, to the extent achievement of the performance condition is deemed probable relative to targeted performance using theaccelerated attribution method. If achievement of the performance condition is not probable, but the award will vest based on the service condition, theCompany recognizes the expense over the requisite service period. A change in the requisite service period that does not change the estimate of the totalcompensation cost (i.e., it doesn’t affect the grant-date fair value or quantity of awards to be recognized) is recognized prospectively over the remainingrequisite service period. The Company accounts for stock-based awards to non-employees using the fair value method on a straight-line basis over theassociated service period of the award. The Company expenses restricted stock unit awards to employees based on the fair value of the award on a straight-line basis over the associated service period of the award.92 Share-based payments issued to non-employees are recorded at their fair values, are periodically revalued as the equity instruments vest and arerecognized as expense over the related service period in accordance with the provisions of ASC 718 and ASC Topic 505 (ASC 505), Equity.The Company estimates the fair value of its stock-based awards to employees and non-employees using the Black-Scholes option pricing model,which requires the input of highly subjective assumptions, including (1) the expected volatility of stock, (2) the expected term of the award, (3) the risk-freeinterest rate and (4) expected dividends. Due to the lack of a public market for the Company’s common stock prior to completion of reverse merger onOctober 30, 2014, and resulting lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility onthe historical volatility of a group of similar companies that are publicly traded. For these analyses, the Company has selected companies with characteristicsthat are comparable, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet theexpected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies' sharesduring the equivalent period as the calculated expected term of its stock-based awards. During 2015, the Company began to blend its stock price history, forthe length of time it has market data for its stock, with the historical volatility of similar public companies for the expected term of each grant. The Companyhas estimated the expected life of its employee stock options as the average of the midpoints between vesting exercise date for each vesting-trance and thecontractual term of the options as the last available exercise date of the option. The risk-free interest rates for periods within the expected life of the option arebased on the U.S. Treasury yield curve in effect during the period the options were granted.As of January 1, 2017, the Company adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09. In connection with the adoption, the Company made an accounting policy change. Prior to adoption, theCompany estimated forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from the estimates. TheCompany used historical data to estimate pre-vesting option forfeitures to the extent that actual forfeitures differed from our estimates, the difference wasrecorded as a cumulative adjustment in the period the estimates were revised. Upon adoption, the Company recognizes the effect of forfeitures incompensation cost when they occur. The Company recorded a cumulative-effect catch-up adjustment to equity of $0.7 million upon adoption.Comprehensive Income (Loss)Comprehensive income (Loss) is defined as the change in non-owner sources of equity of a business enterprise during a period from transactions, otherevents and circumstances and currently consists of net loss and changes in unrealized gains and losses on available-for-sale securities.Segment and Geographic InformationOperating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is availableand regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company views itsoperations and manages its business in one operating segment, and the Company operates in only one geographic segment.Subsequent EventsThe Company considers events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements to provideadditional evidence relative to certain estimates or to identify matters that require additional disclosure. Refer to the Notes below for further details onsubsequent events.Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of thespecified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not havea material impact on its financial position or results of operations upon adoption. Between May 2014 and May 2016, the FASB issued three ASUs changing the requirements for recognizing and reporting revenue, or together, hereinreferred to as the Revenue ASUs: (i) ASU No. 2014-09, Revenue from Contracts with Customers, or ASU 2014-09, (ii) ASU No. 2016-08, Principal versusAgent Considerations (Reporting Revenue Gross versus Net), or ASU 2016-08, and (iii) ASU No. 2016-12, Narrow-Scope Improvements and PracticalExpedients, or ASU 2016-12. ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in anamount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improvethe operability93 and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients andimprovements on the previously narrow scope of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers(Topic 606): Deferral of the Effective Date, or ASU 2015-14. ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years, and interimperiods within, beginning after December 15, 2017. All subsequent ASUs related to ASU 2014-09, including ASU 2016-08 and ASU 2016-12, assumed thedeferred effective date enforced by ASU 2015-14. Early adoption of the Revenue ASUs is permitted for annual periods, and interim periods within, beginningafter December 15, 2016. A reporting entity may apply the amendments in the Revenue ASUs using either a modified retrospective approach, by recording acumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. The Company adopted ASC 606, Revenue from Contracts with Customers, or ASC 606, as of January 1, 2018 using the full retrospective approach.The Company is evaluating the complete impact of the adoption of ASC 606 on its consolidated financial position and results of operations and currentlydoes not expect ASC 606 to have a material impact on revenue previously recognized under the Company’s Allergan, Zai and Purdue CollaborationAgreements. The Company implemented appropriate changes to its internal controls to support revenue recognition, including controls to monitor theprobability of achievement of contingent milestone payments, and additional revenue-related disclosures under the new standard. Upon adoption of ASC 606, the accounting for contingent milestone payments under the Company’s collaboration agreements changed. ASC 606does not contain guidance specific to milestone payments, thereby requiring contingent milestone payments to be considered in accordance with the overallmodel of ASC 606 as variable consideration. Revenue from contingent milestone payments may be recognized earlier under ASC 606 than under ASC605, Revenue Recognition, based on an assessment at each reporting date of the probability of achievement of the underlying milestone event. Thisassessment may, in certain circumstances, result in the recognition of revenue related to a contingent milestone payment before the milestone event has beenachieved. The Company will recognize all future milestone payments in accordance with ASC 606. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendment requires a lessee to recognize assets and liabilities forleases with a maximum possible term of more than 12 months. A lessee would recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the leased asset (the underlying asset) for the lease term. This ASU is effective for fiscal years beginning after December15, 2018, including those interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the ASU will have on itsconsolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), which simplifies certain elements of cash flowclassification. The new standard clarifies certain aspects of the statement of cash flows, including the classification of contingent consideration paymentsmade after a business combination and several other clarifications not currently applicable to the Company. The new standard also clarifies that an entityshould determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cashflows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, theappropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The ASU is effective forannual periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s consolidatedstatements of cash flows upon adoption. In October 2016, the FASB issued ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, or ASU 2016-16. The amendments in ASU2016-16 require an entity to recognize the income tax consequences of intra-entity transfers of assets other than inventory at the time that the transfer occurs.Current guidance does not require recognition of tax consequences until the asset is eventually sold to a third party. ASU 2016-16 is effective for fiscal years,and interim periods within, beginning after December 15, 2017. Early adoption is permitted as of the first interim period presented in a year. A reportingentity must apply the amendments in ASU 2016-16 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of thebeginning of the fiscal year of adoption. The Company is evaluating the impact of the adoption of ASU 2016-16 on January 1, 2018 to its consolidatedfinancial position and results of operations. The Company does not expect the adoption of ASU 2016-16 to have a material impact to its consolidatedfinancial position or results of operations. In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash, or ASU 2016-18. The amendments in ASU 2016-18 require an entity toreconcile and explain the period-over-period change in total cash, cash equivalents and restricted cash within its statements of cash flows. ASU 2016-18 iseffective for fiscal years, and interim periods within, beginning after December 15, 2017. Early adoption is permitted. A reporting entity must apply theamendments in ASU 2016-18 using a full retrospective approach. The Company expects the adoption to have an impact on its consolidated statement of cashflows as, upon adoption, it will include the Company’s restricted cash balance in the cash and cash equivalents reconciliation of operating, investing andfinancing activities. 94 In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, or ASU 2017-04. The amendments in ASU 2017-04 eliminate the current two-step approach used to test goodwill for impairment and require an entity to apply a one-step quantitative test and record theamount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated tothe reporting unit. ASU 2017-04 is effective for fiscal years, including interim periods within, beginning after December 15, 2019 (upon the first goodwillimpairment test performed during that fiscal year). Early adoption is permitted for interim or annual goodwill impairment tests performed on testing datesafter January 1, 2017. A reporting entity must apply the amendments in ASU 2017-04 using a prospective approach. The Company does not expect theadoption of ASU 2017-04 to have a material impact to its consolidated financial position or results of operations. In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope Modification Accounting. The new standardis intended to reduce the diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of ashare-based payment award. The new standard will be effective beginning January 1, 2019. The adoption of this standard is not expected to have a materialimpact on the Company’s consolidated financial position or results of operations upon adoption. 3.Net Loss Per Share Available to Common StockholdersBasic net loss per share available to common stockholders is calculated by dividing the net loss available to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share availableto common stockholders is computed by dividing the net loss available to common stockholders by the weighted-average number of common shareequivalents outstanding for the period determined using the treasury-stock method or the as if converted method, as applicable. For purposes of thiscalculation, stock options and common stock warrants are considered to be common stock equivalents and are only included in the calculation of diluted netloss per share available to common stockholders when their effect is dilutive.The following table presents the computation of basic and diluted net loss per share. Year Ended December 31, 2017 2016 2015 Numerator Net loss attributable to common stockholders (89,069) (111,636) (70,860)Denominator Weighted-average common shares outstanding— basic and diluted 26,827,253 20,253,082 16,501,912 Net loss per share—basic and diluted $(3.32) $(5.51) $(4.29) The following outstanding shares subject to options and warrants to purchase common stock were antidilutive due to a net loss in the years presentedand, therefore, were excluded from the dilutive securities computation as of the dates indicated below (in thousands): Year Ended December 31, 2017 2016 2015 Excluded potentially dilutive securities (1): Shares subject to options to purchase common stock 3,608,907 2,780,791 2,242,890 Unvested restricted stock units 1,167,703 454,000 275,500 Shares subject to warrants to purchase common stock 84,828 79,454 47,426 Shares issuable under employee stock purchase plan 36,539 36,539 36,539 Totals 4,897,977 3,350,784 2,602,355 (1)The number of shares is based on the maximum number of shares issuable on exercise or conversion of the related securities as of the year end. Suchamounts have not been adjusted for the treasury stock method or weighted average outstanding calculations as required if the securities were dilutive. 95 4.License and Collaboration AgreementsZai Lab (Shanghai) Co., Ltd.On April 21, 2017, Paratek Bermuda Ltd., a wholly-owned subsidiary of Paratek Pharmaceuticals, Inc., and Zai entered into the Zai CollaborationAgreement. Under the terms of the Zai Collaboration Agreement, Paratek Bermuda Ltd. granted Zai an exclusive license to develop, manufacture andcommercialize omadacycline, or the licensed product, in the People’s Republic of China, Hong Kong, Macau and Taiwan, or the Zai territory, for all humantherapeutic and preventative uses other than biodefense. Zai will be responsible for the development, manufacturing and commercialization of the licensedproduct in the Zai territory, at its sole cost with certain assistance from Paratek Bermuda Ltd.Under the terms of the Zai Collaboration Agreement, Paratek Bermuda Ltd. earned an upfront cash payment of $7.5 million, before taxes, and iseligible to receive up to $14.0 million in potential regulatory milestone payments and $40.5 million in potential commercial milestone payments, the nextbeing $5.0 million upon approval by the FDA of an NDA submission in the CABP indication. Zai will also pay Paratek Bermuda Ltd. tiered royalties at a lowdouble digit to mid-teen percent on net sales of the licensed product in the Zai territory.The Zai Collaboration Agreement will continue, on a region-by-region basis, until the expiration of and payment by Zai of all Zai’s paymentobligations, which is until the later of: (i) the abandonment, expiry or final determination of invalidity of the last valid claim within the Paratek patents thatcovers the licensed product in the region in the Zai territory in the manner that Zai or its affiliates or sublicensees exploit the licensed product or intend forthe licensed product to be exploited; or (ii) the eleventh anniversary of the first commercial sale of such licensed product in such region.The Company evaluated the Zai Collaboration Agreement under ASC Subtopic 605-25, “Multiple Element Arrangements”. The Company determinedthat there were five deliverables under the Zai Collaboration Agreement: (i) an exclusive license to develop, manufacture and commercialize omadacyclinein the territory; (ii) an initial transfer of technology; (iii) a transfer of certain materials and materials know-how (iv) an additional transfer of materials; and (v)participation on a joint steering committee, or JSC, and joint development committee, or JDC.The consideration allocable to the delivered unit or units of accounting is limited to the amount that is not contingent upon the delivery of additionalitems or meeting other specified performance conditions. The Company determined that each potential future clinical, regulatory and commercializationmilestone is substantive. In making this determination, pursuant to the accounting guidance on revenue recognition for milestone payments, the Companyconsidered and concluded that each individual milestone: (i) relates solely to the past performance of the intellectual property to achieve the milestone; (ii) isreasonable relative to all of the deliverables and payment terms in the arrangement; and (iii) is commensurate with the enhanced value of the intellectualproperty as a result of the milestone achievement. As the Company’s obligations under this arrangement have been completed, all future milestones, whichare all considered substantive, will be recognized as revenue when achieved. Therefore, the Company excluded from the allocable consideration themilestone payments and royalties, regardless of the probability that such milestone and royalty payments will be made, until the events that give rise to suchpayments occur. In addition, all regulatory milestones in the Zai Collaboration Agreement are considered substantive on the basis of the contingent nature ofthe milestone, including factors such as regulatory and other risks that must be overcome to achieve each milestone as well as the level of effort andinvestment required. Accordingly, such amounts will be recognized in the period in which the associated milestone is achieved, assuming all other revenuerecognition criteria are met. All commercial milestones will be accounted for in the same manner as royalties and recorded as revenue upon achievement ofthe milestone, assuming all other revenue recognition criteria are met.The Company determined that all five deliverables listed above had value to the Company on a stand-alone basis and therefore five units ofaccounting were identified. The Company determined, however, that the best estimate for the selling price of the initial transfer of technology, transfer ofcertain materials and materials know-how, the additional transfer of materials and participation on the JSC and JDC were all inconsequential. As such, theCompany recognized the total arrangement consideration as revenue during the year ended December 31, 2017.Under the Zai Collaboration Agreement, Zai will pay taxes incurred in the Zai territory by Paratek on Paratek’s behalf and deduct these taxes from thepayments due to Paratek. Withholding and other value-added taxes of $0.8 million were incurred on the $7.5 million upfront payment. As such, the Companyreceived $6.7 million, net of taxes, during the year ended December 31, 2017. These taxes were paid by Zai on behalf of the Company.During the year ended December 31, 2017, the Company recognized revenue under the Zai Collaboration Agreement of $7.5 million, which representsan upfront payment made by Zai upon execution of the Zai Collaboration Agreement.96 Allergan plcIn July 2007, the Company and Warner Chilcott Company, Inc. (now part of Allergan), entered into a collaborative research and license agreement, orthe Allergan Collaboration Agreement, under which the Company granted Allergan an exclusive license to research, develop and commercialize tetracyclineproducts for use in the United States for the treatment of acne and rosacea. Since Allergan did not exercise its development option with respect to thetreatment of rosacea prior to initiation of a Phase 3 trial for the product, the license grant to Allergan converted to a non-exclusive license for the treatment ofrosacea as of December 2014. Under the terms of the Allergan Collaboration Agreement, the Company and Allergan are responsible for, and are obligated touse, commercially reasonable efforts to conduct specified development activities for the treatment of acne and, if requested by Allergan, the Company mayconduct certain additional development activities to the extent the Company determines in good faith that the Company has the necessary resourcesavailable for such activities. Allergan has agreed to reimburse the Company for its costs and expenses, including third-party costs, incurred in conducting anysuch development activities.Under the terms of the Allergan Collaboration Agreement, Allergan is responsible for and is obligated to use commercially reasonable efforts todevelop and commercialize tetracycline compounds that are specified in the agreement for the treatment of acne. Allergan failed to elect to advance thedevelopment of sarecycline for the treatment of rosacea in accordance with the terms of the agreement so the license granted to Allergan was converted to anon-exclusive license for the treatment of rosacea as of December 2014. The Company has agreed during the term of the Allergan Collaboration Agreementnot to directly or indirectly develop or commercialize any tetracycline compounds in the United States for the treatment of acne and rosacea, and Allerganhas agreed during the term of the Allergan Collaboration Agreement not to directly or indirectly develop or commercialize any tetracycline compoundincluded as part of the agreement for any use other than as provided in the agreement.The Company earned an upfront fee in the amount of $4.0 million upon the execution of the Allergan Collaboration Agreement, $1.0 million uponfiling of an Investigational New Drug Application in 2010, and $2.5 million upon initiation of Phase 2 trials in 2012. In December 2014, the Companyearned $4.0 million upon initiation of Phase 3 trials associated with the Allergan Collaboration Agreement. The Company also earned a $5.0 millionmilestone payment from Allergan upon the FDA’s acceptance of Allergan’s NDA for sarecycline, or Seysara™, in December 2017. The $5.0 million milestonepayment is included within “Accounts receivable” on the Company’s consolidated balance sheet and “Collaboration and royalty revenue” on theCompany’s consolidated statements of operations and comprehensive loss as and for the year ended December 31, 2017, respectively. The amount wassubsequently collected in 2018.Allergan may be required to pay the Company a future milestone payment of $12.0 million upon receipt of commercialization regulatory approvalfrom the FDA. Allergan is also obligated to pay the Company tiered royalties, ranging from the mid-single digits to the low double digits, based on net salesof tetracycline compounds developed under the Allergan Collaboration Agreement, with a standard royalty reduction post patent expiration for such productfor the remainder of the royalty term. Allergan’s obligation to pay the Company royalties for each tetracycline compound it commercializes under theAllergan Collaboration Agreement expires on the later of the expiration of the last to expire patent that covers the tetracycline compound in the United Statesand the date on which generic drugs that compete with the tetracycline compound reach a certain threshold market share in the United States.Either the Company or Allergan may terminate the Allergan Collaboration Agreement for certain specified reasons at any time after Allergan hascommenced development of any tetracycline compound, including if Allergan determines that it would not be commercially viable to continue to develop orcommercialize the tetracycline compound and/or that it is unlikely to obtain regulatory approval of the tetracycline compound, and, in any case, no backuptetracycline compound is in development or ready to be developed and the parties are unable to agree on an extension of the development program or analternative course of action. Either the Company or Allergan may terminate the Allergan Collaboration Agreement for the other party’s uncured breach of amaterial term of the agreement on 60 days’ notice (unless the breach relates to a payment term, which requires a 30-day notice) or upon the bankruptcy of theother party that is not discharged within 60 days. Upon the termination of the Allergan Collaboration Agreement by Allergan for the Company’s breach,Allergan’s license will continue following the effective date of termination, subject to the payment by Allergan of the applicable milestone and royaltypayments specified in the agreement unless our breach was with respect to certain specified obligations, in which event the obligation of Allergan to pay usany further royalty or milestone payments will terminate. Upon the termination of the Allergan Collaboration Agreement by us for Allergan’s breach or thevoluntary termination of the agreement by Allergan, Allergan’s license under the agreement will terminate.The Company determined whether the performance obligations under the Allergan Collaboration Agreement could be accounted for separately or as asingle unit of accounting. The Company determined that the license, participation on steering committees and research and development servicesperformance obligations during the research period of the Allergan Collaboration Agreement represented a single unit of accounting. As the Company couldnot reasonably estimate its level of effort, the Company recognized revenue from the upfront payment, milestone payment and research and developmentservices payments using the contingency-adjusted performance model over the expected development period. The development period was completed inJune 2010. Under this model, when a milestone was earned or research and development services were rendered, revenue was immediately recognized on a97 pro-rata basis in the period the milestone was achieved or services were delivered based on the time elapsed from the effective date of the agreement.Thereafter, the remaining portion was recognized on a straight-line basis over the remaining development period. The Company has determined that eachpotential future clinical, regulatory and commercialization milestone is substantive. In making this determination, pursuant to the accounting guidance onrevenue recognition for milestone payments, the Company considered and concluded that each individual milestone: (i) relates solely to the pastperformance of the intellectual property to achieve the milestone; (ii) is reasonable relative to all of the deliverables and payment terms in the arrangement;and (iii) is commensurate with the enhanced value of the intellectual property as a result of the milestone achievement. As the Company’s obligations underthis arrangement have been completed, all future milestones, which are all considered substantive, will be recognized as revenue when achieved. As such, theCompany recognized revenue from the $5.0 million milestone payment from Allergan upon the FDA’s acceptance of Allergan’s NDA for sarecycline uponachievement of the milestone in December 2017.Also, the Company, at its discretion, may provide manufacturing process development services to Allergan in exchange for full-time equivalent basedcost reimbursements. The Company determined that the manufacturing process development services are considered a separate unit of accounting as (i) theyare set at the Company’s discretion, (ii) they have stand-alone value, as these services could be performed by third parties, and (iii) the full-time equivalentrate paid for such services rendered is considered fair value. Therefore, the Company recognizes cost reimbursements for manufacturing process developmentservices as revenue as the services are performed.Tufts UniversityIn February 1997, the Company and Tufts entered into a license agreement under which the Company acquired an exclusive license to certain patentapplications and other intellectual property of Tufts related to the drug resistance field to develop and commercialize products for the treatment or preventionof bacterial or microbial diseases or medical conditions in humans or animals or for agriculture. The Company subsequently entered into eleven amendmentsto that agreement, collectively the Tufts License Agreement, to include patent applications filed after the effective date of the original license agreement, toexclusively license additional technology from Tufts, to expand the field of the agreement to include disinfectant applications, and to change the royalty rateand percentage of sublicense income paid by the Company to Tufts under sublicense agreements with specified sublicensees. The Company is obligatedunder the Tufts License Agreement to provide Tufts with annual diligence reports and a business plan and to meet certain other diligence milestones. TheCompany has the right to grant sublicenses of the licensed rights to third parties, which will be subject to the prior approval of Tufts unless the proposedsublicensee meets a certain net worth or market capitalization threshold. The Company is primarily responsible for the preparation, filing, prosecution andmaintenance of all patent applications and patents covering the intellectual property licensed under the Tufts License Agreement at its sole expense. TheCompany has the first right, but not the obligation, to enforce the licensed intellectual property against infringement by third parties.The Company issued Tufts 1,024 shares of the Company’s common stock on the date of execution of the original license agreement, and the Companymay be required to make certain payments of up to $0.3 million to Tufts upon the achievement by products developed under the agreement of specifieddevelopment and regulatory approval milestones. The Company has already made a payment of $50,000 to Tufts for achieving the first milestone followingcommencement of the Phase 3 clinical trial for omadacycline and a payment of $100,000 to Tufts for achieving the second milestone following its firstmarketing application (NDA) submitted in the United States. The Company is also obligated to pay Tufts a minimum royalty payment in the amount of$25,000 per year. In addition, the Company is obligated to pay Tufts royalties based on gross sales of products, as defined in the agreement, ranging in thelow single digits depending on the applicable field of use for such product sale. If the Company enters into a sublicense under the agreement, based on theapplicable field of use for such product, the Company will be obligated to pay Tufts (i) a percentage, ranging from 10% to 14% (ten percent to fourteenpercent) for compounds other than omadacycline, and a percentage in the single digits for the compound omadacycline, of that portion of any sublicenseissue fees or maintenance fees received by the Company that are reasonably attributable to the sublicense of the rights granted to the Company under theTufts License Agreement and (ii) the lesser of (a) a percentage, ranging from the low tens to the high twenties based on the applicable field of use for suchproduct, of the royalty payments made to the Company by the sublicensee or (b) the amount of royalty payments that would have been paid by the Companyto Tufts if it had sold the product. The Company paid a sublicense issue fee to Tufts during the year ended December 31, 2017 upon earning the $7.5 millionupfront payment under the Zai Collaboration Agreement.Unless terminated earlier, the Tufts License Agreement will expire at the same time as the last-to-expire patent in the patent rights licensed to theCompany under the agreement and after any such expiration the Company will continue to have an exclusive, fully-paid-up license to such intellectualproperty licensed from Tufts. Tufts has the right to terminate the agreement upon 30 days’ notice should the Company fail to make a material payment underthe Tufts License Agreement or commit a material breach of the agreement and not cure such failure or breach within such 30-day period, or if, after theCompany has started to commercialize a product under the Tufts License Agreement, the Company ceases to carry on its business for a period of 90consecutive days. The Company has the right to terminate the Tufts License Agreement at any time upon 180 days’ notice. Tufts has the right to convert theCompany’s exclusive license to a non-exclusive license if the Company does not commercialize a product licensed under the agreement within a specifiedtime period. 98 Purdue Pharma L.P.In July 2009, the Company and Purdue Pharma entered into the Purdue Collaboration Agreement, which grants an exclusive license to Purdue Pharmato commercialize Intermezzo in the United States and pursuant to which: •Purdue Pharma paid the Company a $25.0 million non-refundable license fee in August 2009; •Purdue Pharma paid the Company a $10.0 million non-refundable intellectual property milestone in December 2011 when the first of twoissued formulation patents was listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book; •Purdue Pharma paid the Company a $10.0 million non-refundable intellectual property milestone in August 2012 when the first of two issuedmethods of use patents was listed in the FDA’s Orange Book; •The Company transferred the Intermezzo NDA to Purdue Pharma, and Purdue Pharma is obligated to assume the expense associated withmaintaining the NDA and further development of Intermezzo in the United States, including any expense associated with post-approvalstudies; •Purdue Pharma is obligated to commercialize Intermezzo in the United States at its expense using commercially reasonable efforts; •Purdue Pharma is obligated to pay the Company tiered base royalties on net sales of Intermezzo in the United States ranging from the mid-teensup to the mid-20% level, with each such royalty tiers subject to an increase by a percentage in the low single digits upon a specifiedanniversary of regulatory approval of Intermezzo. The base royalty is tiered depending upon the achievement of certain fixed net salesthresholds by Purdue Pharma, which net sales levels reset each year for the purpose of calculating the royalty. The royalty tiers are subject toreductions upon generic entry and patent expiration. Purdue Pharma is obligated to pay royalties until the later of 15 years from the date of firstcommercial sale in the United States or the expiration of patent claims related to Intermezzo; and •Purdue Pharma is obligated to pay the Company up to an additional $70.0 million upon the achievement of certain net sales targets forIntermezzo in the United States.The Company had an option to co-promote Intermezzo to psychiatrists in the United States and such option was terminated as a result of the Merger.The Purdue Collaboration Agreement expires on the expiration of Purdue Pharma’s royalty obligations. Purdue Pharma has the right to terminate thePurdue Collaboration Agreement at any time upon advance notice of 180 days. The Purdue Collaboration Agreement is also subject to termination by PurduePharma in the event of FDA or governmental action that materially impairs Purdue Pharma’s ability to commercialize Intermezzo or the occurrence of aserious event with respect to the safety of Intermezzo. The Purdue Collaboration Agreement may also be terminated by the Company upon Purdue Pharmacommencing an action that challenges the validity of Intermezzo related patents. The Company also has the right to terminate the Purdue CollaborationAgreement immediately if Purdue Pharma is excluded from participation in federal healthcare programs. The Purdue Collaboration Agreement may also beterminated by either party in the event of a material breach by or insolvency of the other party.The Company also granted Purdue Pharma and an associated company the right to negotiate for the commercialization of Intermezzo in Mexico in2013 but retained the rights to commercialize Intermezzo in the rest of the world.In December 2013, Purdue Pharma notified the Company that it intended to discontinue use of the Purdue Pharma sales force to actively marketIntermezzo to healthcare professionals during the first quarter of 2014.In October 2014, the Company announced that its Board of Directors had approved a special dividend of, among other things, the right to receive, ona pro rata basis, 100% of any royalty income received by the Company pursuant to the Purdue Collaboration Agreement and 90% of any cash proceeds froma sale or disposition of Intermezzo, less fees and expenses incurred in connection with such activity, to the extent that either occurs prior to the secondanniversary of the closing date of the Merger. On October 28, 2016, in satisfaction of the Company’s payment obligation of the proceeds of sale ordisposition of the Intermezzo assets to the former Transcept stockholders under the Merger Agreement, the Company executed the Royalty SharingAgreement with the Special Committee. Under the Royalty Sharing Agreement, the Company agreed to pay to the former Transcept stockholders fifty percentof all royalty income received by the Company pursuant to the Purdue Collaboration Agreement, net of all costs, fees and expenses incurred by the Companyin connection with the Purdue Collaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income to theTranscept stockholders. 99 Past CollaborationsNovartisIn September 2009, the Company and Novartis International Pharmaceutical Ltd., or Novartis, entered into a Collaborative Development, Manufactureand Commercialization License Agreement, or the Novartis Agreement, which provided Novartis with a global, exclusive patent and technology license forthe development, manufacturing and marketing of omadacycline. The Novartis Agreement was terminated by Novartis without cause in June 2011 and thetermination was effective 60 days later. We and Novartis subsequently entered in a letter agreement in January 2012, or the Novartis Letter Agreement, asamended, pursuant to which we reconciled shared development costs and expenses and granted Novartis a right of first negotiation with respect tocommercialization rights of omadacycline following approval of omadacycline from the FDA, EMA, or any regulatory agency, but only to the extent theCompany had not previously granted such commercialization rights related to omadacycline to another third party as of any such approval. The Companyalso agreed to pay Novartis a 0.25% royalty, to be paid from net sales received by the Company in any country following the launch of omadacycline in thatcountry and continuing until the later of expiration of the last active valid patent claim covering such product in the country of sale and 10 years from thedate of first commercial sale in such country. The amended Novartis Letter Agreement resulted in a long-term liability in the amount of $3.6 million for theyear ended December 31, 2017 and 2016 included within “Other Long-Term Liabilities” on the Company’s consolidated balance sheet. There are no otherpayment obligations to Novartis under the Novartis Agreement or the amended Novartis Letter Agreement. 5.Restricted Cash Short-term restricted cash Intermezzo Reserve As of December 31, 2017, restricted cash of $0.2 million represents royalty income received but not yet paid to former Transcept stockholders as partof the royalty sharing agreement, or the Royalty Sharing Agreement, executed by the Company on October 28, 2016 with the Special Committee. See Note12, Fair Value Measurements, for more information on the Royalty Sharing Agreement. Included in the balance as of December 31, 2016, was the remainderof the Intermezzo reserve of $0.1 million, established in accordance with the Merger Agreement, which was comprised of unpaid legal fees. Letter of Credit During the year ended December 31, 2016, the Company obtained a letter of credit in the amount of $0.8 million, which is collateralized with a bankaccount at a financial institution, to secure value-added tax registration in certain foreign countries. The letter of credit was cancelled by the Company duringthe first quarter of 2017. Long-term restricted cash Letter of Credit The Company leases its Boston, Massachusetts office space under a non-cancelable operating lease. Refer to Note 16, Commitments andContingencies, for further details. In accordance with the lease, the Company has a cash-collateralized irrevocable standby letter of credit in the amount of$0.3 million as of December 31, 2017 and 2016, naming the landlord as beneficiary. 6. Cash and Cash Equivalents and Marketable Securities The following is a summary of available-for-sale securities as of December 31, 2017 (in thousands): AmortizedCost UnrealizedGains UnrealizedLosses Fair Value December 31, 2017 U.S. treasury securities $114,666 $— $(158) $114,508 Government agencies 1,799 — — 1,799 Total $116,465 $ $(158) $116,307 December 31, 2016 U.S. treasury securities $62,574 $— $(18) $62,556 Government agencies 12,518 2 — 12,520 Total $75,092 $2 $(18) $75,076 No available-for-sale securities held as of December 31, 2017 have remaining maturities greater than one year.100 7.Fixed Assets, NetFixed assets consist of the following (in thousands): Estimated December 31, Useful LifeIn Years 2017 2016 Office equipment 5 $866 $443 Computer equipment 3 412 251 Computer software 3 787 787 Leasehold improvements 860 137 Construction-in-progress — 391 Gross fixed assets 2,925 2,009 Less: Accumulated depreciation and amortization (1,214) (821)Net fixed assets $1,711 $1,188 In addition, leasehold improvements are amortized over the shorter of the lease term or the estimated useful economic lives of the related assets. Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was approximately $0.6 million, $0.3 million, and $0.1 million,respectively, which is included in general and administrative and research and development expense on the accompanying consolidated statements ofoperations.Construction-in-progress as of December 31, 2016 includes $0.4 million related to construction costs incurred by the Company at its Boston officelocation.During 2017 and 2016, the Company retired a small amount of fixed assets with no gain or loss recognized. 8.Intangible Assets, Net Intermezzo product rights and the TO-2070 license rights were acquired through the Merger. Refer to Note 4, License and Collaboration Agreements,for further detail concerning Intermezzo and TO-2070. Intangible assets are reviewed when events or circumstances indicate that the assets might beimpaired. An impairment loss would be recognized when the estimated undiscounted cash flows to be generated by those assets are less than the carryingamounts of those assets. If it is determined that the intangible asset is not recoverable, an impairment loss would be calculated based on the excess of thecarrying value of the intangible asset over its fair value. Intermezzo product sales projections significantly declined during the year ended December 31, 2017 and as such, a recoverability test was performedeach reporting period during 2017. The Company determined that the summation of the undiscounted cash flows through the year of patent expiration, or theestimated useful life of the asset, were less than the carrying value of the asset resulting in total impairment of $0.7 million for the year ended December 31,2017.The Company performed a recoverability test each reporting period during 2016. It was determined that the summation of the undiscounted futurecash flow of the Intermezzo product rights were greater than the carrying value for all reporting periods. As such, the Company did not record an impairmentcharge during the year ended December 31, 2016. In accordance with the Company’s policy, the estimated useful lives of long-lived intangible assets are reviewed on an ongoing basis. During the yearended December 31, 2016, the execution of the Royalty Sharing Agreement prompted a change in the estimated useful life of the Intermezzo product rights.The Company extended the estimated useful life to better reflect the projected period it will receive royalties from Intermezzo product sales. The estimateduseful life of Intermezzo product rights was increased from five years to fifteen years. The effect of this change in estimate reduced amortization expense andnet loss recognized during the year ended December 31, 2016 by $60,000 and increased 2016 basic and diluted earnings per share by an immaterial amount.The remaining carrying amount of the Intermezzo product rights will be amortized prospectively over the revised remaining useful life. 101 Intangible assets consist of the following (in thousands): December 31, 2017 2016 Intermezzo product rights $142 $1,410 TO-2070 asset 170 170 Gross intangible assets 312 1,580 Less: Accumulated amortization (170) (565)Net intangible assets $142 $1,015 After the impairment charge, the Intermezzo product rights are being amortized over a remaining useful life of 12 years as of December 31, 2017. TO-2070 product rights are fully amortized as of December 31, 2017. Total amortization expense for the years ended December 31, 2017, 2016, and 2015 was $0.1 million, $0.3 million and $0.6 million, respectively. Amortization expense is expected to be as follows for the next five-year period (in thousands): Amortization Years Ended December 31, 2018 $12 2019 12 2020 12 2021 12 2022 12 Total $60 9.Accrued ExpensesAccrued expenses consist of the following (in thousands): December 31, 2017 2016 Accrued legal costs $257 $358 Accrued compensation 3,403 2,609 Intermezzo payable 124 49 Accrued professional fees 1,864 1,118 Accrued contract manufacturing 4,964 1,940 Accrued other 262 298 Total $10,874 $6,372 10.Common StockFollowing the Merger, the authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $0.001 per share, andthe preferred stock described in Note 11, Preferred Stock.The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders and there are no cumulative rights.Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividendsthat may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of liquidation of the Company,dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to priordistribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are noredemption or sinking fund provisions applicable to the common stock. The outstanding shares of common stock are fully paid and non-assessable.102 The Company completed an underwritten offering on May 5, 2015 of 3,089,000 shares of its common stock at a public offering price of $24.50 pershare, which included 229,000 shares of its common stock issued upon the exercise, in part, by the underwriters of an option to purchase additional shares.The net proceeds received by the Company, after underwriting discounts and commissions and other offering expenses, were $70.4 million. The Companyalso completed an underwritten offering on June 27, 2016 of 4,887,500 shares of its common stock at a public offering price of $13.00 per share, whichincluded 637,500 shares of its common stock issued upon the exercise, in full, by the underwriters of an option to purchase additional shares. The netproceeds received by the Company, after underwriting discounts and commissions and other estimated offering expenses, were $59.3 million.In October 2015 and February 2017, the Company entered into Controlled Equity OfferingSM Sales Agreements, or the 2015 Sales Agreement and2017 Sales Agreement, respectively, and collectively, the Sales Agreements, with Cantor Fitzgerald & Co., or Cantor, under which the Company could, at itsdiscretion, from time to time sell shares of its common stock, with a sales value of up to $50.0 million under each Sales Agreement through Cantor. TheCompany provided Cantor with customary indemnification rights, and Cantor was entitled to a commission at a fixed rate of 3% of the gross proceeds pershare sold. Sales of the shares of the Company’s common stock under the Sales Agreements were to be made in transactions deemed to be “at the marketofferings”, as defined in Rule 415 under the Securities Act. The Company has sold all $50.0 million of shares of its common stock under the 2015 SalesAgreement. The Company received $36.9 million in proceeds, after deducting commissions of $1.1 million, from the sale of 2,326,119 shares of commonstock under the 2015 Sales Agreement during the year ended December 31, 2017. The Company received $47.7 million in proceeds, after deductingcommissions of $1.5 million, from the sale of 2,102,315 shares of common stock, as of February 28, 2018, under the 2017 Sales Agreement. As of February28, 2018, no amount remains available for sale under the 2015 Sales Agreement and $0.8 million remains available for sale under the 2017 Sales Agreement.The Company completed an underwritten offering on January 22, 2018 of 3,205,128 shares of its common stock. The total proceeds received by theCompany were $50.0 million. Offering expenses incurred were approximately $0.2 million. Warrants to Purchase Common StockWarrants to purchase preferred stock with intrinsic value issued to HBM Healthcare Investments (Cayman) Ltd., Omega Fund III, L.P., and K/S DanishBioVenture, all beneficial owners of more than 5% of the Company’s common stock, were exchanged for 9,614 warrants to purchase common stock inconnection with the Merger. 9,614 warrants to purchase common stock have an exercise price of $0.15 per share and will, if not exercised, expire in 2021. Afurther 5,120 warrants to purchase common stock with an exercise price of $73.66 per share expired in April 2016. As described in Note 14, Long-term Debt, in connection with the Loan Agreement, the Company issued to each one of Hercules Technology II, L.P.and Hercules Technology III, L.P. a warrant to purchase 16,346 shares of its common stock (32,692 shares of common stock in total) at an exercise price of$24.47 per share, or the Hercules Warrants, on September 30, 2015. The Hercules Warrants’ total relative fair value of $0.3 million was determined using aBlack-Scholes option-pricing model. The Loan Amendment Warrants’ total fair value of $0.3 million was determined using a Black-Scholes option-pricingmodel with the following assumptions: December 31,2016 Volatility 60.2% Weighted average risk-free interest rate 1.9% Expected dividend yield 0.0% Expected term 5 years Additionally, in connection with the borrowing of the Third Tranche (as defined in Note 14, Long-term Debt) on June 27, 2017, the Company issuedan additional warrant to Hercules Capital, Inc. to purchase 5,374 shares of its common stock at an exercise price of $23.26 per share, or the AdditionalWarrant. The Additional Warrant’s total relative fair value of $0.1 million was determined using a Black-Scholes option-pricing model with the followingassumptions: June 30,2017 Volatility 67.8% Weighted average risk-free interest rate 1.8% Expected dividend yield 0.0% Expected term 5 years 103 The Hercules Warrants, Loan Amendment Warrants and Additional Warrant, collectively referred to as the Warrants, may be exercised on a cashlessbasis. The Warrants are exercisable for a term beginning on the date of issuance and ending on the earlier to occur of five years from the date of issuance orthe consummation of certain acquisitions of the Company as set forth in the various agreements for the Warrants. 11.Preferred StockFollowing the Merger, the authorized capital stock of the Company consists of 5,000,000 shares of undesignated preferred stock, par value $0.001 pershare, and the common stock described in Note 10, Common Stock. There are no shares of preferred stock outstanding.The Company’s Board of Directors has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock, inone or more series, and to fix the rights, preferences, privileges and restrictions granted to or imposed upon the preferred stock. Any or all of these rights maybe greater than the rights of the common stock.As a result of the Merger and concurrent recapitalization, there are no shares of preferred stock issued or outstanding as of December 31, 2017, 2016and 2015. 12.Fair Value MeasurementsFinancial instruments, including cash, restricted cash, accounts receivable, accounts payable, accrued expenses and the Intermezzo reserve are carriedon the consolidated financial statements at amounts that approximate fair value. The fair value of the Company’s long-term debt is determined using currentapplicable rates for similar instruments as of the balance sheet date. The carrying value of the long-term debt approximates its fair value as the interest rate isnear current market rates. The fair value of the Company’s long-term debt was determined using Level 3 inputs. Fair values are based on assumptionsconcerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk.The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value as of December 31,2017 and December 31, 2016, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, fair valuesdetermined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputsutilize observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities or other inputs that are observable market data. Fairvalues determined by Level 3 inputs utilize unobservable data points for the asset or liability, and include situations where there is little, if any, marketactivity for the asset or liability (in thousands): Description QuotedPrices inActiveMarkets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) December 31,2017 Assets: U.S. treasury securities $114,508 $— $— $114,508 Government agencies — 1,799 — $1,799 Total Assets $114,508 $1,799 $— $116,307 Liabilities: Contingent obligations $— $— $71 $71 Total Liabilities $— $— $71 $71104 Description QuotedPrices inActiveMarkets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) December 31,2016 Assets: U.S. treasury securities $62,556 $— $— $62,556 Government agencies — 12,520 — $12,520 Total Assets $62,556 $12,520 $— $75,076 Liabilities: Contingent obligations $— $— $655 $655 Total Liabilities $— $— $655 $655 Marketable SecuritiesU.S. treasury securities fair values can be obtained through quoted market prices in active exchange markets and are therefore classified as Level 1.The pricing on government agency securities was primarily sourced from independent third party pricing services, overseen by management, and is based onvaluation models that consider standard input factor such as deal quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, tradeexecution data, market consensus prepayment spreads, credit information and the bond’s terms and conditions, among other things, and are thereforeclassified as Level 2.Contingent Consideration Prior to the second anniversary of the Merger, contingent obligations represented the right for former Transcept stockholders to receive certaincontingent amounts, in the future, which consisted of: i.one hundred percent of any royalty income received by the Company prior to October 30, 2016, pursuant to the United States License andCollaboration Agreement, dated July 31, 2009, as amended November 1, 2011, by and between Transcept and Purdue Pharmaceutical ProductsL.P.; ii.one hundred percent of any payments received by the Company pursuant to the termination of a License Agreement with Shin NipponBiomedical Laboratories, or SNBL, which granted the Company an exclusive worldwide license to commercialize SNBL’s proprietary nasaldrug delivery technology for development of TO-2070, a proprietary nasal powder drug delivery system; iii.ninety percent of any cash proceeds from a sale or disposition of Intermezzo (less all fees and expenses incurred by the Company in connectionwith such sale or disposition following the closing date); provided such sale or disposition occurs prior to October 30, 2016; iv.the amount, if any, of the $3.0 million Intermezzo Reserve deposited at closing which is remaining at October 30, 2016. The contingent obligations to former Transcept stockholders as described above were recognized at fair value as of the acquisition date andsubsequently remeasured through the second anniversary of the Merger. The change in fair value was recognized in our consolidated statements ofoperations. Through the third quarter of 2016, the fair value of the contingent obligations to former Transcept stockholders was determined usingprobability-weighted scenario methodologies, employing cash-flow and sale proceeds income approaches with consideration to the potential timing ofpossible payments to former Transcept stockholders. On October 28, 2016, in satisfaction of the Company’s payment obligation of the proceeds of sale or disposition of the Intermezzo product rights tothe former Transcept stockholders under the Merger Agreement, the Company executed the Royalty Sharing Agreement with the Special Committee. Underthe Royalty Sharing Agreement, the Company agreed to pay to the former Transcept stockholders fifty percent of all royalty income received by theCompany pursuant to the Purdue Collaboration Agreement, net of all costs, fees and expenses incurred by the Company in connection with the PurdueCollaboration Agreement, related agreements, the Intermezzo product and the administration of the royalty income to the former Transcept stockholders. TheCompany determined that the Royalty Sharing Agreement represents a modification to the original contingent obligations established under the MergerAgreement in accordance with ASC 805, Business Combinations.105 The significant unobservable inputs used in the fair value measurement of the contingent obligation to former Transcept stockholders with respect tothe Intermezzo product rights as of December 31, 2017 and December 31, 2016 were estimated future Intermezzo product revenues and associated royaltiesdue to the Company as well as the appropriate discount rate given consideration to the market and forecast risk involved. The results of this valuationyielded a decrease in the contingent obligation to former Transcept stockholders of $0.6 and $0.3 million during the years ended December 31, 2017 and2016, respectively. Significant increases or decreases in any of those inputs would result in a substantially lower or higher fair value measurement.The contingent obligation associated with the TO-2070 license rights no longer exists as of December 31, 2017 since there were no payments receivedby the Company pursuant to the termination of the SNBL License Agreement prior to the second anniversary of the Merger. This yielded a decrease in thecontingent obligation of $0.1 million during the twelve months ended December 31, 2016.The following table provides a roll forward of the fair value of contingent obligations categorized as Level 3 instruments for the years endedDecember 31, 2017 and 2016 (in thousands): Contingentliability—formerTransceptstockholders Balances at December 31, 2015 $1,000 Decrease in fair value (345)Balances at December 31, 2016 $655 Decrease in fair value (584)Balances at December 31, 2017 $71 13.Stock-Based CompensationCertain employees, officers, directors and consultants have been granted options and other equity instruments to purchase common shares under plansadopted in 1996, 2001, 2002, 2005, 2006, 2014 and 2015, or the 1996 Plan, the 2001 Plan, the 2002 Plan, the 2005 Plan, the 2006 Plan, the 2014 Plan, the2015 Plan, respectively, the 2015 Inducement Plan and the 2017 Inducement Plan. The 2001 Plan, 2002 Plan, and 2006 Plan were former Transcept plansthat carried forward to the date of the Merger. The 1996 Plan, 2001 Plan, 2002 Plan, and 2005 Plan were cancelled at the effective time of the Merger. The2006 Plan and 2014 Plan survived the Merger. Upon effectiveness of the 2015 Plan no further awards will be granted under the 2006 Plan and 2014 Plan.Incentive stock and non-statutory stock options must be granted with exercise prices of not less than the fair market value of the common stock on thedate of grant. Incentive stock options granted to a stockholder owning more than 10% of voting stock of the Company must have an exercise price of not lessthan 110% of the fair market value of the common stock on the date of grant. The Company determined the fair market value of common stock until theCompany became publicly traded. Stock options are generally granted with terms of up to ten years and vest over a period of one to four years.2006 PlanThe 2006 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock, performance share awards, performancestock units, dividend equivalents, restricted stock units, stock payments, deferred stock, performance-based awards and stock appreciation rights. Theoutstanding employee stock options generally vested over four years, are exercisable over a period not to exceed the contractual term of ten years from thedate the stock options are issued and are granted at prices equal to the fair market value of the Company’s common stock on the grant date. The 2006 Planwas most recently amended and restated effective as of the date of the Company’s 2010 Annual Stockholders’ Meeting. Unless earlier terminated, the 2006Plan will terminate on June 2, 2020.106 Stock option exercises and restricted stock units are settled with newly issued common stock from the 2006 Plan’s previously authorized andavailable pool of shares. A total of 200,206 shares of common stock was authorized for issuance pursuant to the 2006 Plan at the time of its most recentamendment and restatement in 2010, plus the number of shares of the Company’s common stock available for issuance under the 2001 Plan that were notsubject to outstanding options, as of the effective date of such amendment and restatement of the 2006 Plan (including shares that are subject to stockoptions outstanding under the 2001 Plan that expired, were cancelled or otherwise terminated unexercised, or shares that otherwise would have reverted tothe share reserve of the 2001 Plan following such effective date). The number of shares of common stock reserved for issuance under the 2006 Plan increasedautomatically on the first day of each fiscal year by a number of shares equal to the least of: (i) 5.0% of shares of the Company’s common stock outstandingon such date; (ii) 125,000 shares; or (iii) a smaller number determined by the Company’s Board of Directors. This provision resulted in an additional 125,000shares, and 125,000 shares, and of the Company’s common stock becoming available for issuance on January 1, 2015 and January 1, 2014. As of December 31, 2017 and 2016, no additional shares remained available for issuance the 2006 Plan. All shares cancelled or forfeited during theyears ended December 31, 2017 and 2016 became available for grant under the 2015 Plan.2014 PlanThe 2014 Plan provided for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stockunit awards and other stock awards to employees, officers, directors, and consultants of the Company. Under the 2014 Plan, 67,500 shares of common stockwere initially approved for grant. 67,500 shares of fully-vested restricted common stock were granted pursuant to the 2014 Plan to current and formeremployees and directors of the Company in June 2014.Also in June 2014, the Board of Directors approved an increase in the shares available for grant under the 2014 Plan to 875,531 shares from the 67,500shares and granted the resulting 808,031 shares that became available for issuance under the 2014 Plan as options to purchase common stock to certainemployees in June 2014. The common stock grants and stock option exercises from the 2014 Plan are settled with newly issued common stock from the 2014Plan’s previously authorized and available pool of shares.Certain of the options to purchase common stock issued in June 2014 were subsequently modified in 2014 in connection with the termination of theemployment of employees holding such options to provide for, among other changes, accelerated vesting terms.Further, in February 2015 the Company’s Board of Directors modified the vesting terms of eight grants made to four executives of the Companyaggregating 483,114 stock options previously granted under the 2014 Plan from strictly time-based vesting to include certain performance-based vestingterms associated with completion of data lock in the Company’s Phase 3 clinical trials of IV-to-oral omadacycline for the treatment of ABSSSI and CABP.The Company recognizes compensation cost for awards with performance conditions if and when it concludes that it is probable that the performancecondition will be achieved over the requisite service period. The Phase 3 ABSSSI IV-to-oral study data lock occurred in June 2016. This resulted in thevesting of 212,516 stock options. The Phase 3 CABP IV-to-oral study data lock occurred in March 2017. This resulted in the vesting of 212,516 stockoptions. The sum of the incremental compensation cost and any remaining unrecognized compensation cost for the original award on the modification datewas recognized, on a prospective basis, through the performance achievement dates.During the year ended December 31, 2015, prior to the effectiveness of the 2015 Plan, the Company’s Board of Directors granted 24,000 stock optionsto directors, officers, employees and consultants to the 2014 Plan with time vesting provisions ranging from one to four years. As of December 31, 2017 and2016, no additional shares remained available for issuance the 2014 Plan. All shares cancelled or forfeited during the years ended December 31, 2017 and2016 became available for grant under the 2015 Plan.2015 PlansThe Company’s Board of Directors adopted a 2015 Inducement Plan in accordance with Nasdaq Rule 5635(c)(4), reserving 360,000 shares of commonstock solely for the grant of inducement stock options to new employees, and granting 353,500 stock options under the plan to executives and employees ofthe Company under the 2015 Inducement Plan with time vesting provisions ranging from one to four years. The Company has not made any additional grants under the 2015 Inducement Plan since December 31, 2015. Although the Company does notcurrently anticipate the issuance of additional stock options under the 2015 Inducement Plan, 73,167 shares remain available for grant under that plan, aswell as any shares underlying outstanding options that may become available for grant pursuant to the plan’s terms. It is therefore possible that the Companymay, based on the business and recruiting needs of the Company, issue additional stock options under the 2015 Inducement Plan. 107 The Company’s Board of Directors also adopted the 2015 Plan, which was approved by Company stockholders at the Annual Meeting held on June 9,2015, reserving 1,200,000 shares of common stock for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restrictedstock awards, restricted stock unit awards, performance stock awards, performance cash awards and other stock awards to directors, officers, employees andconsultants. The 2015 Plan is intended to be the successor to and continuation of the 2006 Plan and the 2014 Plan, or collectively, the Prior Plans. When the2015 Plan became effective, no additional stock awards were granted under the Prior Plans, although all outstanding stock awards granted under the PriorPlans will continue to be subject to the terms and conditions as set forth in the agreements evidencing such stock awards and the terms of the Prior Plans. The number of shares available for issuance under the 2015 Plan was initially 1,200,000 shares, plus the number of shares that again become availablefor grant as a result of forfeited or terminated awards or shares withheld in satisfaction of the exercise price of withholding obligations associated with awardsunder the Prior Plans, not to exceed 2,000,000 shares. 1,397,050, 1,167,931 and 880,430 shares of common stock were automatically added to the sharesauthorized for issuance under the 2015 Plan on January 1, 2018, January 1, 2017 and January 1, 2016, respectively, pursuant to a “Share Reserve” provisioncontained in the 2015 Plan. The Share Reserve will automatically increase on January 1st of each year, for the period commencing on (and including)January 1, 2016 and ending on (and including) January 1, 2025, in an amount equal to 5% of the total number of shares of common stock outstanding onDecember 31st of the preceding calendar year. Notwithstanding the foregoing, the Board of Directors of the Company may act prior to January 1st of a givenyear to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be alesser number of shares of common stock than would otherwise occur. During the year ended December 31, 2017, the Company’s Board of Directors granted 869,000 restricted stock unit, or RSU, awards to executives andemployees of the Company and 746,200 stock options to directors, officers, employees and consultants of the Company under the 2015 Plan. The stockoption awards are subject to time-based vesting over a period of one to four years. The RSU awards made to directors of the Company are subject to time-based vesting, with 100% of the shares of common stock subject to the RSUs vesting one year from the grant date. The grants also included performance-based RSU, or PRSU, awards to certain executives and employees of the Company. The PRSU awards issued in February 2017 have vested or will vest asfollows: 20% of the PRSUs vested upon achievement of data lock for Study 16301 (oral only ABSSSI), which occurred in July 2017, or the First Milestone;30% of the PRSUs shall vest upon achievement of IV and oral NDA filing acceptances, or the Second Milestone; and 50% of the PRSUs shall vest upon FDAapproval of omadacycline, or the Third Milestone, provided, that, each of the First Milestone, the Second Milestone and the Third Milestone must occur nolater than the fifth anniversary of the date of grant for the applicable portion of the PRSUs to vest. The PRSU awards issued in August 2017 shall becomeearned upon FDA approval of omadacycline, or the Milestone, and shall, upon achievement of the Milestone, be eligible to vest as to 100% of the PRSUssubject to the award on the first anniversary of the Milestone achievement date.10,700 RSUs and 68,319 stock options granted under the 2015 Plan were cancelled or forfeited during the year ended December 31, 2017.2017 Inducement PlanIn June 2017, the Company’s Board of Directors adopted the 2017 Inducement Plan in accordance with Nasdaq Rule 5635(c)(4), reserving 550,000shares of common stock solely for the grant of inducement stock options to employees entering into employment or returning to employment after a bonafide period of non-employment with the Company.During the year ended December 31, 2017, the Company’s Board of Directors granted 222,800 stock options and 39,200 RSUs to employees of theCompany under the 2017 Inducement Plan. The stock option awards are subject to time-based vesting over a period of one to four years. The RSU awards aretime-based with 100% of the shares of common stock subject to the RSUs vesting three years from the grant date. 2,000 stock options granted under the 2017Inducement Plan were forfeited during the year ended December 31, 2017.Total shares available for future issuance under the 2015 Plan, 2015 Inducement Plan and 2017 Inducement Plan are 14,214, 73,167 shares and290,000 shares, respectively, as of December 31, 2017.108 A summary of stock option activity and related information through December 31, 2017 follows: Numberof Shares WeightedAverageExercisePrice Weighted–AverageRemainingContractualTerm(in Years) AggregateIntrinsicValue Outstanding Balances at December 31, 2016 2,780,791 $16.63 8.27 $8,809 Granted 969,000 17.25 Exercised (66,455) 4.83 Cancelled or forfeited (74,429) 16.97 Balances at December 31, 2017 3,608,907 $17.01 7.78 $13,311 Exercisable December 31, 2017 2,173,767 $16.28 7.29 $10,119 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of thecommon stock for the options that were in the money at December 31, 2017 and 2016.During the years ended December 31, 2017, 2016 and 2015, the Company granted stock options to purchase an aggregate of 969,000 shares, 723,500 shares and 1,522,269 shares of its common stock, under the equity plans described above, respectively, with weighted-average grant date fair values ofoptions granted of $11.34, $9.14 and $13.45 , respectively. The total intrinsic value of stock options exercised was $1.4 million, $0.0 million and $1.4 million for the years ended December 31, 2017, 2016 and2015, respectively.Restricted Stock UnitsThe following is a summary of restricted stock unit activity for the year ended December 31, 2017: Number ofShares WeightedAverage GrantDate Fair Valueper Share Unvested balance at December 31, 2016 454,000 $19.67 Granted 908,200 $16.98 Released (183,797) $14.60 Forfeited (10,700) $14.14 Unvested balance at December 31, 2017 1,167,703 $18.43 During the year ended December 31, 2017 the Company granted 908,200 restricted stock units with a weighted-average grant date fair value per shareof $16.98. During the year ended December 31, 2016 the Company granted 236,000 restricted stock units with a weighted-average grant date fair value pershare of $14.07. During the year ended December 31, 2015, the Company granted 275,500 restricted stock units with a weighted-average grant date fair valueper share of $24.43. The total fair value of restricted stock units vested during the year ended December 31, 2017 was $4.0 million.Stock-Based Compensation ExpenseFor stock options issued to employees and members of the Board of Directors, the Company estimates the grant date fair value of each option usingthe Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to theexpected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expecteddividend yields of the common stock.109 The relevant data used to determine the value of the stock option grants is as follows: Year Ended December 31, 2017 2016 2015 Volatility 75.5% 73.6% 60.2%Weighted average risk-free interest rate 2.0% 1.4% 1.7%Expected dividend yield 0.0% 0.0% 0.0%Expected life of options (in years) 5.8 5.8 6.0 As of January 1, 2017, the Company adopted ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, or ASU 2016-09. In connection with the adoption, the Company made an accounting policy change. Prior to adoption, theCompany estimated forfeitures at the time of grant and revised those estimates in subsequent periods if actual forfeitures differed from the estimates. TheCompany used historical data to estimate pre-vesting option forfeitures to the extent that actual forfeitures differed from our estimates, the difference wasrecorded as a cumulative adjustment in the period the estimates were revised. Upon adoption, the Company recognize the effect of forfeitures incompensation cost when they occur. The Company recorded a cumulative-effect catch-up adjustment to equity of $0.7 million upon adoption. The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations (in thousands): Year Ended December 31, 2017 2016 2015 Research and development expense $5,513 $3,262 $1,233 General and administrative expense 11,389 7,530 3,829 Total stock-based compensation expense $16,902 $10,792 $5,062 Total unrecognized stock-based compensation expense for all stock-based awards was $19.0 million at December 31, 2017. This amount will berecognized over a weighted-average period of 1.99 years.Employee Stock Purchase PlanThe Company’s ESPP is designed to allow eligible employees of the Company to purchase shares of common stock through periodic payrolldeductions and during specified offering periods under the plan. The price of common stock purchased under the ESPP is equal to 85% of the lower of the fairmarket value of the common stock on the commencement date of each offering period or the specified purchase date. As of December 31, 2017 and 2016,36,539 shares were available for issuance under the ESPP. Since the Merger, the Company has not made the ESPP available to employees.Reserved SharesAt December 31, 2017, the Company has reserved shares of common stock for future issuance as follows: Number ofShares Equity plans: Subject to outstanding options and restricted stock units 4,776,610 Available for future grants 377,381 Warrants 84,828 Employee stock purchase plan 36,539 Total 5,275,358 110 14.Long-Term Debt On September 30, 2015, the Company entered into the Loan Agreement with Hercules and certain other lenders, and Hercules Technology GrowthCapital, Inc. (as agent). Under the Loan Agreement, Hercules provided the Company with access to term loans with an aggregate principal amount of up to$40.0 million, or collectively, the Term Loan. The Company initially drew a principal amount of $20.0 million, which was funded on September 30, 2015.The remaining $20.0 million under the Loan Agreement was available to be drawn at the Company’s option in minimum increments of $10.0 million throughDecember 31, 2016, or the Draw Period. The Term Loan was repayable in monthly installments commencing on April 1, 2018 through maturity onSeptember 1, 2020. The interest rate was equal to the greater of (i) 8.5%, or (ii) the sum of 8.5%, plus the “prime rate” as reported in The Wall Street Journalminus 5.75% per annum. An end of term charge equal to 4.5% of the issued principal balance of the Term Loan was payable at maturity, including in theevent of any prepayment, and was being accrued as interest expense over the term of the loan using the effective interest method. Borrowings under the LoanAgreement were collateralized by substantially all of the assets of the Company.Upon an Event of Default, an additional 5.0% interest would be applied and Hercules could, at its option, accelerate and demand payment of all or anypart of the loan together with the prepayment and end of term charges. An Event of Default is defined in the Loan Agreement as (i) failure to make requiredpayments; (ii) failure to adhere to financial, operating and reporting loan covenants; (iii) an event or development occurs that would be reasonably expectedto have a material adverse effect; (iv) false representations in the Loan Agreement; (v) insolvency, as described in the Loan Agreement; (vi) levy orattachments on any of the Company's assets; and (vii) default of any other agreement or subordinated debt greater than $1.0 million. In the event ofinsolvency, this acceleration and declaration would be automatic. In addition, in connection with the Loan Agreement, the Company agreed to provideHercules with a contingent security interest in the Company's bank accounts. The Company's control of its bank accounts is not adversely affected unlessHercules elects to obtain unilateral control of the Company's bank accounts by declaring that an Event of Default has occurred. The principal of the TermLoan, which was not due within 12 months of December 31, 2017, has been classified as long-term as the Company determined that a material adverse effectresulting in Hercules exercising its rights under the subjective acceleration clause is remote.Subject to certain terms, pursuant to the Loan Agreement, Hercules was also granted the right to participate in an amount of up to $2.0 million insubsequent sales and issuances of the Company's equity securities to one or more investors for cash for financing purposes in an offering that is broadlymarketed to multiple investors and at the same terms as the other investors. On September 30, 2015, Hercules Technology Growth Capital, Inc. entered into aStock Purchase Agreement with the Company to purchase 44,782 shares of common stock resulting in proceeds to the Company of approximately $1.0million. The excess of proceeds received by the Company over the fair value of the common stock issued was allocated as a reduction of the fees paid toHercules in conjunction with obtaining the initial $20.0 million draw of the Term Loan.Debt issuance costs of $511,000 were ratably allocated to the initial $20.0 million draw and the remaining unfunded $20.0 million. Debt issuancecosts related to the initial $20.0 million draw were presented on the consolidated balance sheet as a direct deduction from the related debt liability. Issuancecosts related to the unfunded amount were capitalized as prepaid asset and were to be amortized ratably through the end of the Draw Period. In connection with the Loan Agreement, the Company issued to each of Hercules Technology II, L.P. and Hercules Technology III, L.P., a warrant topurchase 16,346 shares of the Company’s common stock (32,692 shares of common stock in total) at an exercise price of $24.47 per share. The HerculesWarrants’ total relative fair value of $288,000 at September 30, 2015 was determined using a Black-Scholes option-pricing model. The relative fair value ofthe Hercules Warrants was included as a discount to the Term Loan and also as a component of additional paid-in capital. See Note 10, Common Stock, forfurther description of the Hercules Warrants.In addition to the Hercules Warrants, the Company paid fees to Hercules in conjunction with obtaining the Term Loan. The Hercules Warrants fairvalue and fees paid to Hercules, an aggregate of $572,000, were ratably allocated to the initial $20.0 million draw and the remaining unfunded $20.0 million.The $208,000 of costs allocated to the initial $20.0 million draw were recorded as a debt discount and are being amortized as additional interest expense overthe term of the loan using the effective interest method. The $364,000 of costs allocated to the unfunded $20.0 million was recorded as prepaid expenses andwere being amortized ratably through the end of the Draw Period. In the event the Company exercised its option to borrow additional funds, the remainingunamortized prepaid asset balance related would be reclassified and recorded as debt discount based upon a ratable allocation of the amount drawn comparedto the remaining unfunded amount available to the Company and would amortize over the remaining life of the term loan using the effective interest method.111 On December 12, 2016, the Company and Hercules entered into a second amendment to the Loan Agreement, or the Second Amendment, whichextended the date on which the Company must begin making amortization payments under the Loan Agreement from April 1, 2018 to January 1, 2019, or theAmortization Date. Upon commencement of the Amortization Date, the Company will make amortization payments based upon an amortization scheduleequal to thirty consecutive months, with the balance of outstanding loans due on the original maturity date of the Loan Agreement. The Second Amendmentalso increased the amount that the Company may borrow by $10.0 million, from up to $40.0 million to up to $50.0 million in multiple tranches. Inconnection with the Second Amendment the Company paid Hercules a $0.4 million amendment fee. In connection with the Second Amendment, theCompany issued to each one of Hercules Technology II, L.P. and Hercules Technology III, L.P. a warrant to purchase 18,574 shares of its common stock(37,148 shares of common stock in total) at an exercise price of $13.46 per share.Under the Second Amendment, discussed above, the end of term charge was equal to 4.5% of the issued principal balance of the Loan Agreement, andwas payable at maturity, including in the event of any prepayment, and is being accrued as interest expense over the term of the loan using the effectiveinterest method. Borrowings under the Loan Agreement, as amended, are still collateralized by substantially all of the assets of the Company.On June 27, 2017, the Company and Hercules entered into a third amendment to the Loan Agreement, or the Third Amendment. The ThirdAmendment increased the amount that the Company may borrow by $10.0 million, from up to $50.0 million to up to $60.0 million, in multiple tranches. Theadditional $10.0 million tranche, or the Fourth Tranche, was available at the Company’s option through December 15, 2017. The Fourth Tranche shall bearinterest and have the same maturity as all other loans outstanding under the Loan Agreement. The Company borrowed the first tranche of $20.0 million upon the closing of the Loan Agreement on September 30, 2015, and the second tranche of$20.0 million on December 12, 2016, or collectively, the Initial Tranches. Concurrently with the closing of the Third Amendment, the Company borrowed athird tranche of $10.0 million, or the Third Tranche. The Third Amendment extended the date on which the Company is required to begin making monthlyprincipal installments under the Loan Agreement from January 1, 2019 to January 1, 2020, subject to the Company’s receipt of marketing approval for theCompany’s lead product candidate, omadacycline, or the Interest Only Period Extension Event. Beginning on January 1, 2019, or, if the Company achievesthe Interest Only Period Extension Event, beginning on January 1, 2020, the Company will make payments in equal monthly installments of principal andinterest, with the balance of outstanding loans due on the original maturity date of the Loan Agreement. In connection with the Third Amendment, theCompany paid Hercules a $0.1 million amendment fee. The Third Amendment reduced the end of term charge due with respect to the Third Tranche from to 4.5% to 2.25% if the obligations under the LoanAgreement are repaid in full on or prior to September 30, 2017, following Hercules’ election not to consent to a proposed third-party, non-equity financingarrangement (excluding any stock issuance). The end of term charge with respect to the Fourth Tranche is 2.25%.If the Company prepays the loan prior to maturity, it will pay a prepayment charge, based on a percentage of the then outstanding principal balance,equal to (i) 1% with respect to the Third Tranche and the Fourth Tranche or (ii) 2% with respect to the Initial Tranches if the prepayment occurs prior to April1, 2019, or equal to 0% if the prepayment occurs on or after April 1, 2019. In connection with the borrowing of the Third Tranche, on June 27, 2017, the Company issued the Additional Warrant to Hercules Capital, Inc. that isexercisable for an aggregate of 5,374 shares of Common Stock at an exercise price of $23.26 per share. The Additional Warrant may be exercised on acashless basis. The Additional Warrant is exercisable for a term beginning on the date of issuance and ending on the earlier to occur of five years from thedate of issuance or the consummation of certain acquisitions of the Company as set forth in the Additional Warrant. The modified terms under the Second Amendment and Third Amendment were not considered substantially different as compared to the terms of theLoan Agreement immediately prior to each of the Second Amendment and Third Amendment, pursuant to ASC 470-50, Modification and Extinguishment. Assuch, the Second Amendment and Third Amendment were accounted for as a debt modification. The $0.4 million amendment fee paid to Hercules inconnection with the Second Amendment was recorded as debt discount and will be amortized as part of the effective yield. In addition, the unamortizeddiscount on the original loan agreement will be amortized as an adjustment of interest expense over the remaining term of the modified debt using anupdated effective interest rate. All costs incurred with third parties were expensed as incurred. As of December 31, 2017 and 2016, the Company recorded a long-term debt obligation of $59.2 million, net of debt discount of $0.8 million and$39.0 million, net of debt discount of $1.1 million, respectively. Debt issuance costs are presented on the consolidated balance sheet as a direct deductionfrom the related debt liability rather than capitalized as an asset in accordance with ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30):Simplifying the Presentation of Debt Issuance Costs, or ASU 2015-03.112 Future principal payments, which exclude the end of term charge, in connection with the Loan Agreement, as amended, as of December 31, 2017 are asfollows (in thousands): 2018 $— 2019 33,140 2020 26,860 2021 — 2022 and thereafter — Total $60,000 15.Income Taxes(Loss) income before income taxes consists of the following: Year Ended December 31, (in thousands) 2017 2016 2015 United States $(83,762) $(98,465) $(70,860)Foreign (4,554) (13,171) — Total $(88,316) $(111,636) $(70,860) The components of income tax (benefit) expense consist of the following: Year Ended December 31, (in thousands) 2017 2016 2015 Foreign 753 — — Total $753 $— $—There is no provision for income taxes in the United States because the Company has historically incurred net operating losses and maintains a fullvaluation allowance against its net deferred tax assets. The provision for income taxes in foreign jurisdictions relate to withholding taxes incurred in the Zaiterritory. The reported amount of income tax expense for the years differs from the amount that would result from applying domestic federal statutory tax ratesto pretax losses primarily because of changes in valuation allowance. On December 22, 2017, the new tax reform law, which is commonly referred to as the “Tax Cuts and Jobs Act”, or The Act, was signed into law byPresident Trump. The Act includes a number of provisions, including the lowering of the U.S. corporate tax rate from 35 percent to 21 percent, effectiveJanuary 1, 2018 and the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations. The Company isin the process of quantifying the tax impacts of The Act. Due to the Company's full valuation allowance, no provisional tax expense or benefit associatedwith the re-measurement was recognized in the Company's consolidated statement of operations and comprehensive loss for the year ended December 31,2017. However, the reduction of the U.S. federal corporate tax rate from 35 percent to 21 percent resulted in increases to the amounts reflected in the “Changein valuation allowance” and "Impact of Tax Law Change" captions for the year ended December 31, 2017 in the Company’s tax reconciliation tablecompared to those amounts disclosed for the years ended December 31, 2016 and 2015. The change in the U.S. federal corporate tax rate, which is effectiveJanuary 1, 2018, is also reflected in the Company’s deferred tax table. The Company is still in the process of analyzing the impact to the Company of the TaxAct. On December 22, 2017, the SEC staff issued SAB 118 to address the application of GAAP in situations when a registrant does not have the necessaryinformation available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of theTax Act. The Company has recognized the provisional tax impacts related to the revaluation of the deferred tax assets and liabilities and included theseamounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts dueto, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may beissued, and actions the Company may take as a result of The Act, which could result in changes to the provisional tax impacts during 2018.113 A reconciliation of the Company’s effective tax rate to the statutory federal income tax rate is as follows: Year Ended December 31, 2017 2016 2015 Federal statutory rate 35.00% 35.00% 35.00%Change in valuation allowance 17.61 (37.31) (46.61)Permanent differences 0.66 0.17 1.67 State taxes, net of federal benefits 5.57 4.61 6.13 Withholding Tax (0.85) — — Impact of Tax Law Change (59.79) — — Foreign Rate Differential (1.80) (4.13) — Other 2.74 1.66 3.81 (0.86)% 0.00% 0.00% Significant components of the Company’s net deferred tax assets at December 31, 2017 and 2016 are as follows: Year Ended December 31, (in thousands) 2017 2016 Non-current deferred tax assets Net operating losses $69,977 $83,480 Accrued expenses 228 2,774 Capitalized research and development 24,904 29,882 Tax credit carryforwards 12,843 9,478 Other 47 100 Stock compensation and other 8,218 6,425 Total non-current deferred tax assets 116,217 132,139 Non-current deferred tax liabilities Intangible assets (39) (408)Total non-current deferred tax liabilities (39) (408)Net non-current deferred tax asset 116,178 131,731 Less: valuation allowance (116,178) (131,731)Net deferred tax asset $— $— As of December 31, 2017, the Company had federal and state net operating loss carryforwards of $283.0 million and $168.0 million, respectively,which begin to expire in 2018. As of December 31, 2017, the Company had federal and state research and development tax credits carryforwards of $9.0 million and $4.4 million,respectively, which began to expire in 2018.Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, which arecomprised principally of net operating loss carryforwards and research and development credits. Under the applicable accounting standards, management hasconsidered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of federal and statedeferred tax assets. Accordingly, a full valuation allowance of $116.2 million and $131.7 million, respectively, was established as of December 31, 2017 and2016. A change in the Company’s valuation allowance was recorded in 2017, in the amount of $(15.5) million due primarily to the adjustment in thecorporate tax rate from 35 percent to 21 percent enacted for 2018 partially offset by the generation of net operating losses.Utilization of the net operating loss and research and development credit carryforwards may be subject to a substantial annual limitation underSections 382 and 383 of the Internal Revenue Code of 1986, as amended, due to ownership change limitations that have occurred previously or that couldoccur in the future. These ownership changes may limit the amount of net operating loss and research and development credit carryforwards that can beutilized annually to offset future taxable income and tax, respectively.During 2016, the Company performed a formal study to determine if any of its remaining net operating loss and credit attributes might be furtherlimited due to the ownership change rules of Section 382 or Section 383 of the Internal Revenue Code of 1986, as amended. As a result of that study, theCompany has identified certain net operating losses that might expire unused. The Company has established a full valuation allowance against theseattributes.114 The Company follows the provisions of ASC 740-10, Accounting for Uncertainty in Income Taxes—an interpretation of ASC 740, which requires it todetermine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals oflitigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized inthe financial statements is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon the ultimate settlement withthe relevant taxing authority.The Company is in the process of conducting a study of its research and development credit carryforwards. This study may result in an adjustment tothe Company’s research and development credit carryforwards; however, until the study is completed and any adjustment is known, no amounts are beingpresented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits, and if anadjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidatedbalance sheets or statements of operations if an adjustment were required.The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company issubject to examination by federal and state jurisdictions, where applicable. The earliest tax years that remain subject to examination by jurisdiction is 2014for both federal and Massachusetts. However, to the extent the Company utilizes net operating losses from years prior to 2014, the statute remains open to theextent of the net operating losses or other credits are utilized. The Company’s policy is to record interest and penalties related to income taxes as part of thetax provision. There was no interest or penalties pertaining to uncertain tax positions in 2017 or 2016. 16.Commitments and ContingenciesLeasesThe Company leases its Boston, Massachusetts and King of Prussia, Pennsylvania office spaces under non-cancelable operating leases expiring in2021 and 2024, respectively.The Company entered into the original King of Prussia and Boston leases in January 2015 and April 2015, respectively. The lease terms under theoriginal agreements were for six and four years, respectively. Each agreement had one renewal option for an extended term. The King of Prussia and Bostonlease terms under the original agreements began in June 2015 and July 2015, respectively. The Company executed an amended lease agreement on its Boston office space in July 2016. The amended lease agreement added 4,153 rentablesquare feet of office space and extended the original lease term by two years. The total revised lease commitment of $3.4 million is over a remaining four-yearlease term. In accordance with the amended lease agreement, the Company paid a security deposit of $0.1 million. The Company is required to makeadditional payments under the facility operating leases for taxes, insurance, and other operating expenses incurred during the lease period. In addition, thelease provided an incentive from the landlord of up to $0.2 million in tenant improvements. The Company capitalized all leasehold improvements as fixedassets. Accordingly, the Company also recorded a related financing obligation in “other long-term liabilities” on the Company’s consolidated balance sheet.These amounts will be treated as a reduction to rent expense over the lease term. Subsequent to the amended lease agreement, the Company records monthlyrent expense of approximately $54,000 for the Boston office space. The Company executed an amended lease agreement on its King of Prussia office space in October 2016. The amended lease agreement is for 19,708rentable square feet of office space, for a total commitment of $3.3 million with respect to which lease payments became due beginning once the Companytook control of such office space during the first quarter of 2017. The total lease commitment is over a seven-year and seven-month lease term. The amendedlease agreement contains rent escalation and a partial rent abatement period, which is accounted for as rent expense under the straight-line method. TheCompany is required to make additional payments under the facility operating leases for taxes, insurance, and other operating expenses incurred during theoperating lease period. Deferred rent of $0.5 million and $0.2 million is included in other liabilities and accounts payable and other accrued expenses, respectively, in theconsolidated balance sheet as of December 31, 2017 and 2016. Rent expense, exclusive of related taxes, insurance, and maintenance costs, for continuing operations totaled approximately $1.0 million, $0.7 millionand $0.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, and is reflected in operating expenses.115 Future minimum operating lease obligations under non-cancelable leases with initial terms of more than one-year are as follows (in thousands): Minimum LeaseObligation Years Ended December 31, 2018 1,084 2019 1,156 2020 1,178 2021 964 2022 508 2023 and thereafter 914 Total $5,804Commercial Supply AgreementsCipanIn November 2016, the Company entered into a manufacturing and services agreement with CIPAN – Companhia Industrial Produtora de Antibióticos,or CIPAN. The agreement provides the terms and conditions under which CIPAN will manufacture and supply to the Company increased quantities ofminocycline starting material and crude omadacycline, or the CIPAN Products, for purification into omadacycline and, subsequently, for use in our productsthat contain omadacycline as the active pharmaceutical ingredient. Under this agreement, the Company is obligated to pay a CIPAN Product price in the highthree-digit U.S. Dollar range per kilogram for minocycline starting material and in the four-digit or five-digit U.S. Dollar range per kilogram for crudeomadacycline, based on the annual volume of crude omadacycline that we order, subject to adjustments as set forth in the agreement. CIPAN will alsoperform certain services related to development, technology transfer and manufacturing of the CIPAN Products as provided in one or more statements ofwork, which shall set forth the fees payable by the Company to CIPAN for such services.The Company’s agreement with CIPAN will remain in effect for a fixed initial term, after which the agreement will continue, with respect to eachCIPAN Product, for successive renewal terms unless either the Company or CIPAN have given written notice of termination within a certain period prior tothe expiration of either the initial or then-current renewal term. The agreement may also be terminated under certain other circumstances, including by eitherparty due to a material uncured breach by the other party or the other party’s insolvency.CarbogenIn December 2016, the Company entered into an outsourcing agreement with CARBOGEN AMCIS AG, or Carbogen. The agreement provides for theterms and conditions under which Carbogen will manufacture and supply to the Company the active pharmaceutical ingredient for our omadacycline productin bulk quantities, or the Carbogen Product. Under this agreement, the Company is responsible for the cost and supply of crude omadacycline that Carbogenrequires to manufacture the Carbogen Products and perform related services. The Company is obligated to initially pay Carbogen an amount in the lowseven-digit U.S. Dollar range per batch of Carbogen Product that the Company orders, depending on the size of the campaign, and the price may be adjustedin accordance with the terms of the agreement. The Company may also request that Carbogen perform certain services related to the Carbogen Product, forwhich the Company will pay reasonable compensation to Carbogen.The Company’s agreement with Carbogen will remain in effect for a fixed initial term and both parties are obligated to use diligent efforts to come to asubsequent long-term agreement to replace this agreement no later than the end of such initial term. If the Company has not executed a replacementagreement with Carbogen by such time, this agreement will automatically be extended for a fixed period of time. The Company may terminate this agreementby delivering notice of termination to Carbogen prior to the expiration of the initial or subsequent term. The agreement may also be terminated under certainother circumstances, including by either party due to a material uncured breach by the other party or the other party’s insolvency.116 AlmacIn December 2016, the Company entered into a manufacturing and services agreement with Almac Pharma Services Limited, or Almac. The agreementprovides for the terms and conditions under which Almac will manufacture, package and supply to the Company omadacycline oral solid dosage tablets inbulk form, or the Almac Products. Under this agreement, the Company is required to use commercially reasonable efforts to timely provide Almac with theactive pharmaceutical ingredient needed to manufacture the Almac Products and perform related services. The Company is obligated to pay a supply price inthe five-digit range in Great Britain Pounds per batch of the Almac Products, subject to adjustments as provided in the agreement. The Company will alsonegotiate with Almac, as part of each individual scope of work, the reasonable costs for the services to be performed for the Company by Almac.The Company’s agreement with Almac will remain in effect for a fixed initial term, after which the agreement will continue for successive renewalterms unless either the Company or Almac have given written notice of termination within a certain period prior to the expiration of the initial or then-currentrenewal term. The agreement may also be terminated under certain other circumstances, including by either party due to a material uncured breach of theother party or the other party’s insolvency.PatheonIn July 2017, the Company entered into a master manufacturing services agreement and corresponding product agreement with Patheon UK Limited,or Patheon. The agreements provide for the terms and conditions under which Patheon will manufacture, package and supply to the Company, omadacyclinein injectable form, or the Patheon Products. Under these agreements, the Company is required to deliver to Patheon the active pharmaceutical ingredientneeded to manufacture the Patheon Products. The Company is obligated to pay a supply price in the six-digit dollar range per batch of the Patheon Products,subject to adjustments as provided in the agreements. If the Company’s omadacycline product is approved, the Company will also be subject to an annualminimum purchase requirement in the six-digit euro range. If the Company desires for Patheon to conduct additional services other than those expressly setforth in the agreements, those would be subject to additional fees.The Company’s agreements with Patheon will remain in effect for a fixed initial term, after which they will continue for successive renewal termsunless either the Company or Patheon have given written notice of termination within a certain period prior to the expiration of the applicable initial or then-current renewal term. The agreements may also be terminated under certain other circumstances, including by either party due to a material uncured breach ofthe other party or the other party’s insolvency.LitigationThe following pending litigation was assumed through the Merger.Intermezzo Patent Litigation In July 2012, the Company received notifications from three companies, Actavis Elizabeth LLC, or Actavis Elizabeth, Watson Laboratories, Inc.—Florida, or Watson, and Novel Laboratories, Inc., or Novel, in September 2012, from each of Par Pharmaceutical, Inc. and Par Formulations Private Ltd.,together, the Par Entities, in February 2013 from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd., together, Dr. Reddy’s, and in July 2013from TWi Pharmaceuticals, Inc., or Twi, stating that each has filed with the FDA an ANDA, that references Intermezzo. Refer to Item 3, “Legal Proceedings”,of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 9, 2016, for a full description of thehistory of this litigation. The United States District Court for the District of New Jersey, or the New Jersey District Court, held a consolidated trial between December 1, 2014and December 15, 2014 involving Paratek, Purdue Pharma, and their patent infringement claims against Actavis Elizabeth, Novel, and Dr. Reddy’s. The NewJersey District Court then received post-trial briefing and held a February 13, 2015 post-trial hearing. On March 27, 2015, the New Jersey District Courtissued an order and accompanying opinion finding that: (a) the asserted claims of U.S. Patent Nos. 7,682,628, 8,242,131, and 8,252,809, are invalid asobvious; (b) Actavis Elizabeth, Novel, and Dr. Reddy’s infringe the ‘131 patent; (c) Novel infringes the ‘628 patent; and (d) Novel and Dr. Reddy’s infringethe ‘809 patent. On April 9, 2015, the New Jersey District Court entered final judgment consistent with the March 27, 2015 opinion and order referencedabove. The Company and Purdue Pharma jointly appealed the New Jersey District Court’s final judgment as to the '131 patent to the United States Court ofAppeals for the Federal Circuit on May 6, 2015. On January 8, 2016, the United States Court of Appeals for the Federal Circuit affirmed the decision of theNew Jersey District Court, and no opinion accompanied the judgment. On September 14, 2016, the defendants filed a warrant of satisfaction of judgment inthe New Jersey District Court for the costs having been fully paid to the defendants.117 Patent Term Adjustment Suit In January 2013, the Company filed suit in the Eastern District of Virginia against the United States Patent and Trademark Office, or the USPTO,seeking recalculation of the patent term adjustment of the ’131 Patent. Purdue Pharma has agreed to bear the costs and expenses associated with thislitigation. In June 2013, the judge granted a joint motion to stay the proceedings pending a remand to the USPTO, in which the USPTO is expected toreconsider its patent term adjustment award in light of decisions in a number of appeals to the Federal Circuit, including Novartis AG v. Lee 740 F.3d 593(Fed. Cir. 2014), or the Novartis decision. Since having issued final rules implementing the Novartis decision, the USPTO has been working through the civilaction cases and issuing remand decisions. The Company’s case was on remand until the USPTO made its decision on the recalculation of the patent termadjustment. On September 28, 2016, the USPTO issued a decision that the patent term adjustment is 1,038 days, from which the ‘131 Patent expiration wouldbe March 26, 2029.Other Legal ProceedingsFrom time to time the Company is involved in legal proceedings arising in the ordinary course of business. The Company believes there is no otherlitigation pending that could have, individually, or in the aggregate, a material adverse effect on its results of operations or financial condition. TheCompany does not believe that any of the above matters will result in a liability that is probable or estimable at December 31, 2017. 17.401(k) Savings PlanThe Company maintains a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code, or the 401(k) Plan. The 401(k) Plancovers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on apretax basis. The Plan provides for matching contributions on a portion of participant contributions pursuant to the 401(k) Savings Plan’s matching formula.All matching contributions and participant contributions vest immediately. Contributions totaled $0.4 million, $0.3 million and $0.2 million for the yearsended December 31, 2017, 2016, and 2015, respectively, and have been recorded in the consolidated statements of operations. 18.Quarterly Results (Unaudited) Three Months Ended March 31,2017 June 30,2017 September 30,2017 December 31,2017 (in thousands, except per share data) (unaudited) Revenue $18 $7,514 $12 $5,072 Operating expenses 26,789 24,159 20,309 25,939 Loss from operations (26,771) (16,645) (20,297) (20,867)Other expense, net (899) (785) (1,027) (1,025)Provision for income tax — 753 — — Net loss $(27,670) $(18,183) $(21,324) $(21,892)Net loss per share - basic and diluted $(1.14) $(0.66) $(0.77) $(0.78) Three Months Ended March 31,2016 June 30,2016 September 30,2016 December 31,2016 (in thousands, except per share data) (unaudited) Revenue $— $— $— $29 Operating expenses 30,732 29,752 23,113 25,918 Loss from operations (30,732) (29,752) (23,113) (25,889)Other expense, net (539) (531) (515) (565)Net loss $(31,271) $(30,283) $(23,628) $(26,454)Net loss per share - basic and diluted $(1.78) $(1.69) $(1.04) $(1.16) 118 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureOn May 13, 2016, we dismissed CohnReznick LLP as our independent registered public accounting firm. The Audit Committee approved thedismissal of CohnReznick LLP. The reports of CohnReznick LLP on our consolidated financial statements for the fiscal years ended December 31, 2015,2014 and 2013, and on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015 did not contain an adverseopinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years endedDecember 31, 2015, 2014 and 2013, and the subsequent interim period through May 13, 2016 there were no: (1) disagreements, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, with CohnReznick LLP on any matter of accounting principles or practices, financial statementdisclosure, or auditing scope or procedures, which disagreement if not resolved to the satisfaction of CohnReznick LLP would have caused CohnReznickLLP to make reference thereto in its reports on the consolidated financial statements for such years, or (2) reportable events, as described in Item 304(a)(1)(v)of Regulation S-K.We have furnished the foregoing disclosure to CohnReznick LLP and requested that it furnish us with a letter addressed to the SEC stating whether itagrees with the above statements, and if not, stating the respects with which it does not agree. A copy of the letter dated May 16, 2016 is filed as Exhibit 16.1to our Current Report on Form 8-K filed on May 16, 2016.Effective May 13, 2016, we engaged Ernst & Young LLP as our independent registered public accounting firm. The Board of Directors approved theengagement of Ernst & Young LLP. During the two most recent fiscal years ended prior to CohnReznick LLP’s dismissal, December 31, 2015 and 2014, andthrough the subsequent interim period through May 13, 2016, we did not consult with Ernst & Young LLP, regarding either (i) the application of accountingprinciples to a specific transaction, completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither awritten report nor oral advice was provided to us that was an important factor considered in reaching a decision as to accounting, auditing or financialreporting issues; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Regulation S-K 304(a)(1)(iv) and the relatedinstructions to Regulation S-K 304, or a reportable event, as that term is defined in Regulation S-K 304(a)(1)(v).Item 9A.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresAs of December 31, 2017, management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation ofthe effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Ourdisclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act isrecorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated andcommunicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding requireddisclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controlobjective. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, the design andoperation of our disclosure controls and procedures were effective.Internal Control Over Financial Reporting (a)Management’s Annual Report on Internal Control over Financial ReportingOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintainingadequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Because of its inherent limitations,internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subjectto the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policy or procedures maydeteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,management has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017 based uponthe Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based onthis evaluation, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our internal control over financialreporting was effective as of December 31, 2017.The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by Ernst & Young LLP, our independentregistered public accounting firm, as stated in their report which is included herein. (b)Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting 119 Report of Independent Registered Public Accounting FirmThe Stockholders and Board of Directors of Paratek Pharmaceuticals, Inc.We have audited Paratek Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2017, based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).In our opinion, Paratek Pharmaceuticals, Inc. (the Company) maintained in all material respects, effective internal control over financial reporting as ofDecember 31, 2017, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of Paratek Pharmaceuticals, Inc. as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss,stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2017, and the related notes and our report dated March 6,2018 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ Ernst & Young LLPBoston, MassachusettsMarch 6, 2018 (c)Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarterended December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B.Other InformationNone. 120 PART IIIThe information required by Part III is omitted from this report because we will file a definitive proxy statement within 120 days after the end of our2017 fiscal year pursuant to Regulation 14A for our 2018 Annual Meeting of Stockholders, or the 2018 Proxy Statement, and the information to be includedin the 2017 Proxy Statement is incorporated herein by reference. Item 10.Directors, Executive Officers and Corporate GovernanceThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference.Section 16(a) Beneficial Ownership Reporting ComplianceThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference.Code of Business Conduct and EthicsOur Board of Directors has adopted a code of business conduct and ethics. The code of business conduct applies to all of our employees, officers anddirectors. The full texts of our code of business conduct and ethics are posted on our website at http://www.paratekpharma.com under the Investor Relationssection. We intend to disclose future amendments to our code of business conduct and ethics, or certain waivers of such provisions, at the same location onour website identified above and also in public filings. The inclusion of our website address in this report does not include or incorporate by reference theinformation on our website into this report. Item 11.Executive CompensationThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference. Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference. Item 14.Principal Accountant Fees and ServicesThe information required by this item will be contained in the 2018 Proxy Statement and is hereby incorporated by reference. 121 PART IVItem 15.Exhibits and Financial Statement Schedules(a)(1) Financial StatementsSee Index to Financial Statements under Item 8 of Part II of this Annual Report on Form 10-K, which listing is incorporated herein by reference.(a)(2) Financial Statement SchedulesFinancial statement schedules are omitted because they are not applicable or are not required or the information required to be set forth therein isincluded in the Financial Statements or notes thereto.(a)(3) Exhibits122 EXHIBIT INDEX Incorporated by Reference ExhibitNo. Exhibit Description Schedule/Form File Number Exhibit Filing Date 1.1 Controlled Equity OfferingSM Sales Agreement between ParatekPharmaceuticals, Inc. and Cantor Fitzgerald & Co., dated February 28,2017. Form 10-K 001-36066 1.1 March 2, 2017 2.1 Agreement and Plan of Merger and Reorganization by and amongTranscept Pharmaceuticals, Inc., Tigris Merger Sub, Inc., TigrisAcquisition Sub, LLC and Paratek Pharmaceuticals, Inc. dated as of June30, 2014. Form 8-K 001-36066 2.1 July 1, 2014 3.1 Amended and Restated Certificate of Incorporation. Form 8-K 001-36066 3.1 October 31, 2014 3.2 Certificate of Amendment to the Amended and Restated Certificate ofIncorporation. Form 8-K 001-36066 3.2 October 31, 2014 3.3 Certificate of Elimination of Series A Junior Participating Preferred Stock. Form 8-K 001-36066 3.1 July 24, 2015 3.4 Amended and Restated Bylaws. Form 8-K 001-36066 3.1 April 16, 2015 4.1 Specimen Common Stock Certificate. Form S-3 333-201458 4.2 January 12, 2015 4.2 Form of Warrant Agreement issued to Hercules Technology II, L.P.and Hercules Technology III, L.P. Form 8-K 001-36066 4.1 October 5, 2015 4.3 Form of Warrant Agreement issued to Hercules Technology II, L.P. andHercules Technology III, L.P. Form 8-K 001-36066 4.1 December 13, 2016 4.4 Form of Warrant Agreement issued to Hercules Capital, Inc. Form 8-K 001-36066 4.1 June 29, 2017 4.5 Warrant, dated as of April 7, 2014, issued to HBM Healthcare Investments(Cayman) Ltd. Form 10-K 001-36066 10.22 April 2, 2015 4.6 Warrant, dated as of April 18, 2014 issued to K/S Danish BioVenture. Form 10-K 001-36066 10.23 April 2, 2015 4.7 Warrant, dated as of April 7, 2014 issued to Omega Fund III, L.P. Form 10-K 001-36066 10.24 April 2, 2015 10.1A+ 2006 Incentive Award Plan, as amended and restated. Form 10-K 001-36066 10.1A March 9, 2016 10.1B+ Form of Stock Option Grant Notice and Stock Option Agreement under2006 Incentive Award Plan. Form S-8 333-172041 99.2 February 3, 2011 10.1C+ Form of Restricted Stock Unit Award Grant Notice and Restricted StockUnit Award Agreement under the 2006 Incentive Award Plan, asamended. Form 8-K 001-36066 10.1 February 10, 2015 10.2+ 2009 Employee Stock Purchase Plan. Form 8-K 000-51967 10.1 June 9, 2009 10.3A+ 2014 Equity Incentive Plan, as amended. Form S-8 333-201204 4.1 December 22, 2014 10.3B+ Form of Option Agreement under the 2014 Equity Incentive Plan, asamended. Form S-8 333-201204 4.2 December 22, 2014 10.4A+ 2015 Inducement Plan. Form 8-K 001-36066 10.2 February 10, 2015 10.4B+ Form of Stock Option Grant Notice and Option Agreement under the2015 Inducement Plan. Form 8-K 001-36066 10.3 February 10, 2015 10.5A+ 2017 Inducement Plan. Form 8-K 001-36066 10.1 June 16, 2017 10.5B+ Form of Stock Option Grant Notice and Option Agreement under the2017 Inducement Plan. Form 8-K 001-36066 10.2 June 16, 2017123 Incorporated by Reference ExhibitNo. Exhibit Description Schedule/Form File Number Exhibit Filing Date 10.5C+ Form of Restricted Stock Unit Grant Notice and Restricted Stock UnitAward Agreement under the 2017 Inducement Plan. Form 8-K 001-36066 10.3 June 16, 2017 10.6A+ 2015 Equity Incentive Plan Form S-8 333-205482 99.5 July 2, 2015 10.6B+ Form of Stock Option Grant Notice and Option Agreement under the2015 Equity Incentive Plan Form S-8 333-205482 99.6 July 2, 2015 10.6C+ Form of Restricted Stock Unit Grant Notice and Restricted Stock UnitAward Agreement under the 2015 Equity Incentive Plan. Form S-8 333-205482 99.7 July 2, 2015 10.6D+ Form of Leadership Team Restricted Stock Unit Grant Notice andRestricted Stock Unit Award Agreement under the 2015 Equity IncentivePlan. Form 8-K 001-36066 10.1 August 4, 2017 10.6E*+ Form of Director Restricted Stock Unit Grant Notice and Restricted StockUnit Award Agreement under the 2015 Equity Incentive Plan. 10.6F*+ Form of Director Stock Option Grant Notice and Option Agreement underthe 2015 Equity Incentive Plan. 10.7+ Paratek Pharmaceuticals, Inc. Annual Incentive Plan. Form 8-K 001-36066 10.4 June 16, 2017 10.8*+ Non-Employee Director Compensation Policy. 10.9+ Form of Indemnification Agreement between the Company, its executiveofficers and directors. Form 10-K 001-36066 10.8 March 9, 2016 10.10† United States License and Collaboration Agreement by and between theCompany and Purdue Pharmaceutical Products L.P., dated as of July 31,2009. Form 10-Q 000-51967 10.1 November 16, 2009 10.11† First Amendment to the United States License and CollaborationAgreement by and between the Company and Purdue PharmaceuticalProducts L.P., dated as of November 1, 2011. Form 10-K 000-51967 10.30 March 30, 2012 10.12† Letter Agreement by and between the Company and PurduePharmaceutical Products L.P., dated as of July 31, 2009. Form 10-Q 000-51967 10.2 November 16, 2009 10.13† License Agreement by and between the Company and Shin NipponBiomedical Laboratories, Ltd., dated as of September 24, 2013. Form 10-Q 001-36066 10.6 November 7, 2013 10.14 Termination Agreement and Release, between the Company and ShinNippon Biomedical Laboratories, dated as of September 19, 2014. Form 10-Q 001-36066 10.1 October 28, 2014 10.15† Collaborative Research and License Agreement by and between theCompany and Warner Chilcott, dated as of July 2, 2007. Form 10-K 001-36066 10.16 April 2, 2015 10.16† License and Collaboration Agreement by and between Paratek BermudaLtd. and Zai Lab (Shanghai) Co., Ltd., dated April 21, 2017. Form 10-Q 001-36066 10.11 August 2, 2017 10.17*^ License Agreement by and between the Company and Tufts Universitydated as of February 1, 1997, as amended. 124 Incorporated by Reference ExhibitNo. Exhibit Description Schedule/Form File Number Exhibit Filing Date 10.18 Amendment No. 10, dated as of March 21, 2017, to the LicenseAgreement by and between the Company and Tufts University Form 10-Q 001-36066 10.1 May 4, 2017 10.19*^ Amendment No. 11, dated as of November 15, 2017, to the LicenseAgreement by and between the Company and Tufts University 10.20+ Amended and Restated Employment Agreement by and between theCompany and Douglas W. Pagán, dated as of August 4, 2017. Form 10-Q 001-36066 10.4 November 8, 2017 10.21+ Amended and Restated Employment Agreement, by and between theCompany and Michael F. Bigham, dated as of August 4, 2017. Form 10-Q 001-36066 10.1 November 8, 2017 10.22+ Amended and Restated Employment Agreement, by and between theCompany and Evan Loh, M.D., dated as of August 4, 2017. Form 10-Q 001-36066 10.3 November 8, 2017 10.23+ Amended and Restated Employment Agreement, by and between theCompany and Adam Woodrow, dated as of August 4, 2017. Form 10-Q 001-36066 10.5 November 8, 2017 10.24+ Amended and Restated Employment Agreement, by and between theCompany and William M. Haskel, dated as of August 4, 2017. Form 10-Q 001-36066 10.2 November 8, 2017 10.25 Stock Purchase Agreement dated October 1, 2015, by and betweenParatek Pharmaceuticals, Inc. and Hercules Technology Growth Capital,Inc. Form 8-K 001-36066 10.1 October 5, 2015 10.26† Loan and Security Agreement, dated September 30, 2015, between theCompany and Hercules Technology II, L.P., Hercules Technology III,L.P., certain other lenders and Hercules Technology Growth Capital, Inc. Form 10-Q/A 001-36066 10.5 December 3, 2015 10.27 Amendment No. 1 to Loan and Security Agreement dated November 10,2015, by and between Paratek Pharmaceuticals, Inc., Paratek Pharma,LLC, Hercules Technology II, L.P., Hercules Technology III, L.P., certainother lenders and Hercules Technology Growth Capital, Inc. Form 10-K 001-36066 10.23 March 2, 2017 10.28 Amendment No. 2 to Loan and Security Agreement dated December 12,2016, by and between Paratek Pharmaceuticals, Inc., Paratek Pharma,LLC, Hercules Technology II, L.P., Hercules Technology III, L.P., certainother lenders and Hercules Technology Growth Capital, Inc. Form 8-K 001-36066 10.1 December 13, 2016 10.29 Amendment No. 3 to Loan and Security Agreement dated June 27, 2017,by and between Paratek Pharmaceuticals, Inc., Paratek Pharma, LLC,Hercules Technology II, L.P., Hercules Technology III, L.P., and HerculesCapital, Inc. Form 8-K 001-36066 10.1 June 29, 2017 10.30 Boston Lease Agreement between Paratek Pharma LLC and TDCHeritage LLC, dated as of April 24, 2015, as amended. Form 10-Q 001-36066 10.3 May 4, 2017125 Incorporated by Reference ExhibitNo. Exhibit Description Schedule/Form File Number Exhibit Filing Date 10.31 King of Prussia Lease Agreement between Paratek PharmaLLC and Atlantic American Properties Trust, dated as ofJanuary 23, 2015, as amended. Form 10-Q 001-36066 10.2 May 4, 2017 10.32† Manufacturing and Services Agreement by and between theCompany and Almac Pharma Services Limited, dated as ofDecember 30, 2016. Form 10-K/A 001-36066 10.27 May 5, 2017 10.33† Manufacturing and Services Agreement by and between theCompany and CIPAN – Companhia Industrial Produtora deAntibióticos, S.A., dated as of November 2, 2016. Form 10-K/A 001-36066 10.28 May 5, 2017 10.34† Outsourcing Agreement by and between the Company andCARBOGEN AMCIS AG, dated as of December 30, 2016. Form 10-K/A 001-36066 10.29 May 5, 2017 10.35† Master Manufacturing Service Agreement by and between theCompany and Patheon UK Limited dated as of July 28, 2017and Product Agreement by and between the Company andPatheon UK Limited dated as of July 28, 2017. Form 10-Q/A 001-36066 10.12 November 6, 2017 16.1 Letter from CohnReznick to the Securities and ExchangeCommission dated as of May 16, 2016. Form 8-K 001-36066 16.1 May 16, 2016 21.1* Subsidiaries of the Company. 23.1* Consent of Ernst & Young LLP, Independent RegisteredPublic Accounting Firm. 23.2* Consent of CohnReznick LLP, Independent Registered PublicAccounting Firm. 24.1 Power of Attorney (included on signature page) 31.1* Certification of the Company’s Chief Executive Officerpursuant to Rule 13a-14(a) and Rule 15d-14(a) of theSecurities and Exchange Act of 1934, as amended, pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Company’s Chief Financial Officerpursuant to Rule 13a-14(a) and Rule 15d-14(a) of theSecurities and Exchange Act of 1934, as amended, pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Company’s Chief Executive Officerpursuant to 18 U.S.C. Section 1350, as adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of the Company’s Chief Financial Officerpursuant to 18 U.S.C. Section 1350, as adopted Pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. 126 Incorporated by Reference ExhibitNo. Exhibit Description Schedule/Form File Number Exhibit Filing Date 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. *Filed herewith.†Confidential treatment has been granted as to certain portions, which portions have been omitted and submitted separately to the Securities andExchange Commission.^Confidential treatment has been requested as to certain portions, which portions have been omitted and submitted separately to the Securities andExchange Commission.+Management contract or compensatory plan, contract or arrangement. (b) ExhibitsSee Exhibits listed under Item 15(a)(3) above.(c) Financial Statement SchedulesFinancial statement schedules are omitted because they are not applicable or are not required or the information required to be set forth therein isincluded in the Financial Statements or notes thereto. Item 16.Form 10-K SummaryNot applicable. 127 SIGNATURESPursuant 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 onits behalf by the undersigned, thereunto duly authorized, in the City of Boston, State of Massachusetts, on the 6th day of March, 2018. Paratek Pharmaceuticals, Inc. By: /s/ Michael F. Bigham Michael F. BighamChairman and Chief Executive OfficerPOWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of William M.Haskel and Douglas W. Pagán his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in anyand all capacities, to sign any and all amendments to this annual report on Form 10-K, and to file the same, with all exhibits thereto, and other documents inconnection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do andperform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could doin person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes or substitute, may lawfully do or cause to be done byvirtue hereof. IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated opposite his name.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrantand in the capacities and on the dates indicated. Signature Title Date /s/ Michael F. Bigham Chairman of the Board of Directors and Chief Executive Officer(Principal Executive Officer) March 6, 2018Michael F. Bigham /s/ Douglas W. Pagán Chief Financial Officer(Principal Financial and Accounting Officer) March 6, 2018Douglas W. Pagán /s/ Evan Loh, M.D. President, Chief Operating Officer, Chief Medical Officer andDirector March 6, 2018Evan Loh, M.D. /s/ Thomas J. Dietz, Ph.D. Director March 6, 2018Thomas J. Dietz, Ph.D. /s/ Timothy R. Franson, M.D. Director March 6, 2018Timothy R. Franson, M.D. /s/ Richard J. Lim Director March 6, 2018Richard J. Lim /s/ Kristine Peterson Director March 6, 2018Kristine Peterson /s/ Robert S. Radie Director March 6, 2018Robert S. Radie /s/ Jeffrey Stein, Ph.D. Director March 6, 2018Jeffrey Stein, Ph.D. 128Exhibit 10.6E PARATEK PHARMACEUTICALS, INC.DIRECTOR RESTRICTED STOCK UNIT GRANT NOTICE(2015 EQUITY INCENTIVE PLAN)Paratek Pharmaceuticals, Inc. (the “Company”), pursuant to Section 6(b) of the Company’s 2015 Equity Incentive Plan (the “Plan”),hereby awards to Participant a Restricted Stock Unit Award for the number of shares of the Company’s Common Stock (“RestrictedStock Units”) set forth below (the “Award”). The Award is subject to all of the terms and conditions as set forth in this notice of grant(this “Restricted Stock Unit Grant Notice”) and in the Plan and the Director Restricted Stock Unit Award Agreement (the “AwardAgreement”), both of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined hereinshall have the meanings set forth in the Plan or the Award Agreement. In the event of any conflict between the terms in the Award andthe Plan, the terms of the Plan shall control. Participant: Date of Grant: Vesting Commencement Date: Number of Restricted Stock Units/Shares: Vesting Schedule:[ ][If a Change in Control or Corporate Transaction occurs, then, as of immediately prior to such Changein Control or Corporate Transaction, as applicable, the vesting of the Award shall be accelerated to theextent of one-hundred percent (100%) of the unvested portion of the then outstanding Restricted StockUnits, provided that Participant has remained in Continuous Service from the Vesting CommencementDate until the effective date of such Change in Control or Corporate Transaction.]Issuance Schedule:Subject to any change on a Capitalization Adjustment, one share of Common Stock will be issued foreach Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.Additional Terms/Acknowledgements: Participant acknowledges receipt of, and understands and agrees to, this Restricted Stock UnitGrant Notice, the Award Agreement and the Plan. Participant further acknowledges that as of the Date of Grant, this Restricted StockUnit Grant Notice, the Award Agreement and the Plan set forth the entire understanding between Participant and the Companyregarding the acquisition of the Common Stock pursuant to the Award specified above and supersede all prior oral and writtenagreements on the terms of this Award with the exception, if applicable, of any compensation recovery policy that is adopted by theCompany or is otherwise required by applicable law.  By accepting this Award, Participant acknowledges having received and read this Restricted Stock Unit Grant Notice, the AwardAgreement and the Plan and agrees to all of the terms and conditions set forth in these documents. Participant consents to receive Plandocuments by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained bythe Company or another third party designated by the Company. PARATEK PHARMACEUTICALS, INC. PARTICIPANT By: Signature SignatureTitle: Date: Date: ATTACHMENTS:Director Restricted Stock Unit Award Agreement and 2015 Equity Incentive Plan  ATTACHMENT IDIRECTOR RESTRICTED STOCK UNIT AWARD AGREEMENT  Paratek Pharmaceuticals, Inc.Director Restricted Stock Unit Award Agreement(2015 Equity Incentive Plan)Pursuant to the Director Restricted Stock Unit Grant Notice (the “Grant Notice”) and this Director Restricted Stock UnitAward Agreement (the “Agreement”), Paratek Pharmaceuticals, Inc. (the “Company”) has awarded you (“Participant”) a RestrictedStock Unit Award (the “Award”) pursuant to Section 6(b) of the Company’s 2015 Equity Incentive Plan (the “Plan”) for the numberof Restricted Stock Units/shares indicated in the Grant Notice. Capitalized terms not explicitly defined in this Agreement or the GrantNotice shall have the same meanings given to them in the Plan. The terms of your Award, in addition to those set forth in the GrantNotice, are as follows.1.Grant of the Award. This Award represents the right to be issued on a future date one (1) share of CommonStock for each Restricted Stock Unit that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 below) asindicated in the Grant Notice. As of the Date of Grant, the Company will credit to a bookkeeping account maintained by the Companyfor your benefit (the “Account”) the number of Restricted Stock Units/shares of Common Stock subject to the Award. This Awardwas granted in consideration of your services to the Company.2.Vesting. Subject to the limitations contained herein, your Award will vest, if at all, in accordance with the vestingschedule provided in the Grant Notice, provided that vesting will cease upon the termination of your Continuous Service. Upon suchtermination of your Continuous Service, the Restricted Stock Units/shares of Common Stock credited to the Account that were notvested on the date of such termination will be forfeited at no cost to the Company and you will have no further right, title or interest inor to such underlying shares of Common Stock.3.Number of Shares. The number of Restricted Stock Units/shares subject to your Award may be adjusted fromtime to time for Capitalization Adjustments, as provided in the Plan. Any additional Restricted Stock Units, shares, cash or otherproperty that becomes subject to the Award pursuant to this Section 3, if any, shall be subject, in a manner determined by the Board, tothe same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other RestrictedStock Units and shares covered by your Award. Notwithstanding the provisions of this Section 3, no fractional shares or rights forfractional shares of Common Stock shall be created pursuant to this Section 3. Any fraction of a share will be rounded down to thenearest whole share.4.Securities Law Compliance. You may not be issued any Common Stock under your Award unless the shares ofCommon Stock underlying the Restricted Stock Units are either (i) then registered under the Securities Act, or (ii) the Company hasdetermined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award must alsocomply with other applicable laws and regulations governing the Award, and you shall not receive such Common Stock if theCompany determines that such receipt would not be in material compliance with such laws and regulations.1. 5.Transfer Restrictions. Prior to the time that shares of Common Stock have been delivered to you, you may nottransfer, pledge, sell or otherwise dispose of this Award or the shares issuable in respect of your Award, except as expressly providedin this Section 5. For example, you may not use shares that may be issued in respect of your Restricted Stock Units as security for aloan. The restrictions on transfer set forth herein will lapse upon delivery to you of shares in respect of your vested Restricted StockUnits.(a)Death. Your Award is transferable by will and by the laws of descent and distribution. At your death,vesting of your Award will cease and your executor or administrator of your estate shall be entitled to receive, on behalf of your estate,any Common Stock or other consideration that vested but was not issued before your death.(b)Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorizeddesignee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, youmay transfer your right to receive the distribution of Common Stock or other consideration hereunder, pursuant to a domestic relationsorder or marital settlement agreement that contains the information required by the Company to effectuate the transfer. You areencouraged to discuss the proposed terms of any division of this Award with the Company General Counsel prior to finalizing thedomestic relations order or marital settlement agreement to verify that you may make such transfer, and if so, to help ensure therequired information is contained within the domestic relations order or marital settlement agreement.6.Date of Issuance.(a)The issuance of shares in respect of the Restricted Stock Units is intended to comply with TreasuryRegulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner. In the event one or more RestrictedStock Units vests, the Company shall issue to you one (1) share of Common Stock for each Restricted Stock Unit that vests on theapplicable vesting date(s) (subject to any adjustment under Section 3 above). The issuance date determined by this paragraph isreferred to as the “Original Issuance Date”.(b)If the Original Issuance Date falls on a date that is not a business day, delivery shall instead occur onthe next following business day.(c)The form of delivery (e.g., a stock certificate or electronic entry evidencing such shares) shall bedetermined by the Company.7.Dividends. You shall receive no benefit or adjustment to your Award with respect to any cash dividend, stockdividend or other distribution that does not result from a Capitalization Adjustment.8.Restrictive Legends. The shares of Common Stock issued under your Award shall be endorsed with appropriatelegends as determined by the Company.2. 9.Execution of Documents. You hereby acknowledge and agree that the manner selected by the Company bywhich you indicate your consent to your Grant Notice is also deemed to be your execution of your Grant Notice and of thisAgreement. You further agree that such manner of indicating consent may be relied upon as your signature for establishing yourexecution of any documents to be executed in the future in connection with your Award.10.Award not a Service Contract.(a)Nothing in this Agreement (including, but not limited to, the vesting of your Award or the issuance ofthe shares subject to your Award), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Agreementor the Plan shall: (i) confer upon you any right to continue in the employ of, or affiliation with, the Company or an Affiliate; (ii)constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future workassignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under thisAgreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprivethe Company of the right to terminate you at will and without regard to any future vesting opportunity that you may have.(b)The Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of itsbusinesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”). Such a reorganization couldresult in the termination of your Continuous Service, or the termination of Affiliate status of your employer and the loss of benefitsavailable to you under this Agreement, including but not limited to, the termination of the right to continue vesting in the Award. ThisAgreement, the Plan, the transactions contemplated hereunder and the vesting schedule set forth herein or any covenant of good faithand fair dealing that may be found implicit in any of them do not constitute an express or implied promise of continued engagement asan employee or consultant for the term of this Agreement, for any period, or at all, and shall not interfere in any way with theCompany’s right to conduct a reorganization.11.Withholding Obligations. You expressly acknowledge and agree that you shall be responsible for satisfying andpaying all taxes arising from or due in connection with the grant or vesting of the Restricted Stock Units and/or the delivery of anyCommon Stock hereunder. The Company shall have no liability or obligation relating to the foregoing. 12.Tax Consequences. The Company has no duty or obligation to minimize the tax consequences to you of thisAward and shall not be liable to you for any adverse tax consequences to you arising in connection with this Award. You are herebyadvised to consult with your own personal tax, financial and/or legal advisors regarding the tax consequences of this Award and bysigning the Grant Notice, you have agreed that you have done so or knowingly and voluntarily declined to do so. You understand thatyou (and not the Company) shall be responsible for your own tax liability that may arise as a result of this investment or thetransactions contemplated by this Agreement.3. 13.Unsecured Obligation. Your Award is unfunded, and as a holder of a vested Award, you shall be considered anunsecured creditor of the Company with respect to the Company’s obligation, if any, to issue shares or other property pursuant to thisAgreement. You shall not have voting or any other rights as a stockholder of the Company with respect to the shares to be issuedpursuant to this Agreement until such shares are issued to you pursuant to Section 6 of this Agreement. Upon such issuance, you willobtain full voting and other rights as a stockholder of the Company. Nothing contained in this Agreement, and no action takenpursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between you and theCompany or any other person.14.Notices. Any notice or request required or permitted hereunder shall be given in writing to each of the otherparties hereto and shall be deemed effectively given on the earlier of (i) the date of personal delivery, including delivery by expresscourier, or delivery via electronic means, or (ii) the date that is five (5) days after deposit in the United States Post Office (whether ornot actually received by the addressee), by registered or certified mail with postage and fees prepaid, addressed at the followingaddresses, or at such other address(es) as a party may designate by ten (10) days’ advance written notice to each of the other partieshereto: Company: Paratek Pharmaceuticals, Inc. Attn: Stock Administrator 75 Park Plaza, Fourth Floor Boston, MA 02116 USA Participant: Your address as on file with the Company at the time notice is given 15.Headings. The headings of the Sections in this Agreement are inserted for convenience only and shall not bedeemed to constitute a part of this Agreement or to affect the meaning of this Agreement.16.Miscellaneous.(a)The rights and obligations of the Company under your Award shall be transferable by the Company toany one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by,the Company’s successors and assigns.(b)You agree upon request to execute any further documents or instruments necessary or desirable in thesole determination of the Company to carry out the purposes or intent of your Award.(c)You agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for thepurchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares ofCommon Stock or other securities of the Company held by you, for a period of 180 days following the effective date of a registrationstatement of the Company filed under the Securities Act or such longer period as the underwriters or the Company will request tofacilitate compliance with FINRA Rule 2711 or4. NYSE Member Rule 472 or any successor or similar rules or regulation (the “Lock-Up Period”). You further agree to execute anddeliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with theforegoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may imposestop-transfer instructions with respect to your shares of Common Stock until the end of such period. You also agree that any transfereeof any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 16(c). Theunderwriters of the Company’s stock are intended third party beneficiaries of this Section 16(c) and will have the right, power andauthority to enforce the provisions hereof as though they were a party hereto.(d)You acknowledge and agree that you have reviewed your Award in its entirety, have had anopportunity to obtain the advice of counsel prior to executing and accepting your Award and fully understand all provisions of yourAward.(e)This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals byany governmental agencies or national securities exchanges as may be required.(f)All obligations of the Company under the Plan and this Agreement shall be binding on any successor tothe Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise,of all or substantially all of the business and/or assets of the Company.17.Governing Plan Document. Your Award is subject to all the provisions of the Plan, the provisions of which arehereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from timeto time be promulgated and adopted pursuant to the Plan. Your Award (and any compensation paid or shares issued under yourAward) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and anyimplementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwiserequired by applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right tovoluntarily terminate employment upon a resignation for “good reason,” or for a “constructive termination” or any similar term underany plan of or agreement with the Company.18.Effect on Other Employee Benefit Plans. The value of the Award subject to this Agreement shall not beincluded as compensation, earnings, salaries, or other similar terms used when calculating benefits under any employee benefit plan(other than the Plan) sponsored by the Company or any Affiliate except as such plan otherwise expressly provides. The Companyexpressly reserves its rights to amend, modify, or terminate any or all of the employee benefit plans of the Company or any Affiliate.19.Choice of Law. The interpretation, performance and enforcement of this Agreement shall be governed by the lawof the State of Delaware without regard to that state’s conflicts of laws rules.5. 20.Severability. If all or any part of this Agreement or the Plan is declared by any court or governmental authority tobe unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to beunlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible,be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible whileremaining lawful and valid.21.Other Documents. You acknowledge receipt of and the right to receive a document providing the informationrequired by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus. In addition, you acknowledgereceipt of the Company’s Insider Trading Policy.22.Amendment. This Agreement may not be modified, amended or terminated except by an instrument in writing,signed by you and by a duly authorized representative of the Company. Notwithstanding the foregoing, this Agreement may beamended solely by the Board by a writing which specifically states that it is amending this Agreement, so long as a copy of suchamendment is delivered to you, and provided that, except as otherwise expressly provided in the Plan, no such amendment materiallyadversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Boardreserves the right to change, by written notice to you, the provisions of this Agreement in any way it may deem necessary or advisableto carry out the purpose of the Award as a result of any change in applicable laws or regulations or any future law, regulation, ruling,or judicial decision, provided that any such change shall be applicable only to rights relating to that portion of the Award which is thensubject to restrictions as provided herein.23.Compliance with Section 409A of the Code. This Award is intended to comply with the “short-term deferral”rule set forth in Treasury Regulation Section 1.409A-1(b)(4). Notwithstanding the foregoing, if it is determined that the Award fails tosatisfy the requirements of the short-term deferral rule and is otherwise deferred compensation subject to Section 409A, and if you are a“Specified Employee” (within the meaning set forth in Section 409A(a)(2)(B)(i) of the Code) as of the date of your “separation fromservice” (within the meaning of Treasury Regulation Section 1.409A-1(h) and without regard to any alternative definition thereunder),then the issuance of any shares that would otherwise be made upon the date of the separation from service or within the first six (6)months thereafter will not be made on the originally scheduled date(s) and will instead be issued in a lump sum on the date that is six(6) months and one day after the date of the separation from service, with the balance of the shares issued thereafter in accordance withthe original vesting and issuance schedule set forth above, but if and only if such delay in the issuance of the shares is necessary toavoid the imposition of adverse taxation on you in respect of the shares under Section 409A of the Code. Each installment of sharesthat vests is intended to constitute a “separate payment” for purposes of Treasury Regulation Section 1.409A-2(b)(2).* * * * *This Restricted Stock Unit Award Agreement shall be deemed to be signed by the Company and the Participant upon thesigning by the Participant of the Restricted Stock Unit Grant Notice to which it is attached.6. ATTACHMENT II2015 EQUITY INCENTIVE PLAN7.Exhibit 10.6F Paratek Pharmaceuticals, Inc.Director Stock Option Grant Notice(2015 Equity Incentive Plan)Paratek Pharmaceuticals, Inc. (the “Company”), pursuant to its 2015 Equity Incentive Plan (the “Plan”), hereby grants to Optionholderan option to purchase the number of shares of the Company’s Common Stock set forth below (the “Option”). This Option is subject toall of the terms and conditions as set forth in this notice of grant (this “Stock Option Grant Notice”) and in the Director OptionAgreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalizedterms not explicitly defined herein shall have the meanings set forth in the Plan or the Director Option Agreement. In the event of aconflict between the terms in this Stock Option Grant Notice and the Plan, the terms of the Plan will control. Optionholder: Date of Grant: Vesting Commencement Date: Number of Shares Subject to Option: Exercise Price (Per Share): Total Exercise Price: Expiration Date: Type of Grant:Nonstatutory Stock OptionExercise Schedule:Same as Vesting Schedule Vesting Schedule:[ ][If a Change in Control or Corporate Transaction occurs, then, as of immediately prior to such Change inControl or Corporate Transaction, as applicable, the vesting of the Options shall be accelerated to the extentof one-hundred percent (100%) of the unvested portion of the then outstanding Options, provided thatOptionholder has remained in Continuous Service from the Vesting Commencement Date until the effectivedate of such Change in Control or Corporate Transaction.]Payment:By one or a combination of the following items (described in the Option Agreement):☐ By cash, check, bank draft or money order payable to the Company☐Pursuant to a Regulation T Program☐By delivery of already-owned shares☐If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Company’sconsent at the time of exercise, by a “net exercise” arrangementAdditional Terms/Acknowledgements: Optionholder acknowledges receipt of, and understands and agrees to, this Stock Option GrantNotice, the Option Agreement and the Plan. Optionholder acknowledges and agrees that this Stock Option Grant Notice and the OptionAgreement may not be modified, amended or revised except as provided in the Plan. Optionholder further acknowledges that as of theDate of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set forth the entire understanding betweenOptionholder and the Company regarding this option award and supersede1. all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previouslygranted and delivered to Optionholder and (ii) any compensation recovery policy that is adopted by the Company or is otherwiserequired by applicable law. By accepting this option, Optionholder acknowledges having received and read the Stock Option Grant Notice, the Option Agreementand the Plan and agrees to all of the terms and conditions set forth in these documents. Optionholder consents to receive suchdocuments by electronic delivery and to participate in the Plan through an online or electronic system established and maintained by theCompany or another third party designated by the Company. Paratek Pharmaceuticals, Inc. Optionholder: By: Signature Signature Title: Date: Date: Attachments: Director Option Agreement, 2015 Equity Incentive Plan and Notice of Exercise 2. Attachment IDirector Option Agreement  Paratek Pharmaceuticals, Inc.Director Option Agreement(2015 Equity Incentive Plan) Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Director Option Agreement, Paratek Pharmaceuticals,Inc. (the “Company”) has granted you an option under its 2015 Equity Incentive Plan (the “Plan”) to purchase the number of shares ofthe Company’s Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice. The option isgranted to you effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). If there is any conflict between theterms in this Option Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this OptionAgreement or in the Grant Notice but defined in the Plan will have the same definitions as in the Plan.The details of your option, in addition to those set forth in the Grant Notice and the Plan, are as follows:1.Vesting. Subject to the provisions contained herein, your option will vest as provided in your GrantNotice. Vesting will cease upon the termination of your Continuous Service.2.Number of Shares and Exercise Price. The number of shares of Common Stock subject to your optionand your exercise price per share in your Grant Notice will be adjusted for Capitalization Adjustments.3.Method of Payment. You must pay the full amount of the exercise price for the shares you wish toexercise. You may pay the exercise price in cash or by check, bank draft or money order payable to the Company or in any othermanner permitted by your Grant Notice, which may include one or more of the following:(a)Pursuant to a program developed under Regulation T as promulgated by the FederalReserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or thereceipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of paymentis also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.(b)By delivery to the Company (either by actual delivery or attestation) of already-ownedshares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and that are valued atFair Market Value on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exerciseyour option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a formapproved by the Company. You may not exercise your option by delivery to the Company of Common Stock if doing so would violatethe provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.(c)If this option is a Nonstatutory Stock Option, subject to the consent of the Company atthe time of exercise, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of CommonStock issued upon exercise of your option by the largest whole number of shares with a Fair Market Value that does not exceed theaggregate exercise price. You must pay any remaining balance of the aggregate exercise price not satisfied by the “net exercise” incash or other permitted form of payment. Shares of Common Stock will no longer be outstanding under your1.option and will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to the “net exercise,” (ii) aredelivered to you as a result of such exercise, and (iii) are withheld to satisfy your tax withholding obligations.4.Whole Shares. You may exercise your option only for whole shares of Common Stock.5.Securities Law Compliance. In no event may you exercise your option unless the shares of CommonStock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that yourexercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of youroption also must comply with all other applicable laws and regulations governing your option, and you may not exercise your option ifthe Company determines that such exercise would not be in material compliance with such laws and regulations (including anyrestrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).6.Term. You may not exercise your option before the Date of Grant or after the expiration of the option’sterm. The term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:(a)immediately upon the date on which the event giving rise to your termination ofContinuous Service for Cause occurs (or, if required by law, the date of termination of Continuous Service for Cause);(b)three (3) months after the termination of your Continuous Service for any reason otherthan Cause, your Disability or your death (except as otherwise provided in Section 7(d) below); provided, however, that if during anypart of such three (3) month period your option is not exercisable solely because of the condition set forth in the section above relatingto “Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for anaggregate period of three (3) months after the termination of your Continuous Service; provided further, if during any part of such three(3) month period, the sale of any Common Stock received upon exercise of your option would violate the Company’s insider tradingpolicy, then your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period ofthree (3) months after the termination of your Continuous Service during which the sale of the Common Stock received upon exerciseof your option would not be in violation of the Company’s insider trading policy ;(c)twelve (12) months after the termination of your Continuous Service due to yourDisability (except as otherwise provided in Section 7(d)) below;(d)eighteen (18) months after your death if you die either during your Continuous Serviceor within three (3) months after your Continuous Service terminates for any reason other than Cause;(e)the Expiration Date indicated in your Grant Notice; or(f)the day before the tenth (10th) anniversary of the Date of Grant.2.7.Exercise. You may exercise the vested portion of your option during its term by (i) delivering a Notice ofExercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Companyfor exercise and (ii) paying the exercise price to the Company’s Secretary, stock plan administrator, or such other person as theCompany may designate, together with such additional documents as the Company may then require.8.Transferability. Except as otherwise provided in this Section 9, your option is not transferable, except bywill or by the laws of descent and distribution, and is exercisable during your life only by you. (a)Certain Trusts. Upon receiving written permission from the Board or its dulyauthorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined underSection 671 of the Code and applicable state law) while the option is held in the trust. You and the trustee must enter into transfer andother agreements required by the Company. (b)Domestic Relations Orders. Upon receiving written permission from the Board or itsduly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by theCompany, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement orother divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information required by theCompany to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Companyprior to finalizing the domestic relations order or marital settlement agreement to help ensure the required information is containedwithin the domestic relations order or marital settlement agreement. (c)Beneficiary Designation. Upon receiving written permission from the Board or its dulyauthorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a third party who, on your death, will thereafter be entitled to exercisethis option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation,your executor or administrator of your estate will be entitled to exercise this option and receive, on behalf of your estate, the CommonStock or other consideration resulting from such exercise.9.Option not a Service Contract. Your option is not an employment or service contract, and nothing in youroption will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or anAffiliate, or of the Company or an Affiliate to continue your employment. In addition, nothing in your option will obligate theCompany or an Affiliate, their respective stockholders, boards of directors, officers or employees to continue any relationship that youmight have as a Director or Consultant for the Company or an Affiliate.10.Withholding Obligations. You expressly acknowledge and agree that you shall be responsible forsatisfying and paying all taxes arising from or due in connection with the vesting or exercise of the options and/or the delivery of anyCommon Stock hereunder. The Company shall have no liability or obligation relating to the foregoing.11.Tax Consequences. You hereby agree that the Company does not have a duty to design or administer thePlan or its other compensation programs in a manner that minimizes your tax liabilities. You will not make any claim against theCompany, or any of its Officers, Directors, Employees or Affiliates related to tax liabilities arising from your option or your othercompensation. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per3.share specified in the Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant andthere is no other impermissible deferral of compensation associated with the option.12.Notices. Any notices provided for in your option or the Plan will be given in writing (includingelectronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you,five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to theCompany. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this optionby electronic means or to request your consent to participate in the Plan by electronic means. By accepting this option, you consent toreceive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established andmaintained by the Company or another third party designated by the Company.13.Governing Plan Document. Your option is subject to all the provisions of the Plan, the provisions ofwhich are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which mayfrom time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your option andthose of the Plan, the provisions of the Plan will control. In addition, your option (and any compensation paid or shares issued underyour option) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and anyimplementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwiserequired by applicable law.14.Other Documents. You hereby acknowledge receipt of and the right to receive a document providing theinformation required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus. In addition, youacknowledge receipt of the Company’s policy permitting certain individuals to sell shares only during certain “window” periods and theCompany’s insider trading policy, in effect from time to time.15.Effect on Other Employee Benefit Plans. The value of this option will not be included as compensation,earnings, salaries, or other similar terms used when calculating your benefits under any employee benefit plan sponsored by theCompany or any Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend,modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.16.Voting Rights. You will not have voting or any other rights as a stockholder of the Company with respectto the shares to be issued pursuant to this option until such shares are issued to you. Upon such issuance, you will obtain full votingand other rights as a stockholder of the Company. Nothing contained in this option, and no action taken pursuant to its provisions, willcreate or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.17.Severability. If all or any part of this Option Agreement or the Plan is declared by any court orgovernmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this OptionAgreement or the Plan not declared to be unlawful or invalid. Any Section of this Option Agreement (or part of such a Section) sodeclared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or partof a Section to the fullest extent possible while remaining lawful and valid.4.18.Miscellaneous.(a)The rights and obligations of the Company under your option will be transferable to anyone or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by theCompany’s successors and assigns.(b)You agree upon request to execute any further documents or instruments necessary ordesirable in the sole determination of the Company to carry out the purposes or intent of your option.(c)You acknowledge and agree that you have reviewed your option in its entirety, have hadan opportunity to obtain the advice of counsel prior to executing and accepting your option, and fully understand all provisions of youroption.(d)This Option Agreement will be subject to all applicable laws, rules, and regulations, andto such approvals by any governmental agencies or national securities exchanges as may be required.(e)All obligations of the Company under the Plan and this Option Agreement will bebinding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger,consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.* * *This Option Agreement will be deemed to be signed by you upon the signing by you of the Grant Notice to whichit is attached. 5. Attachment II2015 Equity Incentive Plan  Attachment IIINotice of Exercise  Notice Of ExerciseUnder the Paratek Pharmaceuticals, Inc.2015 Equity Incentive Plan Paratek Pharmaceuticals, Inc.Attention: Stock Plan Administrator75 Park Plaza, Fourth FloorBoston, MA 02116, USADate of Exercise: _______________This constitutes notice to Paratek Pharmaceuticals, Inc. (the “Company”) under my stock option that I elect to purchase thebelow number of shares of Common Stock of the Company (the “Shares”) for the price set forth below.Type of option (check one):Incentive ☐Nonstatutory ☐Stock option dated:______________________________Number of Shares asto which option isexercised:______________________________Certificates to beissued in name of:______________________________Total exercise price:$______________$______________Cash payment deliveredherewith:$______________$______________Value of ________ Shares delivered herewith:$______________$______________Value of ________ Shares pursuant to net exercise:$______________$______________Regulation T Program (cashless exercise):$______________$______________By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the ParatekPharmaceuticals, Inc. 2015 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) ofyour withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an Incentive Stock Option,to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this optionthat occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise ofthis option.  Very truly yours, SignaturePrint Name Exhibit 10.8PARATEK PHARMACEUTICALS, INC.NON-EMPLOYEE DIRECTOR COMPENSATION POLICYEach member of the Board of Directors (the "Board") who is not also serving as an employee of Paratek Pharmaceuticals,Inc. (the "Company") or any of its subsidiaries (each such member, an "Eligible Director") will receive the compensation described inthis Non-Employee Director Compensation Policy for his or her Board service. This Non-Employee Director Compensation Policy iseffective on January 1, 2018 (the "Effective Date"). An Eligible Director may decline all or any portion of his or her compensation bygiving notice to the Company prior to the date for which service begins for a cash payment, or the date of grant for an equity award, asthe case may be (e.g., an election to decline the cash payment to be made for a quarter must be made prior to the date the quarterbegins). This policy may be amended at any time in the sole discretion of the Board or the Compensation Committee of the Board, andsupersedes any prior policies related to compensation of Eligible Directors.Annual Cash CompensationThe annual cash compensation amount set forth below is payable in equal quarterly installments, payable in arrears on thelast day of each fiscal quarter in which the service occurred. If an Eligible Director joins the Board or a committee of the Board at a timeother than effective as of the first day of a fiscal quarter, each annual retainer set forth below will be pro-rated based on days served inthe applicable fiscal year, with a pro-rated amount paid for the first fiscal quarter in which the Eligible Director provides the service, andregular full quarterly payments thereafter. All annual cash fees are vested upon payment. 1.Annual Board Service Retainer: a.All Eligible Directors: $45,000 2.Annual Committee Chair Service Retainer: a.Chairman of the Audit Committee: $20,000 b.Chairman of the Compensation Committee: $15,000 c.Chairman of the Nominating and Corporate Governance Committee: $10,000 3.Annual Committee Member Service Retainer (other than Chairman): a.Member of the Audit Committee: $7,750 b.Member of the Compensation Committee: $6,000 c.Member of the Nominating and Corporate Governance Committee: $4,500Equity CompensationThe stock options and restricted stock units set forth below will be granted under the Company's 2015 Equity Incentive Plan(the "Plan”). All stock options granted under this policy will be non-statutory stock options, with an exercise price per share equal to100% of the Fair Market Value (as defined in the Plan) of the underlying Common Stock on the date of grant, and a term of ten yearsfrom the date of grant (subject to earlier termination in connection with a termination of service as provided in the Plan). In addition tothe vesting schedules described below, in the event of a Change in Control or a Corporate Transaction (each, as defined in the Plan),any unvested portion of the stock options and restricted stock units described below will fully vest and become exercisable as ofimmediately prior to the effective time of such Change in Control or Corporate Transaction, subject to the Eligible Director'sContinuous Service (as defined in the Plan) on the effective date of such transaction.1FINAL approved by CC 14 DEC 2017Exhibit 10.8 1.Initial Grant: On the last trading day of the month in which an Eligible Director is initially elected or appointed to the Board(or if there is no trading day in that month on or after the date of election or appointment of the Eligible Director, then on thelast trading day of the month following the month in which an Eligible Director is initially elected or appointed to theBoard), the Eligible Director will be granted automatically, without further action by the Board or Compensation Committeeof the Board, (i) stock options to purchase 10,000 shares of the Company's Common Stock and (ii) Restricted Stock Units(RSUs) representing 15,000 shares of the Company’s Common Stock. The shares subject to each such (i) stock option willvest as to 1/36 of the shares on the last day of the month following the month of the date of grant, and on the last day ofeach successive month thereafter until fully vested, and (ii) 1/3 of the RSUs will vest on each successive one-yearanniversary following the grant date over a three-year period, in either case, subject to the Eligible Director's ContinuousService (as defined in the Plan) through such vesting dates. No Initial Grant will be granted to an Eligible Director who isalready serving as a director on the Effective Date. 2.Annual Grant: At the Compensation Committee meeting held in January or February of each year for the purpose ofgranting executives annual equity incentive awards following the Effective Date or, if a Compensation Committee meeting isnot held by the end of February of any year, on the last trading date in February of such year following the Effective Date,each Eligible Director who continues to serve as a non-employee member of the Board on such date will be grantedautomatically, without further action by the Board or Compensation Committee of the Board, a stock option to purchase5,000 shares of the Company's Common Stock and Restricted Stock Units (RSUs) representing 7,500 shares of theCompany’s Common Stock. The shares subject to each such (i) stock option will vest as to 1/12 of the shares on the one-month anniversary following the vesting commencement date, and on the same calendar date of each successive monththereafter until fully vested, and (ii) RSUs on the one-year anniversary following the grant date, subject, in either case, to theEligible Director's Continuous Service (as defined in the Plan) through such vesting date.ExpensesThe Company will reimburse Eligible Directors for ordinary, necessary and reasonable out-of-pocket travel expenses tocover in-person attendance at and participation in Board and/or Committee meetings.2FINAL approved by CC 14 DEC 2017Exhibit 10.17 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. [Execution Copy]TUFTS UNIVERSITY LICENSE AGREEMENTThis Agreement is made and entered into as of February 1, 1997 ("the Effective Date"), by and between ParatekPharmaceuticals, Inc., a Delaware corporation having an address of P.O. Box 1525, Boston, Massachusetts 02117-1525 ("Licensee")and Tufts University, a/k/a Trustees of Tufts College, a corporation duly organized and existing under the laws of the Commonwealthof Massachusetts and having a principal office at Medford, Massachusetts 02155 ("Tufts").WHEREAS, Tufts possesses certain know-how, inventions and intellectual property in the field of drug resistance;WHEREAS, Tufts, acting through Dr. Stuart Levy, (the "Principal Investigator") wishes to and is prepared to conductadditional research in this field under a Sponsored Research Agreement of even date herewith;WHEREAS, Licensee is prepared to provide support to Tufts for such research by the Principal Investigator, providing itreceives certain license rights under inventions, biological materials, and/or know-how developed in the research under the terms ofthis License Agreement; andWHEREAS, Tufts wishes to have such inventions, biological materials, and/or know- how perfected and marketed in orderthat products resulting therefrom might be available for public use and benefit.NOW THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, andintending to be legally bound, the parties hereto mutually agree as follows:ARTICLE I - DEFINITIONS.1.1. "Patent Rights" shall mean rights owned or controlled by Tufts which arise under United States or foreign patents orpatent applications as described in Exhibit A or any patents issuing from said applications that cover inventions which were discoveredor developed at Tufts by Dr. Stuart Levy, alone or in conjunction with others, or which are discovered or developed in the Field of Usepursuant to the Sponsored Research Agreement of even date herewith (the "Research Agreement"), including any divisions,continuations, continuations-in-part, re-examinations, extensions, renewals, or reissues thereof.1.2. "Technology" shall mean the trade secret, know-how, and other proprietary, non-public information relating to the"Field of Use" and necessary or useful for practicing the Patent Rights that was discovered or developed at Tufts by Dr. Stuart Levy,alone or in conjunction with others, or is discovered or developed pursuant to the Research Agreement and that has been revealed toLicensee pursuant to the Research Agreement or that may hereafter be revealed to Licensee pursuant to the requirements of thisAgreement or the Research Agreement. The THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Technology shall not include the Patent Rights but shall include any non-public information included in patent applications if andwhen it is subsequently deleted therefrom before the patent is issued.1.3. "Confidential Technology" shall mean all Technology, and all information in or concerning patent applications includedin the Patents, provided, however, that Licensee need not keep confidential any information that:(a)at the date of its disclosure by Tufts to Licensee was known to Licensee as documented in Licensee'sfiles and is revealed to Tufts within thirty (30) days after Tufts' disclosure to Licensee; or(b)at the date of disclosure by Tufts to Licensee was, or thereafter becomes, through no fault of Licensee,publicly known through publication or so widely known and used that it can be said to be generally available to the public.1.4. "Field of Use" shall mean the prophylaxis, treatment or prevention of bacterial or microbial diseases or medicalconditions in humans or animals or agriculture using (i) tetracycline derivatives or other compounds which affect tetracycline resistanceor (ii) compounds based on knowledge of the MAR operon or (iii) compounds involving novel genes which affect antibiotic resistanceor microbial infectivity and which are derived from studies of the MAR operon or (iv) compounds that affect any such genes.1.5. "License Period" shall mean collectively the respective periods commencing on the Effective Date and ending (unlesssooner terminated) upon the later of the expiration of the last to expire of the Patent Rights (treating pending applications as issuedpatents for so long as they are pending) and fifteen (15) years from the Effective Date.1.6. "Licensed Products" shall mean all products that are within or made by a process within the Field of Use and thatembody or are made in accordance with or using or are based upon or derived from any aspect of the Patent Rights or the Technology.1.7 "Gross Sales" shall mean the gross sales of Licensed Products subject to royalty under this Agreement billed tocustomers by Licensee and its Subsidiaries, less the following:(a)[***];(b)[***]; and(c)[***].Gross Sales shall also include and be deemed to have been made with respect to any Licensed Products used by Licensee or anySubsidiary, for its own commercial purposes, or transferred to any third-party for less than the transferee is then charging in normal arms-length sales transactions; and Gross Sales in all such casesshall be deemed to have been made at the prices therefor at which such Licensed Products are then being sold to the customers of suchuser or transferor (or of Licensee, if a Subsidiary is a user but not a seller) in arms-length sales transactions. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. In the event that a Licensed Product under this Agreement is sold in combination with another active ingredient orcomponent having independent therapeutic effect or diagnostic utility, then "Gross Sales," for purposes of determining royaltypayments on the combination, shall be calculated using one of the following methods: (e)By multiplying the Gross Sales of the combination by the fraction A/A+B, where A is the gross selling price, during the royalty paying period in question, of the Licensed Product soldseparately, and B is the gross selling price, during the royalty period in question, of the other active ingredientsor components sold separately; or (f)In the event that no such separate sales are made of the Licensed Product or any of the active ingredients orcomponents in such combination package during the royalty paying period in question, Gross Sales, for thepurposes of determining royalty payments, shall be calculated using the above formula where A is thereasonably estimated commercial value of the Licensed Product sold separately and B is the reasonablyestimated commercial value of the other active ingredients or components sold separately. Any such estimatesshall be made in good faith by Licensee and reported to Tufts with the reports to be provided to Tufts pursuant toSection 3.7 hereof. 1.8. "Subsidiary" shall mean any corporation, partnership, or other business organization that directly or indirectly controls,is controlled by, or is under common control with Licensee. For the purpose of this Agreement, "control" shall mean the holding directly or indirectly of fifty percent (50%) or more of the voting stock or other ownership interest of the corporation or other business organization invoiced.1.9. "Territory" shall mean the world.ARTICLE II - GRANT; SUBLICENSES.2.1. Grant. Subject to the terms and conditions hereinafter set forth, Tufts hereby grants to Licensee, to the extent that itlawfully may, a royalty-bearing, exclusive license to practice the Patent Rights and use the Technology in the Territory, only for thepurpose of developing, making, using, and selling Licensed Products (the "License"). The License shall exist as such an exclusive,royalty-bearing license during and will terminate as such at the end of the License Period, unless sooner terminated as hereinafterprovided. If the License does not terminate before the end of the License Period, then the License to use the Technology shall continuein effect thereafter without limitation of time as an exclusive, fully-paid-up license subject to termination only as provided in Article IX.2.2. Reserved Rights. During the License Period, Tufts shall have no right to use the Patent Rights or Technology to make,use, or sell Licensed Products for commercial purposes, but Tufts reserves to itself (a) the right at all times to practice the Patent Rightsand to use the Technology, and to make and use Licensed Products for research purposes within Tufts, and (b) all other rights notgranted to Licensee, including the rights to use and permit the use of Patent Rights and Technology for any purpose not in conflict withthe provisions of the License. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 2.3. Sublicenses. Licensee shall also have the right to grant to its Subsidiaries or other sublicensees, exclusive or non-exclusive sublicenses under the License during the License Period; provided, however, and Licensee agrees that:(a)the terms and conditions of each sublicense shall be consistent with the terms and conditions of thisAgreement and shall contain, among other things (by way of example but not limitation), provisions substantially similar to andconsistent with: the "Gross Sales" definition; Article III (providing, among other things, that royalties shall be paid to Licensee inamounts at least equal to those of Article III hereof, so that Licensee may in turn pay those royalties to Tufts); Article V; Section 7.1(so that no representations or warranties inconsistent with that Article shall be extended to or by any sublicensee); Article IX, but thesublicense must terminate not later than the end of the License Period, or earlier if the License terminates earlier for any reason; ArticleXI; and Article XII.(b)each sublicense shall provide that the obligations to Tufts of Sections 3.8, 3.9, 3.10, 7.1, 8.1, 8.5, and9.2, and Articles V, XI, and XII of this Agreement shall be binding on the sublicensee and be enforceable both by Tufts and theLicensee.(c)if a proposed sublicensee is either (i) a Subsidiary or (ii) a company engaged in the development,manufacture or distribution of health care products with a net worth or market capitalization of at least $50 million, no approval ofTufts shall be required for the proposed sublicense: in all other cases, the sublicense may not be granted without Tufts' prior writtenapproval (which may not be unreasonably withheld or delayed);(d)Licensee shall furnish to Tufts a true and complete copy of each sublicense agreement and eachamendment thereto, promptly after the sublicense or amendment has been agreed upon;(e)no Subsidiary or other sublicensee shall have the right to further license, sublicense, or assign its rightswithout the prior approval of Licensee; and(f)no sublicense shall relieve Licensee of any of its obligations hereunder, and Licensee shall beresponsible for the acts or omissions of its Subsidiaries and sublicensees and for compliance by them with their obligations, andLicensee shall take all steps necessary to enforce that compliance to the extent required to allow Licensee to fully comply with all of itsobligations under this agreement.2.4During the term of this Agreement and so long as neither Licensee nor any Subsidiary or sublicensee is in defaultwith respect to any payment due to Tufts hereunder, Tufts will not assert its rights under any Patent Rights to prevent anyparty from using or selling any quantity of Licensed Product on which a royalty has been paid hereunder.ARTICLE III - PAYMENTS; RECORDS.3.1. License Fee. As partial consideration for the licenses granted hereunder, Licensee agrees to issue to Tufts and itsdesignees, within thirty (30) days of the Effective Date, 500,000 shares of Licensee's Common Stock, par value $0.001 per share,pursuant to the terms of a Stock Subscription and Right of First Refusal Agreement. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 3.2. Milestone Payments. Licensee agrees to pay to Tufts the following non- refundable milestone payments:Milestone Payment AmountCommencement of First Phase III Clinical Trials inThe United States 50,000First marketing application (NDA) submitted in theUnited States 100,000[***] [***]3.3 Minimum Royalties. Licensee agrees to pay to Tufts a minimum royalty payment of Twenty-Five Thousand Dollars($25,000) in each twelve-month period commencing on each anniversary of the Effective Date if during such period Licensee is notsponsoring at least One Hundred Thousand Dollars ($100,000) in research at Tufts. Minimum royalty payments shall be creditableagainst royalties due under Section 3.4 during the same twelve-month period.3.4. Running Royalties. Licensee agrees to pay to Tufts royalties of:(a)[***] percent ([***]%) of the Gross Sales of Licensed Products, the making, using, or selling of whichinfringes (were it not for the License) at least one claim in an issued, unexpired and non-lapsed patent included in the Patent Rights; or(b)[***] percent ([***]%) of the Gross Sales of Licensed Products that do not fall within the clause (a),above, but the manufacture, use or sale of which would infringe (were it not for the License) at least one claim in a pending applicationincluded in the Patent Rights, if such claim were to issue.3.5 Sublicense Royalties. For each sublicense granted by Licensee, Licensee shall pay to Tufts (a) fourteen percent (14%) ofthat portion of any sublicense issue fees or license maintenance fees received by Licensee which are reasonably attributable tosublicenses of rights granted to Licensee hereunder, and (b) the lesser of (i) [***] percent ([***]%) of any royalty payments receivedunder such sublicense with respect to the Gross Sales by the sublicensee of Licensed Products covered by a claim contained in anissued Patent Right or a claim included in a pending application covering a Patent Right on a country-by-country basis or (ii) theroyalty which would be due if Licensee, rather than the sublicensee, had sold the Licensed Product. Funds received by Licensee froma sublicensee for research conducted by Licensee, achievement of product development-related performance milestones, or for equityinvestments in Licensee will not be subject to any royalties hereunder.3.6 Royalty Reductions. In the event Licensee or a sublicensee of Licensee incurs expenses in judicial or administrativeproceedings based upon allegations of infringement by Licensee or sublicensee of third-party patents or know-how solely or primarilyas a result of the sale of Licensed Products, Licensee may withhold up to [***] percent ([***]%) of the royalties due hereunder for thecalendar year in which the expenses are incurred, and apply the same toward reimbursement of its expenses in connection therewith. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 3.7. Statements; Payments. After the first commercial sale of a Licensed Product, Licensee shall, within sixty (60) days afterthe last days of March, June, September, and December in each year or portion thereof during the License Period, and within sixty (60)days after the end of the License Period, provide Tufts with a statement accounting for the Gross Sales of Licensed Products byLicensee, its Subsidiaries, and its sublicensees and all amounts described in Section 3.5, all for the immediately preceding three (3)month period or portion thereof, accompanied by payment for the full amount of royalties due under this Article III for that period orportion thereof. Each such statement shall be certified by the Chief Financial Officer of Licensee as being true, correct, and complete.3.8. Currencies. All payments to be paid to Tufts shall be computed and made in United States Dollars, and Licensee shalluse best efforts to convert royalty payments payable on Gross Sales in any country to United States Dollars; provided, however, that ifconversion to and transfer of such Dollars cannot be made by Licensee, its Subsidiaries, or its sublicensees in any country for anyreason, Licensee may pay such sums in the currency of the country in which such Gross Sales are made, deposited in Tufts' name in abank designated by Tufts in any such country. The rate of exchange of local currencies to U.S. Dollars shall be at the rate of exchangeprevailing at the Bank of Boston (or such other bank in Boston, Massachusetts or New York, New York as Tufts may designate inwriting from time to time), for currencies of the amounts involved, as such rate is stated for the first business day after the end of theperiod with respect to which the royalties are due.3.9. Records; Audits. Licensee shall keep (and cause to be kept) and maintain complete and accurate records of Gross Salesof the Licensed Products by Licensee, its Subsidiaries, and its sublicensees, in accordance with generally accepted accountingprocedures. Such records shall be accessible to independent certified public accountants selected by Tufts and reasonably acceptable toLicensee, by audits conducted not more than once a year during the License Period and for one year after the termination thereof, atany reasonable times during business hours, for the purpose of verifying Gross Sales and any royalties due thereon. Such accountantsshall disclose to Tufts only information relating to the accuracy of the records kept and the payments made, and shall be under a duty tokeep confidential any other information obtained from such records. Licensee, its Subsidiaries, and its sublicensees shall not berequired to retain such records for more than three (3) years after the close of any calendar quarter-year. No period shall be subject toaudit under this Section more than once as to any entity being audited.3.10. Substantial Underpayment. If any such audit reveals that the aggregate of royalties paid during any four consecutivecalendar quarters was more than five percent (5%) less than the amount that should have been paid, then the reasonable expenses of theaudit shall be borne by Licensee, which shall pay those expenses within thirty (30) days after demand therefore by Tufts accompaniedby the accountants' statement therefor.ARTICLE IV - TECHNOLOGY DISCLOSURE; PATENT PROSECUTION.4.1. Demonstration. Within ninety (90) days of the Effective Date, Tufts representative(s) having knowledge of theTechnology and Patent Rights will disclose them to Licensee personnel generally competent in the Field of Use, at the premises ofTufts, or, if mutually agreed, at the premises of Licensee. Such disclosure shall be scheduled at the mutual convenience of Tufts andLicensee and shall be made in such ways as the parties mutually agree seems most likely to enable those Licensee personnel to learnthe Technology and Patent Rights. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4.2. Written Disclosure. Tufts may elect to prepare and furnish to Licensee one or more written descriptions of theTechnology and Patent Rights or portions thereof. Licensee agrees to review the written descriptions promptly after receiving them andindicate in writing to Tufts whether there are any details or aspects with which Licensee does not concur. Absent a sufficiently detailedobjection by Licensee, those written descriptions will be deemed binding on the parties for all purposes under this Agreement as to thedescription of the Technology and Patent Rights so described.4.3. Availability. Tufts shall perform its obligations under Sections 4.1 and 4.2 for no additional consideration. Tufts shallnot be obligated to devote any particular amount of time to the performance of those obligations as long as Tufts makes itsknowledgeable personnel available to competent Licensee personnel as stated above, and devotes the amount of time reasonablyrequired to teach the necessary Technology to those Licensee personnel. Licensee agrees to make those personnel available forinstruction within the time period and otherwise as stated in Section 4.1.4.4. Patent Prosecution. Commencing on the Effective Date, Licensee shall have the responsibility to apply for, seek promptissuance of, and maintain while the License is in effect, the Patent Rights in the United States, in the foreign countries listed on ExhibitB hereto and in the foreign countries selected by Licensee and Licensee will keep Tufts informed of the foregoing on a current basis.Upon Tufts' request, Licensee will file and prosecute patent applications corresponding to the Patent Rights in any one or more othercountries, to the extent commercially reasonable. Tufts shall cooperate fully with Licensee and provide all such information and dataand execute any documents reasonably required in order to allow Licensee to conduct such prosecution and Tufts shall have theopportunity to provide substantive review and comment on any such filing or prosecution. The choice of patent counsel shall bereasonably acceptable to Tufts.4.5. Patent Expenses. Licensee shall pay all costs associated with the preparation, filing, prosecution, and maintenance of allpatent applications filed and patents obtained, which are included in the Patent Rights.4.6 Abandonment. In the event that Licensee desires to abandon any patent or patent application within the Patent Rights inany country, Licensee shall provide Tufts with reasonable prior written notice of such intended abandonment or decline ofresponsibility, and Tufts shall have the right, at its expense, to prepare, file, prosecute, and maintain the relevant Patent Rights. IfLicensee decides to abandon an issued patent (and all filed applications therefor) throughout the world, or if Licensee determines not tofile and prosecute in at least one country a patent application that Tufts has requested Licensee to file, then in any such event suchpatent and patent applications shall not thereafter be included in "Patent Rights", and the non-public information included in (or thatwould be included in) such patent and applications shall not thereafter be included in "Technology". If Licensee decides to abandon anissued patent (or a filed application therefor) in any country, or if Licensee declines to file and prosecute a patent application in acountry as requested by Tufts herein, then in any such event each such country shall no longer be included in the "Territory" forpurposes of the claims covered by the relevant patent or patent application or for purposes of the non-public information included in (orthat would be included in) such patent or application. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ARTICLE V - CONFIDENTIALITY.5.1. Limitations on Use, Disclosure. Licensee agrees to treat as confidential, and to use and disclose only in furtherance ofthis Agreement, all Confidential Technology disclosed to it by Tufts. Licensee agrees that it will exercise every reasonable precautionto prevent the unauthorized disclosure of Confidential Technology by any of its directors, officers, employees, or agents to otherparties, other than to Subsidiaries and to Licensee sublicensees. Any Confidential Technology disclosed to Subsidiaries or sublicenseesshall be disclosed on the basis of and subject to the confidentiality provisions of this Agreement.5.2. Cessation. Any information which is Confidential Technology at the date of disclosure thereof to Licensee shall cease tobe Technology, and Licensee, its Subsidiaries, and its sublicensees shall be released from the provisions of Section 5.1 as to suchinformation on the date when, through no act or omission on the part of Licensee, its Subsidiaries, or its sublicensees, such informationbecomes (a) publicly known by way of a single publication in which such Confidential Technology is disclosed in reasonable detail,(b) so widely known and used in combination that it can be said to be generally available to the public or (c) is subsequently rightfullyobtained without restriction on use or disclosure from sources other than Tufts having no confidential obligation in favor of Tufts.5.3. Time Limit. The provisions of this Article V shall continue to apply to any information which is ConfidentialTechnology for so long as it shall remain such, notwithstanding any termination of this Agreement or the License or expiration of theLicense Period, provided, however, that the obligations of confidentiality under this Article shall in any event expire and cease to existten years from the Effective Date. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ARTICLE VI - DILIGENCE.Licensee agrees to use its best efforts to effect introduction of Licensed Products into the United States commercial market assoon as practical, consistent with sound and reasonable business practices and judgments. Prior to the first commercial sale of aLicensed Product, Licensee shall provide annual reports of such efforts to Tufts within sixty (60) days of each anniversary of theEffective Date. Tufts shall have the right, at any time after eighteen (18) months from the Effective Date, to terminate the License andTufts' obligations under this Agreement if Licensee, within ninety (90) days after written notice from Tufts of such intendedtermination, fails to provide written evidence that Licensee has commercialized or is actively attempting to commercialize LicensedProducts. Evidence that Licensee has, within eighteen months after the Effective Date, (i) delivered to Tufts a business plan, (ii) takenall reasonable steps to prosecute and maintain the Patent Rights in accordance with the provisions of Section 4.4 hereof, (iii) madepayment of all research support under the Sponsored Research Agreement between the parties of even date herewith and (iv) raised atotal of $2 million through venture capital investors or strategic partners shall be deemed, in and of itself, a sufficient showing of suchactive attempts to commercialize Licensed Products during such period. Thereafter, evidence that Licensee has achieved the followingmilestones as scheduled below shall be deemed, in and of itself, a sufficient showing of such active attempts to commercialize LicensedProducts through such date: (i)raised a total of $5 million through venture capital investors or strategic partners within three (3) years of theEffective Date; and (ii)filed an IND for a Licensed Product in the United States within five (5) years of the Effective Date.Tufts shall not unreasonably withhold its assent to any revision of such milestones whenever requested in writing byLicensee and supported by evidence of technical difficulties or delays that the parties could not have reasonably avoided.Notwithstanding the foregoing, Tufts shall have the right at any time after ten (10) years from the Effective Date to convertthe License hereunder to non-exclusive if Licensee, its Subsidiaries, or its sublicensees have not by the time of such conversion soldLicensed Products into the United States market.If at any time Licensee decides to discontinue all programs relating to the MAR operon or all programs relating totetracycline derivatives, Licensee shall give notice of such intent to Tufts and Tufts shall have the option to terminate the Licensegranted hereunder solely with respect to such discontinued programs on thirty days notice to Licensee. Upon any such termination,responsibility for the prosecution and maintenance of any Patent Rights on the discontinued programs shall revert to Tufts. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ARTICLE VII - REPRESENTATIONS, WARRANTIES, AND LIMITATIONS.7.1 Tufts Disclaimer. TUFTS MAKES NO REPRESENTATIONS, EXTENDS NO WARRANTIES OF ANY KIND,EITHER EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OFMERCHANTABILITY OR FITNESS FOR PURPOSE), AND ASSUMES NO RESPONSIBILITIES WHATSOEVER, WITHRESPECT TO THE PATENTS OR TECHNOLOGY OR THE USE THEREOF, OR THE MANUFACTURE, POSSESSION,USE, MARKETING, SALE, OR OTHER DISPOSITION BY TUFTS, LICENSEE, OR ANYONE ELSE, OF LICENSEDPRODUCT(S) OR ANY OTHER PRODUCTS OF SERVICES (INCLUDING, WITHOUT LIMITATION, PRODUCTS MADEBY TUFTS, AND TUFTS SERVICES, THAT ARE OR WERE FURNISHED TO LICENSEE AT ANY TIME BEFORE, ON,OR AFTER THE Effective Date), EXCEPT ONLY AS EXPRESSLY STATED BELOW IN THIS ARTICLE VII. Withoutlimitation of the foregoing generality, nothing contained herein or in any disclosure of the Patents or Technology made by or on behalfof Tufts shall be construed as extending any representation or warranty with respect to the Patents or Technology or Licensed Productsor the results to be obtained by the use of the Patents or Technology or any Licensed Products, or that anything made, used, or sold byuse of the Patents or Technology or any part thereof, alone or in combination, will be free from infringement of patents of third parties.TUFTS SHALL NOT BE LIABLE TO LICENSEE, ITS SUBSIDIARIES, ITS SUBLICENSEES, OR ANY OTHER PARTY,REGARDLESS OF THE FORM OR THEORY OF ACTION (WHETHER CONTRACT, TORT, INCLUDING NEGLIGENCE,STRICT LIABILITY, OR OTHERWISE), FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR OTHEREXTRAORDINARY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, PATENTS, THETECHNOLOGY, THE LICENSED PRODUCTS, OR ANY PRODUCTS OR SERVICES FURNISHED OR NOTFURNISHED BY TUFTS, EVEN IF TUFTS HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.Licensee agrees that all warranties, if any, in connection with the sale or other disposition of any Licensed Products (or anyproducts made by Tufts and furnished at any time to Licensee) by Licensee, its Subsidiaries, or its sublicensees will be made by themand will not directly or impliedly obligate Tufts.7.2 Tufts Representations. Notwithstanding the first sentence of Section 7.1, Tufts:(a)Represents that Tufts is a corporation organized and existing under the laws of the Commonwealth ofMassachusetts and has the power and authority to enter into this Agreement.(b)Represents that Tufts has taken all necessary action to authorize its execution and delivery of thisAgreement by the representatives of Tufts who carried out such execution and delivery, and to authorize the performance by Tufts ofits obligations hereunder.(c)Represents that execution and delivery of this Agreement and its performance by Tufts will not result inany breach or violation of, or constitute a default under, any agreement, instrument, judgment, or order to which Tufts is a party or bywhich it is bound. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 7.3. Licensee Representations. Licensee represents and warrants to Tufts that:(a)Licensee is a corporation organized and existing under the laws of Delaware and has the power andauthority to enter into this Agreement.(b)Licensee has taken all necessary action to authorize its execution and delivery of this Agreement by therepresentatives of Licensee who carried out such execution and delivery, and to authorize the performance by Licensee of itsobligations hereunder.(c)Execution and delivery of this Agreement and its Agreement and its performance by Licensee will notresult in any breach or violation of, or constitute a default under, any agreement, instrument, judgment, or order to which Licensee is aparty or by which it is bound.ARTICLE VIII - INDEMNITY; INSURANCE; INFRINGERS.8.1. Indemnity. Licensee agrees to exonerate, indemnify, and hold harmless Tufts, its trustees, officers, employees, andagents, from all costs, expenses (including attorneys' fees), interest, losses, obligations, liabilities, and damages paid or liability forwhich is incurred by any of said parties ("Losses"), and which arise out of or are in connection with or are for the purpose of avoidingany and all claims, demands, actions, causes of action, suits, appeals, and proceedings ("Claims"), all whether groundless or not, or thesettlement thereof, based on any actual or alleged injuries, damages, or liability of any kind whatsoever (including, without limitation,personal injury, death, property damage, breach of warranty, or breach of contract) arising, directly or indirectly, out of any one ormore of: any breach of Licensee of its representations, warranties, or agreements hereunder; or out of any manufacture, marketing,possession, use, sale, or other disposition of Licensed Products or products furnished by Tufts to Licensee in connection herewith or inconnection with the Research Agreement (whether same occurs during or after the License or during or after the License Period) byLicensee, its Subsidiaries, its sublicensees, or anyone claiming by, through, or under any of them; or any acquisition, possession,disclosure, or use of the Patents or Technology, or any thereof, by Licensee, its Subsidiaries, its sublicensees, or anyone claiming by,through, or under any of them or the presence of Licensee's or its Subsidiaries' or sublicensee's officers, agents, employees, invitees orproperty on Tufts' premises.8.2. Defense; Settlement. Licensee shall defend and control negotiation of settlement of any Claim, with counsel ofLicensee's choosing approved in advance by Tufts, which approval shall not be unreasonably withheld. Tufts agrees to cooperate fullyin the defense of any Claim and may participate in the defense with counsel of Tufts' choosing, such separate counsel to be at Tufts'expense unless a conflict of interest exists between Licensee and Tufts with respect to the defense, in which case Tufts' separatecounsel shall be at Licensee's expense. Any settlement by which Tufts would incur any obligation or liability, whether for the paymentof money, the taking of any action, the refraining from any action, or otherwise, shall require the advance written consent of Tufts,which may be withheld in the sole discretion of Tufts without relieving Licensee of any of its indemnification or other obligationshereunder. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 8.3. Insurance. Not later than thirty (30) days before the time when Licensee, any Subsidiary, or any Licensee sublicenseeshall, on a commercial basis, make, use, or sell any Licensed Products or any products furnished to Licensee by Tufts at any time(before, on or after the Effective Date) in connection herewith or in connection with the Research Agreement, and at all timesthereafter until the expiration of all applicable statutes of limitation pertaining to any such manufacture, marketing, possession, use, saleor other disposition of any Licensed Products or the aforesaid products furnished by Tufts (whether same occurs or exists during orafter the existence of the License or during or after the License Period), Licensee will at Licensee's expense, obtain and maintain in fullforce and effect, comprehensive general liability insurance, including product liability insurance, protecting Tufts against all claims,suits, obligations, liabilities, and damages, based upon or arising out of actual or alleged bodily injury, personal injury, death, or anyother damage to or loss of persons or property, caused by any such manufacture, marketing, possession, use, sale, or other disposition.Such insurance policy or policies shall be issued by companies rated by A. M. Best as A VIII or better (or other companies acceptableto Tufts), shall name Tufts as an additional named insured, shall have limits of at least one million dollars ($1,000,000) per occurrencewith an aggregate of three million dollars ($3,000,000), shall be non-cancelable except upon thirty (30) days prior written notice toTufts, and shall provide that as to any loss covered thereby and also by any policies obtained by Tufts itself, Licensee's policies shallprovide primary coverage for Tufts and Tufts' policies shall be considered excess coverage for Tufts.8.4. Certificates: Policies. Licensee will forthwith after the obtaining of such insurance required by Section 8.3, obtain anddeliver to Tufts certificates of and copies of, and at all times thereafter deliver without further demand replacement certificates andcopies of, all such insurance policies that are in force and effect. As requested by Tufts but in no event more than once per calendaryear, Licensee will furnish to Tufts a complete list, statement, and description of all insurance called for in this Article, together withcertificates and copies of policies for each insurance company issuing any thereof, that such insurance in is full force and effect, that allpremiums have been paid, and that such insurance will not be canceled except upon thirty (30) days prior written notice to Tufts.8.5. Infringers. Each party shall inform the other promptly in writing of any alleged infringement of the Patent Rights in theField of Use by a third party, including all details then available. Licensee shall have the right, but shall not be obligated, to prosecuteat its own expense any such infringements, and Tufts agrees that Licensee may join Tufts as a plaintiff at the expense of Licensee. Inany infringement action commenced solely by Licensee, all expenses of Licensee shall first be reimbursed and all recovery forinfringement shall be shared [***]% to Tufts and [***]% to Licensee. Licensee shall indemnify Tufts against any order for costs orother payments that may be made against Tufts in such proceedings.If Licensee has not taken legal action or been successful in obtaining cessation of the infringement, within one-hundredeighty (180) days of written notification from Tufts of such infringement, or if Licensee elects not to continue prosecuting any legalaction against an infringer, Tufts shall have the right, but shall not be obligated, to prosecute at its own expense any such infringement.Tufts may join Licensee as a plaintiff in any such infringement suit at Tufts' expense. In any such action by Tufts, all expenses of Tuftsshall first be reimbursed and all recovery for infringement shall be shared [***]% to Tufts and [***]% to Licensee. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. No settlement, consent judgment or other voluntary final disposition of any suit may be entered into without the consents ofTufts and Licensee, which consents shall not be unreasonably withheld or delayed.In any infringement suit that either party brings to enforce the Patent Rights, the other party shall at the request and expenseof the party bringing the suit, cooperate in all reasonable respects, including, to the extent possible, obtaining the testimony of itsemployees and making available physical evidence in the possession of that party.Licensee shall have the exclusive right in accordance with the provisions of Section 2.2, to sublicense any alleged infringerin the Territory for the Field of Use, for future use of the Patent Rights.8.6 Declaratory Judgment. If any declaratory judgment action alleging invalidity or non-infringement of any of the PatentRights shall be brought against Licensee, Tufts shall have the right at its election made within sixty (60) days after commencement ofthat action, to intervene and take over the sole defense of the action at its expense.ARTICLE IX - LICENSE TERMINATION.9.1. Events. The License granted hereunder may be terminated by Tufts pursuant to Article VI or one of the followingsubsections:(a)Material Default. If Licensee shall fail after thirty (30) days written notice from Tufts to pay to Tufts anyroyalties or other payments and payable hereunder, or shall fail in any material way to perform any other agreement required to beperformed by Licensee under this Agreement, or if any Subsidiary or sublicensee shall be in material breach of any conditions orobligations affecting Tufts and compliance with which Licensee is responsible for hereunder, or if any representation or warranty ofLicensee contained in this Agreement shall prove to have been inaccurate or misleading in any material way when made (referred tocollectively and individually as a "material default"), then, without limitation of and in addition to any and all other rights and remediesavailable to Tufts with respect to such material default, Tufts may terminate the License and Tufts' obligations hereunder by writtennotice to Licensee at any time after the expiration of such thirty (30) day notice period if Licensee has not cured the material defaultand the effects thereof before Tufts gives such notice of termination to Licensee, unless Licensee commences arbitration proceedingshereunder to contest such material default, in which event Tufts' right to terminate the License shall be stayed until such arbitrationproceedings shall have been completed.(b)Cessation of Business. If Licensee shall have commenced to carry on the business of selling anyLicensed Products (either directly or through any Subsidiary or sublicensee) and shall at any time thereafter cease for a consecutiveperiod of ninety (90) days to carry on such business actively (either directly or through any Subsidiary or sublicensee), other than as aresult of fire or other casualty or governmental action taken in the absence of Licensee's fault, Tufts may at any time thereafter whilethat state of affairs continues, terminate the License by written notice to Licensee. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 9.2 Licensee shall have the option at any time to terminate this License upon one- hundred and eighty (180) days' writtennotice to Tufts.9.3. Effects. Upon termination of the License for any reason, nothing herein shall be construed to release Licensee from anyobligations hereunder except those of Article VI, but all rights of Licensee and its Subsidiaries and its sublicensees to make, use, or sellLicensed Products, or to practice the Patents and use the Technology, shall cease immediately, except that Licensee, its Subsidiaries,and its sublicensees may after the effective date of such termination sell all Licensed Products that they may have on hand at the date oftermination, and may complete manufacture of Licensed Products then in the process of manufacture, and sell them, provided that theypay all royalties due thereon with respect to Gross Sales, as provided in this Agreement.ARTICLE X - NOTICE.Any notice or communication required to be given hereunder in writing shall be given by registered or certified mail, returnreceipt requested, or delivered by courier, return receipt requested, charges and postage prepaid, addressed to the parties, respectively,at the following addresses:In the case of Tufts to:Joseph J. Byrne, Ph.D.Associate Provost for ResearchTufts University136 Harrison AvenueBoston, MA 02111with a copy to:Mason (Skip) Irving, IIIVice President, Commercial DevelopmentMassachusetts Biotechnology Research InstituteOne Innovation DriveWorcester, MA 01605with a second copy to:Mary Lee Jacobs, Esq.General CounselTufts UniversityBallou HallMedford, MA 02155 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. or in the case of Licensee to:Walter GilbertActing Chief Executive OfficerParatek Pharmaceuticals, Inc.P.O. Box 1525Boston, MA 02117-1525with a copy to:Jeffrey M. Wiesen, Esq.Mintz, Levin, Cohn, Ferris, Glovsky & Popeo P.C.One Financial CenterBoston, MA 02111or at such other respective substitute addresses as the addressee may designate in writing to the other party.ARTICLE XI - NON-USE OF NAMES.Licensee, its subsidiaries and its sublicensees agree that it will not use the name "Tufts University," or any variant thereof, oridentify Tufts or any portion of Tufts, or any inventor of any of the Patents or Technology, as a party to this Agreement, or as aparticipant in inventing the inventions of the Patents or creating the Technology, including, without limitation, in any advertising orpromotional sales literature, without the prior express written consent of Tufts, which consent may be withheld or withdrawn by Tuftsin its complete and uncontrolled discretion for any reason whatsoever and at any time or times. However, notwithstanding theforegoing, Tufts will make no objection to any proper reference by Licensee to published technical publications by such inventors orcreators; and, subject to the confidentiality requirements hereof, Tufts will make no objection to Licensee's making such disclosures asin the reasonable opinion of legal counsel are required as a matter of law and such general disclosures of this Agreement as may bedesired by Licensee for purposes of grant solicitations from governmental authorities or as reasonably necessary (as reasonablydetermined by Licensee) for the purposes of obtaining financing for Licensee or as reasonably necessary (as reasonably determined byLicensee) for the conduct of its business, other than advertising or sales promotion. Licensee shall impose and enforce the requirementsof this Article on its Subsidiaries and sublicensees.ARTICLE XII - COMPLIANCE WITH LAWS.12.1. Export Controls. The Export Control Regulations of the U. S. Department of Commerce prohibit, except under specialvalidated license, the exportation from the United States of technical data relating to certain commodities (listed in the Regulations),unless the exporter has received certain written assurance from the foreign importer. In order to facilitate the exchange of technicalinformation under this Agreement, Licensee therefore hereby agrees and gives its assurance to Tufts that Licensee will not, unless anyrequired prior authorization is obtained from the U. S. Office of Export Control, re-export directly or indirectly any technical datareceived from THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Tufts under this Agreement and will not export directly the Licensed Products or such technical data to any country listed on either theCommodity Control List or Militarily-Critical Technologies List. Tufts makes no representation as to whether any such license isrequired or, if one is required, as to whether it will be issued by the U. S. Department of Commerce.12.2. Other Laws. In addition to the foregoing export control requirements, Licensee agrees that it, its Subsidiaries, and itssublicensees will comply with all applicable mandatory or permissive patent marking laws, rules, and regulations and comply with allother laws, rules, and regulations of all governmental authorities applicable to any of their activities contemplated by this Agreement,and will comply with all necessary and desirable practices in connection and compliance with safety recommendations of tradeassociations or governmental authorities.ARTICLE XIII - MISCELLANEOUS PROVISIONS.13.1. Assignment. Licensee shall not assign the License or this Agreement without the prior written consent of Tufts, whichconsent shall not be unreasonably withheld; provided, however, that Licensee, without such consent, may assign all of its rightshereunder to a wholly-owned Subsidiary or to the acquiring party in connection with the transfer of all or substantially all of itsbusiness and assets to an acquiring party or in the event of its merger or consolidation with that acquiring party, if and only if theassignee shall assume all obligations of Licensee under this Agreement. However, no assignment or other transfer by Licensee shallrelieve Licensee of any obligations hereunder and Licensee shall continue to be primarily and jointly and severally liable (along withsuch assignee or other transferee) for the performance of all obligations of Licensee and such assignee or other transferee hereunder.13.2. Independent Contractors. The parties hereto shall be independent contractors with respect to each other, and nothingcontained herein shall be construed as constituting either of them as the agent, principal, employee, servant, joint venturer, or partner ofthe other for any purpose whatsoever.13.3 Governing Law. This Agreement shall be governed by and construed in accordance with Massachusetts law, withoutregard to its conflict of laws principles.13.4. Sole Agreement. This Agreement and any Exhibits annexed hereto (each of which is hereby made part hereof by thisreference), and any other documents which may be expressly incorporated by reference herein, constitute the entire and onlyagreement between the parties concerning the subject matter hereof; and all prior negotiations, representations, warranties, agreements,and understandings related thereto are superseded hereby.13.5. Severability. If any provision of this Agreement shall to any extent be found to be invalid or unenforceable, theremainder of this Agreement shall-not be affected thereby, and any such invalid or unenforceable provision shall be reformed so as tobe valid and enforceable to the fullest extent permitted by law.13.6. Headings. Headings of Articles, Sections, and subsections included herein are for convenience of reference only andshall not be used to construe this Agreement.13.7. Financial Confidentiality. Both parties agree to keep the financial terms of this Agreement confidential. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ARTICLE XIV - ARBITRATION.14.1. Arbitration. Subject to Section 14.2 below, all disputes, controversies, or differences which may arise between theparties out of or in relation to or in connection with this Agreement, or for the breach thereof, which cannot be resolved by mutualagreement, shall be finally settled by arbitration to be held in accordance with the Commercial Arbitration Rules (the "Rules") of theAmerican Arbitration Association (the "Association") as the Rules then exist, in Boston, Massachusetts, with the following deviationsfrom the Rules. The arbitrators shall consist of one Tufts nominee, one Licensee nominee, and a third person jointly selected by thosetwo nominees. The party requesting arbitration shall designate its nominee in the request, which shall be addressed to the Associationwith a simultaneous copy to the other party. If the other party shall fail within thirty (30) days of the request for arbitration to nominatethe second arbitrator or if the two arbitrators are unable to agree upon the third arbitrator within thirty (30) days after selection of thesecond arbitrator, then in either case the arbitration panel will be completed according to the Rules. Both legal and equitable remediesshall be available to the arbitrators. The award of a majority of the arbitration panel shall be final and binding on the parties hereto andshall be enforceable in any court having jurisdiction. Tufts and Licensee each irrevocably consent and submit to the jurisdiction of thecourts of the Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts.14.2. Judicial Relief. Claims, disputes, or controversies concerning the validity, infringement, construction, or effect of anypatent including, without limitation, any patent licensed hereunder, shall be resolved in any court having jurisdiction thereof, and theparties submit to the jurisdiction of the United States District Court for the District of Massachusetts. In the event that, in any arbitrationproceeding, any issue shall arise concerning the validity, infringement, construction, or effect of any patent licensed hereunder, thearbitrators shall assume the validity of all claims as set forth in such patent. In any case, the arbitrators shall not delay the arbitrationproceeding for the purpose of obtaining or permitting either party to obtain judicial resolution of such an issue, unless an order stayingsuch arbitration proceeding shall be entered by a court of competent jurisdiction. Neither party shall raise any issue concerning thevalidity, infringement, construction, or effect of any patent licensed hereunder in any proceeding to enforce any arbitration awardhereunder in any proceeding otherwise arising out of any such arbitration award. Nothing in Section 14.1 shall be construed to waiveany rights or timely performance of any obligations existing under this Agreement. Moreover, each party acknowledges thatappropriate cases (as determined by the courts of competent jurisdiction) of a violation by either party of any of the provisions of thisAgreement may entitle the other party to equitable judicial relief, and this relief shall be available in addition to, and shall not beunavailable by reason of, the arbitration provisions of Section 14.1, above. Such equitable judicial relief may be by temporaryrestraining orders, preliminary and permanent injunctions, and such other equitable relief as any court of competent jurisdiction maydeem just and proper. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this License Agreement to be effective as ofthe Effective Date. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Steven S. Manos By: /s/ Walter Gilbert Signature Steven S. Manos Typed Name Typed Name Executive Vice President Title Title 3/19/97 4/23/97 Date Date THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT ATOLICENSE AGREEMENTBETWEENTUFTS UNIVERSITY AND PARATEK PHARMACEUTICALS, INC.Existing Patent Rights (Including Existing Applications)I. Issued Patents:(See attached Patent Summary)"Patent Rights" shall also include the patents to be applied for pursuant to the terms of the License Agreement after theEffective Date, after such applications are made. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Patent SummaryStuart B. Levy, Ph.D.January 1997[***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT BList of Foreign Countries in which Patents are to be Filed.United StatesCanadaJapanEurope (Germany, Belgium, France, Italy, Spain and United Kingdom) THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY -- PARATEK PHARMACEUTICALS, INC.AMENDMENT NO. 1TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Exhibit A is hereby amended to include:•Provisional patent application "[***]", Filed [***]•Patent application "[***]", Filed [***]Section 1.4. "Field of Use" is hereby replaced by the following:1.4. "Medical Field of Use" shall mean the prophylaxis, treatment or prevention of bacterial or microbial diseases or medicalconditions in humans or animals or agriculture through the direct administration of (i) tetracycline derivatives or other compoundswhich affect tetracycline resistance or (ii) compounds based on knowledge of the MAR operon or (iii) compounds involving novelgenes which affect antibiotic resistance or microbial infectivity and which are derived from studies of the MAR operon or (iv)compounds that affect any such genes."Disinfectant Field of Use" shall mean the use of compositions, including but not limited to disinfectants and soaps,in any manner other than the direct administration to humans or animals or agriculture, to kill or reduce the growth rate ofmicroorganisms, where such compositions include (i) tetracycline derivatives or other compounds which affect tetracycline resistanceor (ii) compounds based on knowledge of the MAR operon or (iii) compounds involving novel genes which affect antibiotic resistanceor microbial infectivity and which are derived from studies of the MAR operon or (iv) compounds that affect any such genes."Field of Use" shall mean the Medical Field of Use and Disinfectant Field of Use, collectively.Section 1.7. Third paragraph is hereby amended to read: "In the event that a Licensed Product in the Medical Field of Use under thisAgreement is sold..."Section 3.4 Running Royalties is hereby replaced by the following:3.4.Running Royalties.For the Medical Field of Use, Licensee agrees to pay to Tufts royalties of:(a) [***] percent ([***]%) of the Gross Sales of Licensed Products, the making, using, or selling of which infringes (were itnot for the License) at least one claim in an issued, unexpired and non-lapsed patent included in the Patent Rights; or(b) [***] percent ([***]%) of the Gross Sales of Licensed Products that do not fall within the clause (a), above, but themanufacture, use or sale of which would infringe (were it not for the License) at least one claim in a pending application included inthe Patent Rights, if such claim were to issue. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. For the Disinfectant Field of Use, Licensee agrees to pay to Tufts royalties of:[***] percent ([***]%) of the Gross Sales of Licensed Products, the making, using, or selling of which infringes (were it notfor the License) at least one claim in an issued, unexpired and non-lapsed patent included in the Patent Rights or would infringe (wereit not for the License) at least one claim in a pending application included in the Patent Rights, if such claim were to issue.Section 3.5. Sublicense Royalties is hereby replaced by the following:3.5. Sublicense Fees and Royalties. For each sublicense granted by Licensee, Licensee shall pay to Tufts fourteen percent(14%) of that portion of any sublicense issue fees or license maintenance fees received by Licensee which are reasonably attributable tosublicenses of rights granted to Licensee hereunder. Funds received by Licensee from a sublicensee for research conducted byLicensee, achievement of product development-related performance milestones, or for equity investments in Licensee will not besubject to any fees hereunder.For the Medical Field of Use, for each sublicense granted by Licensee, Licensee shall pay to Tufts the lesser of (i)[***] percent ([***]%) of any royalty payments received under such sublicense with respect to the Gross Sales by the sublicensee ofLicensed Products covered by a claim contained in an issued Patent Right or a claim included in a pending application covering aPatent Right on a country-by-country basis or (ii) the royalty which would be due, pursuant to Section 3.4, if Licensee, rather than thesublicensee, had sold the Licensed Product.For the Disinfectant Field of Use, for each sublicense granted by Licensee, Licensee shall pay to Tufts the lesser of(i) [***] percent ([***]%) of any royalty payments received under such sublicense with respect to the Gross Sales by the sublicenseeof Licensed Products covered by a claim contained in an issued Patent Right or a claim included in a pending application covering aPatent Right on a country-by-country basis or (ii) the royalty which would be due, pursuant to Section 3.4, if Licensee, rather than thesublicensee, had sold the Licensed Product. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. All other provisions of the Agreement remain unchanged and in full force and effect. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Philip G. Salem By: /s/ George C. Hillman (signature) (signature) Philip G. Salem George C. Hillman Name Name Senior Director, University Development Executive Vice President Title Title 12/23/97 12/29/97 Date Date THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY -- PARATEK PHARMACEUTICALS, INC.AMENDMENT NO. 2TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Exhibit A is hereby amended to include:•Patent application entitled: "[***]" Continuation in Part of U.S. patent No.: [***], Filed [***], Notice of Allowance [***].•Provisional patent application entitled: "[***]", Serial No.: [***], Filed [***]•Patent application jointly owned with [***], entitled: "[***]", Serial No.: [***], Filed [***]•Provisional patent application entitled: "[***]", Serial No.: [***], Filed [***]•Patent application entitled: "[***]", Serial No.: [***], Filed [***]•Patent application entitled: "[***]", U.S. patent No. [***], Issued [***], Divisional Application of U.S. patent No. [***]All other provisions of the Agreement remain unchanged and in full force and effect. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Margaret Newell By: /s/ George C. Hillman (signature) (signature) Margaret Newell George C. Hillman Name Name Executive Vice President and Associate Provost forResearch Chief Operating Officer Title Title 7/31/98 7/31/98 Date Date THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.TUFTS UNIVERSITY - PARATEK PHARMACEUTICALS, INCAMENDMENT NO. 3TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997 Exhibit A and all amendments and modifications are deleted and replaced in their entirety by the attached Exhibit A. Tufts’ ownershipinterests in all patents, patent applications and disclosures listed in the attached Exhibit A are hereby incorporated into the LicenseAgreement dated February 1, 1997.All other provisions of the Agreement as amended remain in full force and effect. IIN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment to be effective as of the last date ofsignature below. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Margaret Newell By: /s/ George C. HillmanMargaret Newell, Associate Provost for Research George Hillman, Executive Vice President Date: 6/3/99 Date: 6/3/99 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Amendment #3 - Exhibit APATENT SUMMARY AS OF MAY 27, 1999Stuart B. Levy, M.D.Compositions and Methods Related to Antibiotic Resistance [***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Amendment #3 - Exhibit A PATENT SUMMARY AS OF MAY 27, 1999 Stuart B. Levy, M.D.TETRACYLINE [***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Amendment #3 - Exhibit A PATENT SUMMARY AS OF MAY 27, 1999 Stuart B. Levy, M.D. COMPOSITIONS AND METHODS RELATED TO ANTIBIOTIC RESISTANCEDISCLOSURES [***] [***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Amendment #3 - Exhibit A PATENT SUMMARY AS OF MAY 27, 1999 Stuart B. Levy, M.D. TETRACYCLINE DISCLOSURES [***] [***][***][***] [***] [***] [***] [***] [***] [***] [***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY - PARATEK PHARMACEUTICALS, INC AMENDMENT NO. 4TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Exhibit A and all amendments and modifications are deleted and replaced in their entirety by the attached Exhibit A. Tufts’ ownershipinterests in all patents, patent applications and disclosures listed in the attached Exhibit A are hereby incorporated into the LicenseAgreement dated February 1, 1997. Exhibit A shall hereafter be updated on an annual basis. Each new Exhibit A shall be dated andappended hereto and by such action replace all prior versions of Exhibit A.All other provisions of the Agreement as amended remain in full force and effect.IIN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment to be effective as of the last date ofsignature below. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Margaret Newell By: /s/ George C. HillmanMargaret Newell, Associate Provost for Research George Hillman, Executive Vice President Date: 8/9/00 Date: 8/14/00 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Updated August 8, 2000Exhibit A CONFIDENTIALATTORNEY-CLIENT PRIVILEGED PARATEK PHARMACEUTICALS, INC.PATENT STATUS SHEET Docket No.(Firm of Record)Serial No./Patent No.Title and DescriptionInventorsand/orContributors(Owners)Filing date/Issue dateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIALATTORNEY-CLIENT PRIVILEGED PARATEK PHARMACEUTICALS, INC.PATENT STATUS SHEET Docket No.(Firm of Record)Serial No./Patent No.Title and DescriptionInventorsand/orContributors(Owners)Filing date/Issue dateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***] [***][***] [***][***][***][***][***][***][***][***] [***][***][***] [***] [***][***][***] [***][***][***][***][***][***][***] [***][***][***][***][***] [***][***][***] [***] [***][***][***] [***] [***][***][***][***][***] [***][***][***] [***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***][***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***] [***] [***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIALATTORNEY-CLIENT PRIVILEGED PARATEK PHARMACEUTICALS, INC.PATENT STATUS SHEET Docket No.(Firm of Record)Serial No./Patent No.Title and DescriptionInventorsand/orContributors(Owners)Filing date/Issue dateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIALATTORNEY-CLIENT PRIVILEGED PARA TEK PHARMACEUTICALS, INC.PATENT STATUS SHEET (FOREIGN) Docket No.(Firm of Record)Region/CountryAppln. No./Patent No.Title and DescriptionAppln. Date/Grant dateStatus[***][***][***][***][***][***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***][***][***][***] [***][***][***][***] [***][***][***][***][***] [***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIALATTORNEY-CLIENT PRIVILEGED PARA TEK PHARMACEUTICALS, INC.PATENT STATUS SHEET (FOREIGN) Docket No.(Firm of Record)Region/CountryAppln. No./Patent No.Title and DescriptionAppln. Date/Grant dateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY - PARATEK PHARMACEUTICALS, INCAMENDMENT NO. 5TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Exhibit A and all amendments and modifications are deleted and replaced in their entirety by the attached Exhibit A. Tufts’ ownershipinterests in all patents, patent applications and disclosures listed in the attached Exhibit A are hereby incorporated into the LicenseAgreement dated February 1, 1997. Exhibit A shall hereafter be updated on an annual basis. Each new Exhibit A shall be dated andappended hereto and by such action replace all prior versions of Exhibit A.All other provisions of the Agreement as amended remain in full force and effect.IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment to be effective as of the last date ofsignature below. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS,INC. By: /s/ Margaret Newell By: /s/ George HillmanMargaret Newell, Associate Provost for Research George Hillman, Executive Vice President Date: 9/10/01 Date: 9/10/01 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPATENT SUMMARY L&C Docket No.TitleApplication No.Patent No.Filing dateIssue DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. L&C Docket No.TitleApplication No.Patent No.Filing dateIssue DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. L&C Docket No.TitleApplication No.Patent No.Filing dateIssue DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. L&C Docket No.TitleApplication No.Patent No.Filing dateIssue DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY - PARATEK PHARMACEUTICALS, INCAMENDMENT NO. 6TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Exhibit A and all amendments and modifications are deleted and replaced in their entirety by the attached Exhibit A. Tufts’ ownershipinterests in all patents, patent applications and disclosures listed in the attached Exhibit A are hereby incorporated into the LicenseAgreement dated February 1, 1997. Exhibit A shall hereafter be updated on an annual basis. Each new Exhibit A shall be dated andappended hereto and by such action replace all prior versions of Exhibit A.All other provisions of the Agreement as amended remain in full force and effect.IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment to be effective as of the last date ofsignature below. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS, INC. By: /s/ Margaret Newell By: /s/ George Hillman George Hillman, Executive Vice President Date: 12/11/02 Date: 12/11/02 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPATENT SUMMARY (TET) L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPATENT SUMMARY (TET) L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. 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EXHIBIT A CONFIDENTIALPATENT SUMMARY (TET) L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPATENT SUMMARY (TET) L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***] [***][***][***][***][***][***] [***] [***][***][***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (MAR) L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***][***][***][***] [***][***][***][***] [***][***][***][***][***][***] [***][***][***][***][***][***] [***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.L&C Docket No.TitleApplication No.Patent No.Filing DateIssue DateStatus[***][***][***] [***][***][***][***][***][***] [***][***][***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TUFTS UNIVERSITY — PARATEK PHARMACEUTICALS, INC.AMENDMENT NO. 7TO LICENSE AGREEMENT DATED FEBRUARY 1, 1997Section 3.4 Running Royalties is hereby replaced by the following:3.4 Running Royalties.For the Medical Field of Use, Licensee agrees to pay to Tufts royalties of:(a)[***] percent ([***]%) of the Gross Sales of Licensed Products, the making using, or selling of whichinfringes (were it not for the License) at least one claim in an issued, unexpired and non-lapsed patent included in the Patent Rights; or(b)[***] percent ([***]%) of the Gross Sales of Licensed Products that do not fall within clause (a), above,but the manufacture, use, or sale of which would infringe (were it not for the License) at least one claim in a pending patent applicationincluded in the Patent Rights, if such claim were to issue.For the Disinfectant Field of Use, Licensee agrees to pay to Tufts royalties of:[***] percent ([***]%) of the Gross Sales of Licensed Products, the making using, or selling of which infringes(were it not for the License) at least one claim in an issued, unexpired and non-lapsed patent included in the Patent Rights or wouldinfringe (were it not for the License) at least one claim in a pending patent application included in the Patent Rights, if such claim wereto issue.Section 3.5 Sublicense Royalties is hereby replaced by the following:3.5 Sublicense Fees and Royalties.For the Medical Field of Use, Licensee agrees to make the following payments to Tufts:(a) Sublicense Fees. For the Medical Field of Use, for each sublicense granted by Licensee, Licensee shall pay toTufts ten percent (10%) of that portion of any sublicense issue fees or license maintenance fees received by Licensee that arereasonably attributable to sublicenses of rights granted to Licensee hereunder. Funds received by Licensee from a sublicensee forresearch conducted by Licensee, achievement of product development-related performance milestones, or for equity investments inLicensee will not be subject to any fees hereunder.(b) Sublicense Royalties. For the Medical Field of Use, for each sublicense granted by Licensee, Licensee shallpay to Tufts the lesser of (i) [***] percent ([***]%) of any royalty payments received under such sublicense with respect to sales by thesublicensee of Licensed Products covered by a claim contained in an issued Patent Right or a claim included in a pending applicationcovering a Patent Right on a country-by-country basis or (ii) the royalty which would be due, pursuant to Section 3.4, if Licensee,rather than the sublicensee, had sold the Licensed Product. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. For the Disinfectant Field of Use, Licensee agrees to make the following payments to Tufts:(c) Sublicense Fees. For the Disinfectant Field of Use, for each sublicense granted by Licensee, Licensee shall payto Tufts fourteen percent (14%) of that portion of any sublicense issue fees or license maintenance fees received by Licensee that arereasonably attributable to sublicenses of rights granted to Licensee hereunder. Funds received by Licensee from a sublicensee forresearch conducted by Licensee, achievement of product development- related performance milestones, or for equity investments inLicensee will not be subject to any fees hereunder.(d) Sublicense Royalties. For the Disinfectant Field of Use, for each sublicense granted by Licensee, Licenseeshall pay to Tufts the lesser of (i) [***] percent ([***]%) of any royalty payments received under such sublicense with respect to salesby the sublicensee of Licensed Products covered by a claim contained in an issued Patent Right or a claim included in a pendingapplication covering a Patent Right on a country-by-country basis or (ii) the royalty which would be due, pursuant to Section 3.4, ifLicensee, rather than the sublicensee, had sold the Licensed Product.ARTICLE VI — DILIGENCE clause (ii) of the fifth sentence is hereby amended to read:(ii) filed an IND for a Licensed Product in the United States within seven (7) years of the Effective Date.ARTICLE VI — DILIGENCE Third paragraph is hereby amended to read: “Notwithstanding the forgoing, Tufts shall have the rightat any time after twelve (12) years from the Effective Date to convert the License...”Exhibit A and all amendments and modifications are deleted and replaced in their entirety by the attached Exhibit A. Tufts’ ownershipinterests in all patents, patent applications and disclosures listed in the attached Exhibit A are hereby incorporated into the LicenseAgreement dated February 1, 1997. Exhibit A shall hereafter be updated on an annual basis. Each new Exhibit A shall be dated andappended hereto and by such action replace all prior versions of Exhibit A.All other provisions of the Agreement as amended remain in full force and effect.IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment to be effective as of the last date ofsignature below. TUFTS UNIVERSITY PARATEK PHARMACEUTICALS By: /s/ Margaret Newell By: /s/ Thomas J. BiggerMargaret Newell Associate Provost for Research Thomas J. Bigger President and Chief Executive Officer Date: 7/1/03 Date: 6/17/03 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***] [***][***][***][***] [***] [***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (TET) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 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REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (MAR) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***][***][***][***][***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. EXHIBIT A CONFIDENTIALPatent Summary (MAR) L&C Docket No.TitleApplication No.Patent No.Billing DateFiling DateStatus[***][***] [***][***][***][***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***][***][***][***] [***] [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AMENDMENT NO. 8 TO THETUFTS UNIVERSITY LICENSE AGREEMENT This Amendment No. 8 to the Tufts University License Agreement (this “Amendment”), dated as of November 20, 2012(the “Amendment Effective Date”) is by and between Paratek Pharmaceuticals, Inc. (“Licensee”), and Tufts University, a/k/aTrustees of Tufts College (“Tufts”). Each of Licensee and Tufts is sometimes referred to individually herein as a “Party” andcollectively as the “Parties”.WHEREAS, the Parties entered into the Tufts University License Agreement, effective as of February 1, 1997 and enteredinto amendments thereto: Amendment No. 1 dated as of December 29, 1997, Amendment No. 2 dated July 31, 1998, Amendment No.3 dated June 3, 1999, Amendment No. 4 dated August 14, 2000, Amendment No. 5 dated September 10, 2001, Amendment No. 6dated December 11, 2002, Amendment No. 7 dated July 1, 2003 and the letter agreement dated September 17, 2009 (the “NovartisAmendment”), as so amended, the “License Agreement”; and WHEREAS, the Parties now wish to further amend the License Agreement as set forth herein. NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereto, intending to be legally bound, herebyagree as follows: 1.Amendments to Agreement.(a)The definition of Field of Use in Section 1.4 of the License Agreement is hereby deleted in its entiretyand the following is hereby inserted in lieu thereof:“Medical Field of Use” shall mean the prophylaxis, treatment or prevention of all diseases or medicalconditions in humans, animals and/or agriculture, including bacterial or microbial diseases, through the directadministration of (a) tetracycline derivatives or (b) compounds which affect tetracycline resistance or (c)compounds based on knowledge of the MAR operon or (d) compounds involving novel genes which affectantibiotic resistance or microbial infectivity and which are derived from studies of the MAR operon or (e)compounds that affect any such genes.“Disinfectant Field of Use” shall mean the use of compositions, including but not limited to disinfectants and soaps, in anymanner other than the direct administration to humans or animals or agriculture, to kill or reduce the growth rate of microorganisms,where such compositions include (a) tetracycline derivatives or (b) compounds which affect tetracycline resistance or (c) compoundsbased on knowledge of the MAR operon or (d) compounds involving novel genes which affect antibiotic resistance or microbialinfectivity and which are derived from studies of the MAR operon or (e) compounds that affect any such genes. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. “Field of Use” shall mean the Medical Field of Use and Disinfectant Field of Use, collectively.(b)The definition of Licensed Products in Section 1.6 of the License Agreement is hereby amended byadding the following at the end of the definition:“For purposes of clarity, the Parties hereby agree that [***] shall be treated as Licensed Products.” (c)The first sentence of Section 3.3 of the License Agreement is hereby deleted in its entirety and thefollowing is hereby inserted in lieu thereof: “Licensee agrees to pay to Tufts a minimum royalty payment of Twenty Five Thousand Dollars ($25,000) at theend of each twelve-month period commencing on each anniversary of the Effective Date.”(d)Section 3.4 of the License Agreement is hereby deleted in its entirety and the following is herebyinserted in lieu thereof:“3.4Running Royalties.For the Medical Field of Use, Licensee agrees to pay to Tufts royalties of:[***] percent ([***]%) of the Gross Sales of Licensed Products, (a) that are comprised of or containLicensed Compounds or (b) the making, using, or selling of which infringes (were it not for the License) at leastone claim in an issued, unexpired and non-lapsed patent included in the Patent Rights or would infringe (were itnot for the License) at least one claim in a pending patent application included in the Patent Rights, if such claimwere to issue.For the Disinfectant Field of Use, Licensee agrees to pay to Tufts royalties of:[***] percent ([***]%) of the Gross Sales of Licensed Products, (a) that are comprised of or containLicensed Compounds or (b) the making, using, or selling of which infringes (were it not for the License) at leastone claim in an issued, unexpired and non-lapsed patent included in the Patent Rights or would infringe (were itnot for the License) at least one claim in a pending patent application included in the Patent Rights, if such claimwere to issue.”(e)The following new Section 3.6A of the License Agreement is hereby inserted immediately before Section 3.6:“3.6A Licensee Challenge. In the event Licensee, its affiliates or subsidiaries, directly or indirectly through a thirdparty, initiates a Challenge or assists any party in doing so then, commencing on the date that such Challenge is initiated andcontinuing until such Challenge is irrevocably withdrawn: (a) the [***] shall be [***] and (b) Licensee’s right to withhold any royaltyidentified in Section 3.6 shall not be applicable, in the case of each of (a), (b) and (c) of Section 3.6 until such Challenge has beenwithdrawn irrevocably. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. As used herein, the term “Challenge” shall mean any challenge to the validity or enforceability of any patents orpatent applications owned in whole or in part by Tufts by: (a) filing a declaratory judgment action in which anysuch patents or patent applications is alleged to be invalid or unenforceable; (b) filing a request for re-examinationof any of such patents or patent applications pursuant to 35 U.S.C. §302 and/or §311, or provoking or becomingparty to an interference with an application for any such patents or patent applications pursuant to 35 U.S.C. §135;or (c) filing or commencing any post grant review, inter partes review, third party observation, derivation,opposition, cancellation, nullity or similar proceedings against any of such patents or patent applications.” (f)The fourth paragraph of Article VI of the License Agreement is hereby deleted in its entirety and the following ishereby inserted in lieu thereof:“Notwithstanding the foregoing, Tufts shall have the right at any time after [***] to convert the License hereunderto non-exclusive if Licensee, its Subsidiaries or its sublicensees have not by the time of such conversion met eachof the following milestones by the applicable date:MilestoneDue By[***][***][***][***] (g)The Novartis Amendment is hereby terminated and of no further force and effect.2.Payment of Minimum Royalty Fee. The $25,000 Minimum Royalty Fee for the license period through theAmendment Effective Date shall be paid by Licensee to Tufts within [***] days of the date that Licensee receives an invoice fromTufts on and after the Amendment Effective Date.3.Further Clarification of Terms. Tufts hereby agrees to cooperate with Licensee, including by taking such actionsreasonably requested by Licensee, to enforce, commercialize products under, protect and/or maintain foreign patents or patentapplications included as Patent Rights under the License Agreement, as amended by the Amendment, in each case including anydivisions, continuations, continuations-in-part, re-examinations, extensions, renewals, or reissues of such patents or patentapplications. Licensee hereby agrees to cooperate with Tufts to properly reflect the rights of Tufts in any patents or patent applicationscovering any products that include or contain any compound identified as a lead by Paratek, in each case including any divisions,continuations, continuations-in-part, re-examinations, extensions, renewals, or reissues of such patents or patent applications. Licenseewill file and prosecute patent applications or claims to pending patent applications corresponding to the Patent Rights as reasonablyrequested by Tufts. Licensee shall reimburse Tufts for its reasonable attorneys’ fees and out-of-pocket costs incurred on and after theAmendment Effective Date in so doing, up to a maximum amount equal to $[***] for the period commencing on the AmendmentEffective Date and ending on January 31, 2014 and $[***] each twelve (12) month period thereafter, which shall be payable in arrearswithin [***] days upon submission by Tufts to Licensee of an invoice evidencing such fees and costs. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 4.Covenant. The Parties hereby covenant and agree to use commercially reasonable efforts to reach a mutuallysatisfactory agreement on an amendment to Exhibit A to the License Agreement as soon as practicable after the Amendment EffectiveDate and before [***].5.Confirmation. Tufts hereby confirms to Licensee that Licensee, as of the date of the Amendment: (a) has providedto Tufts all annual and any other reports required pursuant to Article VI of the License Agreement; and (b) has made the paymentsrequired by Sections 3.1, and 3.3 (including but not limited to Sponsored Research Agreement payments) under the LicenseAgreement.6.Miscellaneous. The Parties hereby confirm and agree that the License Agreement, as amended hereby and asfurther provided in this Amendment, together shall constitute the entire amended License Agreement among the parties, remains in fullforce and effect and is a binding obligation of the Parties hereto. This Amendment may be executed in counterparts, each of whichshall be deemed an original, but all of which together shall constitute one and the same instrument. [Remainder of page intentionally left blank.] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Amendment Effective Date. PARATEK PHARMACEUTICALS, INC. By: /s/ Dennis Molnar Name: Dennis Molnar Title: President and Chief Executive Officer TUFTS UNIVERSITY A/K/A TRUSTEES OF TUFTS COLLEGE By: /s/ David R. Harris Name: David R. Harris Title: Provost & Senior Vice President THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AMENDMENT NO.9 TO THETUFTS UNIVERSITY LICENSE AGREEMENTThis Amendment No. 9 to the Tufts University License Agreement (this “Amendment”), dated as of June 24th,2014 (the “Amendment Effective Date”) is by and between Paratek Pharmaceuticals, Inc. (“Licensee”), and Tufts University, a/k/aTrustees of Tufts College (“Tufts”). Each of Licensee and Tufts is sometimes referred to individually herein as a “Party” andcollectively as the “Parties”.WHEREAS, the Parties entered into the Tufts University License Agreement, effective as of February 1, 1997 and enteredinto amendments thereto: Amendment No. 1 dated as of December 29, 1997, Amendment No. 2 dated July 31, 1998, Amendment No.3 dated June 3, 1999, Amendment No. 4 dated August 14, 2000, Amendment No. 5 dated September 10, 2001, Amendment No. 6dated December 11, 2002, Amendment No. 7 dated July 1, 2003 and Amendment No. 8 dated November 20, 2012, as so amended,the “License Agreement”; andWHEREAS, the Parties now wish to further amend the License Agreement as set forth herein.NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereto, intending to be legally bound, herebyagree as follows:1.Amendments to Agreement.(a)The fourth paragraph of Article VI of the License Agreement is hereby deleted in its entirety and thefollowing is hereby inserted in lieu thereof:“Notwithstanding the foregoing, Tufts shall have the right at any time after [***] to convert the License hereunderto non-exclusive if Licensee, its Subsidiaries or its sublicensees have not by the time of such conversion met eachof the following milestones by the applicable date:Milestone Due By[***] [***][***] [***](b)The Covenant in Section 4 of Amendment No. 8 is hereby deleted in its entirety and the following ishereby inserted in lieu thereof: “4. Covenant. The Parties hereby covenant and agree to use commercially reasonable efforts to reach a mutuallysatisfactory agreement on an amendment to Exhibit A to the License Agreement as soon as practicable after the AmendmentEffective Date and before [***].” THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. 2.Payment of outstanding Minimum Royalty Fees due under Section 2 of Amendment No. 8. The $25,000Minimum Royalty Fee described in the invoice dated [***] and attached as Appendix A to this Amendment No. 9 shall be paid byLicensee to Tufts by [***]. The $25,000 Minimum Royalty Fee described in the invoice dated [***] and attached as Appendix B tothis Amendment No. 9 shall be paid by Licensee to Tufts within by [***].3.Miscellaneous. The Parties hereby confirm and agree that the License Agreement, as amended hereby and asfurther provided in this Amendment, together shall constitute the entire amended License Agreement among the parties, remains in fullforce and effect and is a binding obligation of the Parties hereto. This Amendment may be executed in counterparts, each of whichshall be deemed an original, but all of which together shall constitute one and the same instrument.[Remainder of page intentionally left blank.] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Amendment Effective Date. PARATEK PHARMACEUTICALS, INC. By: /s/ Dennis Molnar Name: Dennis Molnar Title: President and Chief Executive Officer TUFTS UNIVERSITY A/K/A TRUSTEES OF TUFTS COLLEGE By: /s/ Diane L. Souvaine Name: Diane L. Souvaine Title: Vice-Provost for Research THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Appendix ATUFTS UNIVERSITYOffice for Technology Licensing and Industry Collaboration136 Harrison Avenue, Suite 75K-950Boston, MA 02111FEIN 04 210 3634[***]Tufts invoice 13/OTLIC/083 (revised)By email to dmolnar@Paratekpharm.comDennis MolnarPresident, Chief Executive OfficerParatek Pharmaceuticals, Inc.75 Kneeland StreetBoston, MA 02111Re:Tufts University—Paratek Pharmaceuticals License Agreementeffective February 1, 1997Amendment 8 of November 20, 2012Amendment to section 3.3Minimum royalty payment of twenty five thousand dollars at the end of each twelve month period commencing on eachanniversary of effective dateINVOICEFee due for license period through the amendment 8 effective dateFebruary 1, 2012, through January 31, 2013$25,000.00Please make your check payable to Tufts University and send it toThomas McVarishTufts UniversityOffice of the Vice ProvostSuite 75K-950136 Harrison AvenueBoston, MA 02111Phone ● [***]E-mail ● [***] THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. Appendix BTUFTS UNIVERSITYOffice for Technology Licensing and Industry Collaboration136 Harrison Avenue, Suite 75K-950Boston, MA 02111FEIN 04 210 3634[***]Tufts invoice 14/OTLIC/062By email to dmolnar@Paratekpharm.comDennis MolnarPresident, Chief Executive OfficerParatek Pharmaceuticals, Inc.75 Kneeland StreetBoston, MA 02111Re:Tufts University—Paratek Pharmaceuticals License Agreementeffective February 1, 1997Amendment 8 of November 20, 2012Amendment to section 3.3Minimum royalty payment of twenty five thousand dollars at the end of each twelve month period commencing on eachanniversary of effective dateINVOICEFee due for license periodFebruary 1, 2013, through January 31, 2014$25,000.00Please make your check payable to Tufts University and send it toThomas McVarishTufts UniversityOffice of the Vice ProvostSuite 75K-950136 Harrison AvenueBoston, MA 02111Phone ● [***]E-mail ● [***] Exhibit 10.19 THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AMENDMENT NO. 11 TO THETUFTS UNIVERSITY LICENSE AGREEMENTThis Amendment No. 11 to the Tufts University License Agreement (this “Amendment”) is made as of November 15,2017 (the “Amendment Effective Date”) by and between Paratek Pharmaceuticals, Inc., a Delaware corporation with a principalbusiness address at 75 Park Plaza, 4th Floor, Boston, MA 02116 (“Licensee”) and Tufts Unviersity a/k/a Trustees of Tufts College(“Tufts”). Each of Licensee and Tufts is sometimes referred to individually as a “Party” and collectively as the “Parties.”WHEREAS, the Parties entered into the Tufts University License Agreement, effective as of February 1, 1997, and enteredinto amendments thereto: Amendment No. 1 dated December 29, 1997, Amendment No. 2 dated July 31, 1998, Amendment No. 3dated June 3, 1999, Amendment No. 4 dated August 14, 2000, Amendment No. 5 dated September 10, 2001, Amendment No. 6dated December 11, 2002, Amendment No. 7 dated July 1, 2003, Amendment No. 8 dated November 20, 2012, Amendment No. 9dated June 24, 2014, and Amendment No. 10 dated March 21, 2017 (as so amended, the “License Agreement”);WHEREAS, the Parties now wish to further amend the License Agreement as set forth herein;NOW THEREFORE, the Parties agree as follows:1.Amendment to Agreement.Section 3.5(a) of the License Agreement is hereby replaced in its entirety with the paragraph below: (a)Sublicense Fees. For the Medical Field of Use, for each sublicense granted by Licensee for compounds other thanomadacycline, Licensee shall pay to Tufts ten percent (10%) of that portion of any sublicense issue fees or licensemaintenance fees received by Licensee that are reasonably attributable to sublicenses of rights granted to Licenseehereunder. For the Medical Field of Use, for each sublicense granted by Licensee for the compound omadacycline,Licensee shall pay to Tufts [***] percent ([***]%) of any sublicense issue fees or license maintenance feesreceived by Licensee. Funds received by Licensee from a sublicensee for research conducted by Licensee,achievement of product-development related performance milestones, or for equity investments in Licensee will notbe subject to any fees hereunder.2.Miscellaneous.The Parties hereby confirm and agree that the License Agreement, as amended hereby and as further provided in thisAmendment, together shall constitute the entire amended License Agreement among the Parties, remains in full force and effectand is a binding obligation of the Parties hereto. This Amendment may be executed in counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the same instrument. THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST. REDACTED MATERIAL ISMARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the Amendment Effective Date.PARATEK PHARMACEUTICALS, INC. TUFTS UNIVERSITY A/K/A TRUSTEES OF TUFTSCOLLEGE By: /s/ William M. Haskel By: /s/ Larry R. SterankaName: William M. Haskel Name: Larry R. SterankaTitle: Sr. VP Title: Director Technology Transfer Exhibit 21.1Paratek Pharmaceuticals, Inc.Subsidiaries Paratek Bermuda Ltd.Paratek Ireland LimitedParatek Pharma, LLCParatek Securities CorporationParatek UK LimitedTranscept Pharma, Inc.  Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements: (1)Registration Statements (Form S-3 Nos. 333-201458, 333-207441, 333-215123 and 333-221843) of ParatekPharmaceuticals, Inc., (2)Registration Statement (Form S-8 No. 333-135506) pertaining to the Novacea, Inc. 2006 Incentive Award Plan and theAmended 2001 Stock Option Plan of Novacea, Inc., (3)Registration Statement (Form S-8 No. 333-150869) pertaining to the Novacea, Inc. 2006 Incentive Award Plan, (4)Registration Statement (Form S-8 Nos. 333-157927, 333-164468, 333-172041, 333-180517, 333-187254 and 333-194624)pertaining to the 2006 Incentive Award Plan of Transcept Pharmaceuticals, Inc., (5)Registration Statement (Form S-8 No. 333-160222) pertaining to the 2009 Employee Stock Purchase Plan of TransceptPharmaceuticals, Inc., (6)Registration Statement (Form S-8 No. 333-201204) pertaining to the Paratek Pharmaceuticals, Inc. 2014 Equity IncentivePlan, as amended, (7)Registration Statement (Form S-8 No. 333-205482) pertaining to the Paratek Pharmaceuticals, Inc. 2006 Incentive AwardPlan, as amended and restated, the Paratek Pharmaceuticals, Inc. 2015 Equity Incentive Plan, and the ParatekPharmaceuticals, Inc. 2015 Inducement Plan, (8)Registration Statements (Form S-8 Nos. 333-210053 and 333-217660) pertaining to the Paratek Pharmaceuticals, Inc. 2015Equity Incentive Plan, and (9)Registration Statement (Form S-8 No. 333-218847) pertaining to the Paratek Pharmaceuticals, Inc. 2017 Inducement Plan, of our reports dated March 6, 2018, with respect to the consolidated financial statements of Paratek Pharmaceuticals, Inc. and theeffectiveness of internal control over financial reporting of Paratek Pharmaceuticals, Inc. included in this Annual Report (Form 10-K)of Paratek Pharmaceuticals, Inc. for the year ended December 31, 2017. /s/ Ernst & Young LLP Boston, MassachusettsMarch 6, 2018 Exhibit 23.2Consent of Independent RegisteredPublic Accounting Firm We consent to the incorporation by reference in Registration Statement Nos. 333-188171, 333-201458, 333-207441 and 333-215123on Form S-3 and Registration Statement Nos. 333-135506, 333-150869, 333-157927, 333-157929, 333-160222, 333-164468, 333-172041, 333-180517, 333-187254, 333-194624, 333-201204, 333-205482 and 333-210053 on Form S-8 of our report dated March 9,2016, on our audit of the consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows of ParatekPharmaceuticals, Inc. for the year ended December 31, 2015, included in this Annual Report on Form 10-K of Paratek Pharmaceuticals,Inc. for the year ended December 31, 2017. /s/ CohnReznick LLPVienna, VirginiaMarch 6, 2018  Exhibit 31.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Michael F. Bigham, certify that:1.I have reviewed this Annual Report on Form 10-K of Paratek Pharmaceuticals, Inc.;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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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 withinthose 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 oursupervision; to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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 arereasonably 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 internalcontrol over financial reporting. /s/ MICHAEL F. BIGHAM Michael F. BighamChief Executive OfficerMarch 6, 2018  Exhibit 31.2CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Douglas W. Pagán, certify that:1.I have reviewed this Annual Report on Form 10-K of Paratek Pharmaceuticals, Inc.;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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange 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 withinthose 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 oursupervision; to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness 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 mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’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 arereasonably 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 internalcontrol over financial reporting. /s/ DOUGLAS W. PAGAN Douglas W. PagánChief Financial OfficerMarch 6, 2018  Exhibit 32.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Michael F. Bigham, Chief Executive Officer of Paratek Pharmaceuticals, Inc. (the“Company”), hereby certifies that, to the best of his knowledge:1.The Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”), to which this Certification is attached asExhibit 32.1 fully complies with the requirements of Section 13(a) or Section 15(d), of the Exchange Act; and2.The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations theCompany.In Witness Whereof, the undersigned has set his hand hereto as of the 6th day of March, 2018. /s/ MICHAEL F. BIGHAM Michael F. BighamChief Executive Officer This certification accompanies the Annual Report on Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and isnot to be incorporated by reference into any filing of Paratek Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities ExchangeAct of 1934, as amended (whether made before or after the date of this Annual Report on Form 10-K), irrespective of any general incorporation languagecontained in such filing.  Exhibit 32.2CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Douglas W. Pagán, Chief Financial Officer of Paratek Pharmaceuticals, Inc. (the“Company”), hereby certifies that, to the best of his knowledge:1.The Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”), to which this Certification is attached asExhibit 32.2 fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and2.The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.In Witness Whereof, the undersigned has set his hand hereto as of the 6th day of March, 2018. /s/ DOUGLAS W. PAGAN Douglas W. PagánChief Financial Officer This certification accompanies the Annual Report on Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and isnot to be incorporated by reference into any filing of Paratek Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities ExchangeAct of 1934, as amended (whether made before or after the date of this Annual Report on Form 10-K), irrespective of any general incorporation languagecontained in such filing. 

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