Strongbridge Biopharma plc
Annual Report 2015

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 20-F (Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to OR SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report 0Commission file number 001-37569 STRONGBRIDGE BIOPHARMA plc (Exact name of Registrant as specified in its charter) N/A(Translation of Registrant’s name into English) Ireland(Jurisdiction of incorporation or organization)900 Northbrook DriveSuite 200Trevose, PA 19053+1 610‑254‑9200(Address of principal executive offices)Stephen Long, Chief Legal OfficerStrongbridge Biopharma plc900 Northbrook DriveSuite 200Trevose, PA 19053+1 610‑254‑9200(Name, telephone, email and/or facsimile number and address of Company contact person)Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredOrdinary shares, par value $0.01 per share The NASDAQ Global Select Market Securities registered or to be registered pursuant to Section 12(g) of the Act: None(Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None(Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report: 21,205,382 were issued and outstanding as of March 10, 2016. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☒ No Note—checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer Accelerated Filer Non-Accelerated Filer ☒ Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP L ☒International Financial Reporting Standards as issuedby the International Accounting Standards Board Other If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18 If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No Table of ContentsStrongbridge Biopharma plcTable of Contents PageIntroduction 3 Forward-Looking Statements 4 Part I. 6 Item 1. Identity of Directors, Senior Management and Advisers 6 Item 2. Offer Statistics and Expected Timetable 6 Item 3. Key Information 6 Item 4. Information on the Company 40 Item 4A. Unresolved Staff Comments 72 Item 5. Operating and Financial Review and Prospects 73 Item 6. Directors, Senior Management and Employees 87 Item 7. Major Shareholders and Related Party Transactions 100 Item 8. Financial Information 102 Item 9. The Offer and Listing 103 Item 10. Additional Information 104 Item 11. Quantitative and Qualitative Disclosures About Market Risk 115 Item 12. Description of Securities Other Than Equity Securities 116 Part II. 116 Item 13. Defaults, Dividend Arrearages and Delinquencies 116 Item 14. Material Modifications to the Rights of Security Holders 116 Item 15. Controls and Procedures 116 Item 16 Reserved 117 Item 16A. Audit Committee Financial Experts 117 Item 16B. Code of Ethics 117 Item 16C. Principal Accountant Fees and Services 117 Item 16D. Exemptions From The Listing Standards For Audit Committees 118 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers 118 Item 16F. Change In Registrant’s Certifying Accountant 118 Item 16G. Corporate Governance 119 Item 16H Mine Safety Disclosure 119 Part III. 119 Item 17. Financial Statements 119 Item 18. Financial Statements 119 Item 19. Exhibits 120 SIGNATURES 122 Table of ContentsIntroductionAs used herein, “Strongbridge Biopharma”, the “Company” and “we”, “our” or “us” refer to StrongbridgeBiopharma plc and its consolidated subsidiaries, unless the context requires otherwise. Strongbridge Biopharma plc’s consolidated financial statements and other financial data contained in this AnnualReport on Form 20-F are presented in United States dollars (“$”) and are prepared in accordance with generally acceptedaccounting principles in the United States (U.S. GAAP).3 Table of ContentsCAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTSThis Annual Report on Form 20-F contains forward‑looking statements that involve substantial risks anduncertainties. The forward‑looking statements are contained principally in the sections of this Annual Report on Form 20-Ftitled “Annual Report on Form 20-F Summary,” “Risk Factors,” “Operating and Financial Review and Prospects” and“Business.” All statements, other than statements of historical facts, contained in this Annual Report on Form 20-F, includingstatements regarding our future results of operations and financial position, business strategy, prospective products, productapprovals, research and development costs, timing and likelihood of success, plans and objectives of management for futureoperations, and future results of current and anticipated products, are forward‑looking statements. These statements relate tofuture events or to our future financial performance and involve known and unknown risks, uncertainties and other factorswhich may cause our actual results, performance or achievements to be materially different from any future results,performance or achievements expressed or implied by the forward‑looking statements. The words “anticipate,” “assume,”“believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “objective,” “plan,”“potential,” “predict,” “project,” “positioned,” “seek,” “should,” “target,” “will,” “would,” or the negative of these terms orother similar expressions are intended to identify forward‑looking statements, although not all forward‑looking statementscontain these identifying words. These forward‑looking statements are based on current expectations, estimates, forecasts andprojections about our business and the industry in which we operate and management’s beliefs and assumptions, are notguarantees of future performance or development and involve known and unknown risks, uncertainties and other factors.These forward‑looking statements include statements regarding:·the timing, progress and results of clinical trials for our product candidates, including statements regarding thetiming of initiation and completion of clinical trials, enrollment of patients, dosing of subjects and the periodduring which the results of the clinical trials will become available;·the timing, scope or likelihood of regulatory filings and approvals for our product candidates;·our ability to successfully commercialize our product candidates;·potential benefits of the clinical development and commercial experience of our management team;·our ability to effectively market any product candidates that receive regulatory approval with a small, focusedsale force;·potential development and commercial synergies from having multiple product candidates for relatedindications;·our commercialization, marketing and manufacturing capabilities and strategy;·our expectation regarding the safety and efficacy of our product candidates;·the potential clinical utility and benefits of our product candidates;·our ability to advance our product candidates through various stages of development, especially throughpivotal safety and efficacy trials;·our estimates regarding the potential market opportunity for our product candidates;·our expectations related to the use of proceeds from this offering;·our strategy to in‑license, acquire and develop new product candidates and our ability to execute that strategy;·developments and projections relating to our competitors or our industry;4 Table of Contents·our ability to become profitable;·our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;·our ability to secure additional financing when needed on acceptable terms;·the impact of government laws and regulations in the United States and foreign countries;·the implementation of our business model, strategic plans for our business, product candidates and technology;·our intellectual property position;·our ability to rely on orphan drug designation for market exclusivity;·our ability to attract or retain key employees, advisors or consultants; and·our expectations regarding the time during which we will be an emerging growth company under the JOBS Act.Actual results or events could differ materially from the plans, intentions and expectations disclosed in theforward‑looking statements we make. As a result, any or all of our forward‑looking statements in this Annual Report on Form20-F may turn out to be inaccurate. We have included important factors in the cautionary statements included in this AnnualReport on Form 20-F, particularly in the section of this Annual Report on Form 20-F titled “Risk Factors,” that we believecould cause actual results or events to differ materially from the forward‑looking statements that we make. We may notactually achieve the plans, intentions or expectations disclosed in our forward‑looking statements, and you should not placeundue reliance on our forward‑looking statements. Moreover, we operate in a highly competitive and rapidly changingenvironment in which new risks often emerge. It is not possible for our management to predict all risks, nor can we assess theimpact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results todiffer materially from those contained in any forward‑looking statements we may make. Our forward‑looking statements donot reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.You should read this Annual Report on Form 20-F and the documents that we reference in this Annual Report onForm 20-F and have filed as exhibits to the Annual Report on Form 20-F completely and with the understanding that ouractual future results may be materially different from what we expect. The forward‑looking statements contained in thisAnnual Report on Form 20-F are made as of the date of this Annual Report on Form 20-F, and we do not assume anyobligation to update any forward‑looking statements except as required by applicable law.5 Table of ContentsPART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSNot applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLENot applicable. ITEM 3. KEY INFORMATIONA.SELECTED FINANCIAL DATAThe following tables set forth a summary of our consolidated financial data. We have derived the consolidatedstatement of operations data for the years ended December 31, 2013, 2014 and 2015 and the balance sheet data as ofDecember 31, 2014 and 2015 from our consolidated audited financial statements. You should read this data together with theconsolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 20-F and the sectionin this filing titled “Operating and Financial Review and Prospects.” The historical results are not necessarily indicative ofthe results to be expected for any future periods. All of our operations are continuing operations and we have not proposedor paid dividends in any of the periods presented. December 31, 2013 2014 2015 (in thousands, except share and per share data) Consolidated Statement of Operations Data: Operating expenses: Research and development $ 2,534 $5,844 $20,135 General and administrative 2,658 4,588 22,719 Total operating expenses 5,192 10,432 42,854 Operating loss (5,192) (10,432) (42,854) Other income (expense), net: Foreign exchange loss (570) (204) (124) Other income (expense), net 282 486 (1,105) Total other income (expense), net (288) 282 (1,229) Loss before income taxes (5,480) (10,150) (44,083) Income tax benefit 93 480 450 Net loss (5,387) (9,670) (43,633) Net loss attributable to non‑controlling interest — — 53 Net loss attributable to Strongbridge Biopharma $(5,387) $(9,670) $(43,580) Net loss attributable to common shareholders, basic and diluted $(5,387) $(9,670) $(43,580) Net loss per share attributable to common shareholders, basic and diluted $(0.88) $(1.20) $(2.62) Weighted‑average shares used in computing net loss per share attributableto common shareholders, basic and diluted 6,017,895 8,043,175 16,606,669 (1)See note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 20-F foran explanation of the method used to calculate basic and diluted net loss per share attributable to common shareholdersand basic and diluted weighted‑average shares outstanding used to calculate the per share data.6 (1)Table of Contents December 31, 2014 2015 ( in thousands) Consolidated Balance Sheet Data: Cash and cash equivalents $15,632 $51,623 Total assets 23,689 97,330 Total liabilities 4,868 6,403 Total shareholders’ equity 18,821 90,927 B. CAPITALIZATION AND INDEBTEDNESSNot applicable.C. REASONS FOR THE OFFER AND USE OF PROCEEDSNot applicable.D. RISK FACTORSCertain factors may have a material adverse effect on our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below, in addition to other information contained inthis Annual Report on Form 20-F, including our consolidated financial statements and related notes. Our business,financial condition or results of operations could be materially and adversely affected if any of these risks occurs and, as aresult, the market price of our ordinary shares could decline and you could lose all or part of your investment. Additionalrisks and uncertainties not presently known to us or that we currently deem immaterial also may have similar adverse effectson us.Risks Related to Our Being a Development‑Stage CompanyWe are a development‑stage biopharmaceutical company and have a limited operating history on which to assess ourbusiness, have incurred significant losses over the last several years, and anticipate that we will continue to incur losses forthe foreseeable future.We are a development‑stage biopharmaceutical company with a limited operating history. We have not yetdemonstrated an ability to successfully complete a large‑scale, pivotal clinical trial, obtain regulatory approval ormanufacture and commercialize a product candidate. Consequently, we have no meaningful commercial operations uponwhich to evaluate our business and predictions about our future success or viability may not be as accurate as they could beif we had a history of successfully developing and commercializing pharmaceutical products.Since inception, we have incurred significant operating losses. Our net loss attributed to Strongbridge Biopharmawas $5.3 million, $9.7 million and $43.6 million for the years ended December 31, 2013, 2014 and 2015, respectively. As ofDecember 31, 2015, we had an accumulated deficit of $80.8 million. We have devoted substantially all of our financialresources to identifying, in‑licensing, acquiring and developing our product candidates, including conducting clinical trialsand providing general and administrative support for these operations to build our business infrastructure.To date, we have financed our operations primarily through private placements of equity securities and the proceedsfrom our initial public offering of ordinary shares in the United States in October 2015. The amount of our future net losseswill depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debtfinancings, strategic collaborations or grants. To become and remain profitable, we must develop and eventuallycommercialize one or more of our product candidates with significant market potential. Biopharmaceutical productdevelopment is a highly speculative undertaking and involves a substantial degree of risk. It may be several years, if ever,before we receive regulatory approval and have a product candidate approved for commercialization. Even if we obtainregulatory approval to market a product candidate, our future revenue will depend upon the size of any7 Table of Contentsmarkets in which our product candidates may receive approval and our ability to achieve market acceptance and adequatemarket share for our product candidates in those markets. Further, because the potential markets in which our productcandidates may ultimately receive regulatory approval are very small, we may never become profitable despite obtainingsuch market share and acceptance of our product candidates.We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Weanticipate that our expenses will increase substantially if and as we:·continue research and nonclinical and clinical development of our product candidates, including advancing ourprograms from preclinical development into clinical trials and increasing the number and size of our currentclinical trials and preclinical studies;·seek to identify, assess, in‑license, acquire and develop additional product candidates;·change or add manufacturers or suppliers;·seek regulatory approvals for our product candidates that successfully complete clinical trials;·establish a sales, marketing and distribution infrastructure to commercialize any products for which we mayobtain regulatory approval;·make up‑front, milestone or other payments under any license arrangements;·seek to maintain, protect and expand our intellectual property portfolio;·seek to attract and retain skilled personnel;·create additional infrastructure to support our operations as a U.S. listed company and our product developmentand planned future commercialization efforts; and·experience any delays or encounter issues with any of the above, including, but not limited to, failed preclinicalstudies or clinical trials, complex results, safety issues or other regulatory challenges that may require eitherlonger follow‑up of existing preclinical studies or clinical trials or limitation of additional preclinical studies orclinical trials in order to pursue regulatory approval.Further, the net losses we incur may fluctuate significantly from quarter‑to‑quarter and year‑to‑year, such that aperiod‑to‑period comparison of our results of operations may not be a good indication of our future performance. Moreover,if we incur substantial losses, we could be liquidated, and the value of our shares might be significantly reduced or the sharesmight be of no value.We have never generated any revenue from product sales and may never be profitable.We have no products approved for commercialization and have never generated any revenue from product sales. Wewill not generate revenue from product sales unless and until we successfully complete the development of, obtain regulatoryapproval for and commercialize one or more of our product candidates. Our ability to generate future revenue from productsales depends heavily on our success in many areas, including, but not limited to:·completing research, preclinical or clinical development, as applicable, of our product candidates, includingsuccessfully completing clinical trials of our product candidates;·integrating product candidates that we in‑license or acquire, as well as completing research, formulation andprocess development, and preclinical or clinical development, as applicable, of those product candidates,including successfully completing clinical trials of those product candidates;·obtaining regulatory approval our product candidates;·incurring additional costs as we advance our product candidates;8 Table of Contents·developing a sustainable and scalable manufacturing process for our product candidates, if approved;·maintaining supply and manufacturing relationships with third parties that can conduct the manufacturingprocess development and provide adequate, in amount and quality, products to support clinical developmentand the market demand for our product candidates, if approved;·developing a commercial organization and launching and commercializing product candidates for which weobtain regulatory approval, either directly or with a collaborator or distributor;·obtaining market acceptance of our product candidates as viable treatment options;·addressing any competing technological and market developments;·identifying, assessing, in‑licensing, acquiring and/or developing new product candidates;·negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;·maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, tradesecrets and know‑how; and·attracting, hiring and retaining qualified personnel.Given the numerous risks and uncertainties associated with pharmaceutical product development, we are unable toaccurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Ourexpenses could increase beyond expectations if we are required by the FDA or the EMA, or any comparable foreignregulatory agency, to perform nonclinical and preclinical studies or clinical trials in addition to those that we currentlyanticipate.Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipateincurring significant costs associated with commercializing any approved product candidate. Further, our revenue will bedependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price forthe product, the ability to obtain coverage and adequate reimbursement, and whether we own the commercial rights for thatterritory. If the number of our addressable patients is not as significant as we estimate, the indication approved by regulatoryauthorities is narrower than we expect, or the treatment population is narrowed by competition, physician choice or treatmentguidelines, we may not generate significant revenue from sales of our product candidates. If we are not able to generatesufficient revenue from the sale of any approved products, we may never become profitable. Even if we do achieveprofitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to successfullyexecute any of the foregoing would decrease the value of our company and could impair our ability to raise capital, expandour business or continue our operations. A decline in the value of our company could cause you to lose all or part of yourinvestment.We expect that we will need substantial additional funding before we can expect to complete the development of ourproduct candidates and become profitable from sales of our approved products, if any.We are currently advancing our product candidates through clinical development. Development of our productcandidates is expensive, and we expect our research and development expenses to increase in connection with our ongoingactivities, particularly as we continue our ongoing trials and initiate new trials of COR‑003, COR‑005 and any other productcandidates we may seek to develop. We expect that we will require additional capital to obtain regulatory approval for, andto commercialize, our product candidates.As of December 31, 2015, Strongbridge had cash and cash equivalents of $51.6 million and no outstanding debt.We currently believe that our existing cash and cash equivalents is sufficient to fund planned operations into the fourthquarter of 2017, which is after the expected receipt of data from the COR-003 SONICS trial. However, this estimate is basedon assumptions that may prove to be incorrect, our operating plans may change as a result of many factors that may currentlybe unknown to us, and we may need to seek additional funds sooner than planned. Our future funding requirements willdepend on many factors, including, but not limited to:9 Table of Contents·the scope, rate of progress, results and cost of our clinical trials, nonclinical testing, formulation, processdevelopment and other related activities;·the cost of manufacturing clinical supplies and establishing commercial supplies of our product candidates, ifapproved, and any products that we may develop;·the number and characteristics of product candidates that we pursue, including any additional productcandidates we may in‑license or acquire;·the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;·the cost of defending potential intellectual property disputes, including patent infringement actions brought bythird parties against us or our product candidates;·the cost, timing and outcomes of regulatory approvals;·the cost and timing of establishing sales, marketing and distribution capabilities; and·the terms and timing of any collaborative, licensing and other arrangements that we may establish, includingany required milestone and royalty payments thereunder.Any additional fundraising efforts may divert our management from their day‑to‑day activities, which maycompromise our ability to develop and commercialize our product candidates, if approved. In addition, we cannot guaranteethat future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of anyfinancing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities,whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our ordinary shares todecline.If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay ordiscontinue one or more of our research or development programs or the commercialization of any product candidates, ifapproved, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired.Raising additional capital may cause dilution to our shareholders, restrict our operations or require us to relinquish rightsto our intellectual property or future revenue streams.Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs througha combination of equity offerings, debt financings, grants, and license and development agreements in connection with anycollaborations. We do not have any committed external source of funds. In the event we seek additional funds, we may raiseadditional capital through the sale of equity or convertible debt securities. In such an event, the ownership interests of ourcurrent shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that wouldadversely affect their rights as shareholders. Debt financing, if available, could result in increased fixed payment obligationsand may involve agreements that include restrictive covenants, such as limitations on our ability to incur additional debt,make capital expenditures, acquire, sell or license intellectual property rights or declare dividends, and other operatingrestrictions that could hurt our ability to conduct our business.Further, if we raise additional funds through collaborations, strategic alliances, or marketing, distribution orlicensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property or futurerevenue streams. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce orterminate our product development or future commercialization efforts, or grant rights to develop and market productcandidates that we would otherwise prefer to develop and market ourselves.10 Table of ContentsWe may not be successful in executing our growth strategy or our growth strategy may not deliver the anticipated results.We plan to source new product candidates that are complementary to our existing product candidates byin‑licensing or acquiring them from other companies or academic institutions. If we are unable to identify, in‑license oracquire and integrate product candidates in accordance with this strategy, our ability to pursue our growth strategy would becompromised.Research programs and business development efforts to identify new product candidates require substantialtechnical, financial and human resources. We may focus our efforts and resources on potential programs or productcandidates that ultimately prove to be unsuccessful. Our research programs, business development efforts or licensingattempts may fail to yield additional complementary or successful product candidates for clinical development andcommercialization for a number of reasons, including, but not limited to, the following:·our research or business development methodology or search criteria and process may be unsuccessful inidentifying potential product candidates with a high probability of success for development progression;·we may not be able or willing to assemble sufficient resources or expertise to in‑license, acquire or discoveradditional product candidates;·for product candidates we seek to in‑license or acquire, we may not be able to agree to acceptable terms with thelicensor or owner of those product candidates;·our product candidates may not succeed in preclinical studies or clinical trials;·we may not succeed in formulation or process development;·our product candidates may be shown to have harmful side effects or may have other characteristics that maymake the products unmarketable or unlikely to receive regulatory approval;·competitors may develop alternatives that render our product candidates obsolete or less attractive;·product candidates that we develop may be covered by third parties’ patents or other exclusive rights;·product candidates that we develop may not allow us to leverage our expertise and our development andcommercial infrastructure as currently expected;·the market for a product candidate may change during our program so that such a product may becomeunreasonable to continue to develop;·a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or atall; and·a product candidate may not be accepted as safe and effective by patients, the medical community or third‑partypayors.If any of these events occurs, we may not be successful in executing our growth strategy or our growth strategy maynot deliver the anticipated results.We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize onproduct candidates or indications that may be more profitable or for which there is a greater likelihood of success.We have limited financial and managerial resources. As a result, we may forego or delay pursuit of opportunitieswith other product candidates or for other indications that later prove to have greater commercial potential. Our resourceallocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Ourspending on current and future research and development programs and product candidates for specific indications may notyield any commercially viable products. If we do not accurately evaluate the commercial11 Table of Contentspotential or target market for a particular product candidate, we may relinquish valuable rights to that product candidatethrough collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous forus to retain sole development and commercialization rights to such product candidate.If we acquire other businesses or in‑license or acquire other product candidates and are unable to integrate themsuccessfully, our financial performance could suffer.If we are presented with appropriate opportunities, we may acquire other businesses. We have had limitedexperience integrating other businesses or product candidates, or in‑licensing or acquiring other product candidates. Sinceour formation in 1996, we have in‑licensed or acquired three product candidates: COR‑004, COR‑005 and BP‑2002. Theacquisition of COR‑005 occurred recently, and we are still in the early stages of integrating it into our business. Theintegration process following these or any future transactions may produce unforeseen operating difficulties andexpenditures, and may absorb significant management attention that would otherwise be directed to the ongoingdevelopment of our business. Also, in any future in‑licensing or acquisition transactions, we may issue shares of stock thatwould result in dilution to existing shareholders, incur debt, assume contingent liabilities or create additional expensesrelated to amortizing intangible assets, any of which might harm our financial results and cause our stock price to decline.Any financing we might need for future transactions may be available to us only on terms that restrict our business or imposecosts that reduce our net income.We are highly dependent on our key personnel, including our president and chief executive officer, as well as our ability torecruit, retain and motivate additional qualified personnel.We are highly dependent on Matthew Pauls, our President and Chief Executive Officer, and Dr. RuthThieroff‑Ekerdt, our Chief Medical Officer. Some members of our management team, including Matthew Pauls, have onlybeen our employees since August 2014. As a result, they have limited experience working for us and working together as ateam. Any member of management or employee can terminate his or her relationship with us at any time. Although we haveincluded non‑compete provisions in their respective employment or consulting agreements, as the case may be, sucharrangements might not be sufficient for the purpose of preventing such key personnel from entering into agreements withany of our competitors. The inability to recruit and retain qualified personnel, or the loss of Mr. Pauls or Dr. Thieroff‑Ekerdtcould result in competitive harm as we could experience delays in reaching our in‑licensing, acquisition, development andcommercialization objectives.We also depend substantially on highly qualified managerial, sales and technical personnel who are difficult to hireand retain. There is currently a shortage of skilled personnel in our industry, which is likely to continue. As a result,competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retainpersonnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies forindividuals with similar skill sets. In addition, failure to succeed in preclinical studies or clinical trials may make it morechallenging to recruit and retain qualified personnel. Recruiting and retaining other qualified employees, consultants andadvisors for our business, including scientific and technical personnel, will be critical to our success.We may expand our organization and experience difficulties in managing this growth, which could disrupt our operations.As our development, commercialization, in‑licensing, and acquisition plans and strategies develop, and as weadvance the preclinical and clinical development of our product candidates, we expect to experience significant growth inthe number of our employees and the scope of our operations, particularly in the areas of managerial, operational, sales,marketing, financial, legal and other resources. To manage our anticipated future growth, we must continue to implement andimprove our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additionalqualified personnel. Our management may need to divert a disproportionate amount of its attention away from ourday‑to‑day activities and devote a substantial amount of time to managing these growth activities. Due to our limitedfinancial resources, we may not be able to effectively manage the expansion of our operations, which may result inweaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reducedproductivity among remaining employees. Any such growth could require significant capital expenditures and may divertfinancial resources from other projects, such as the in‑licensing, acquisition and development of additional12 Table of Contentsproduct candidates. If our management is unable to effectively manage our growth, our expenses may increase more thanexpected, our ability to generate or grow revenue could be reduced and we may not be able to implement our businessstrategy. Our future financial performance and our ability to compete effectively will depend, in part, on our ability toeffectively manage any future growth.Our business and operations would suffer in the event of system failures.Our computer systems, as well as those of our clinical research organizations, or CROs, and other contractors andconsultants, are vulnerable to damage from computer viruses, unauthorized access, natural disasters, including hurricanes,terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in ouroperations, it could result in a material disruption of our product development programs. For example, the loss of preclinicalstudy or clinical trial data from completed, ongoing or planned preclinical studies or clinical trials could result in delays inour regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that anydisruption or security breach were to result in a loss of or damage to our data or applications, or inappropriate disclosure ofpersonal, confidential or proprietary information, we could incur liability and the further development of our productcandidates could be delayed.Risks Related to the Development and Clinical Testing of Our Product CandidatesWe depend entirely on the success of a limited number of product candidates, which are still in clinical development. If wedo not obtain regulatory approval for and successfully commercialize one or more of our product candidates or weexperience significant delays in doing so, we may never become profitable.We currently have no products approved for sale and may never be able to obtain regulatory approval of orcommercialize any products. We have invested, and continue to expect to invest, a significant portion of our efforts andfinancial resources in the development of a limited number of product candidates, which are still in clinical development.Our ability to generate product revenues, which we do not expect will occur for at least the next several years, if ever, willdepend heavily on our successful development and eventual commercialization, if approved, of one or more of our productcandidates. We are not permitted to market or promote any of our product candidates before we receive regulatory approvalfrom the FDA, EMA or any comparable foreign regulatory agency, and we may never receive such regulatory approval forany of our product candidates. The success of COR‑003 and COR‑005 will depend on several additional factors, including,but not limited to, the following:·successfully completing formulation and process development activities;·successfully completing clinical trials that demonstrate the efficacy and safety of our product candidates;·acceptance of our product candidates by patients and the medical community;·a continued acceptable safety profile following approval;·obtaining and maintaining healthcare coverage and adequate reimbursement; and·competing effectively with other therapies, including with respect to the sales and marketing of our productcandidates, if approved.Many of these factors are beyond our control, including clinical development, the regulatory submission process,potential threats to our intellectual property rights and changes in the competitive landscape. If we do not achieve one ormore of these factors in a timely manner or at all, we could experience significant delays or an inability to successfullycomplete clinical trials or eventually commercialize our product candidates, if approved.13 Table of ContentsClinical trials are very expensive, time consuming and difficult to design and implement, and involve uncertain outcomes.Furthermore, results of earlier preclinical studies and clinical trials may not be predictive of results of future preclinicalstudies or clinical trials.To obtain the requisite regulatory approvals to market and sell any of our product candidates, we must demonstratethrough extensive preclinical studies and clinical trials that our products are safe and effective in humans. Clinical testing isexpensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time duringthe clinical trial process. The results of preclinical studies and earlier clinical trials may not be predictive of the results oflater‑stage clinical trials. For example, the results generated to date in preclinical studies or clinical trials for our productcandidates do not ensure that later preclinical studies or clinical trials will demonstrate similar results. Further, we havelimited clinical data for each of our product candidates and have not completed Phase 3 clinical trials for any of our productcandidates. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despitehaving progressed through preclinical studies and initial clinical trials. Companies in the biopharmaceutical industry maysuffer setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising resultsin earlier clinical trials. For example, COR‑003 was previously studied for the treatment of type 2 diabetes. In December2005, prior to the initiation of the first clinical trial by DiObex, our licensee, the FDA placed a clinical hold relating to asafety concern for use of a dosage above 600 mg/day. DiObex modified the clinical trial protocol to limit the highest dose to600 mg/day, and the clinical hold was lifted by the FDA in February 2006. Furthermore, COR‑003 did not demonstrate areduction in blood glucose levels in a small Phase 2 clinical trial in patients with type 2 diabetes mellitus, the originalindication for which it was being developed. We may experience delays in our ongoing or future preclinical studies orclinical trials, and we do not know whether future preclinical studies or clinical trials will begin on time, need to beredesigned, enroll an adequate number of subjects or patients on time or be completed on schedule, if at all. Clinical trialsmay be delayed, suspended or terminated for a variety of reasons, including delay or failure to:·obtain authorization from regulators or institutional review boards, or IRBs, to commence a clinical trial at aprospective clinical trial site;·reach agreements on acceptable terms with prospective CROs and clinical trial sites, the terms of which can besubject to extensive negotiation and may vary significantly among different CROs and clinical trial sites;·recruit and enroll a sufficient number of patients in clinical trials to ensure adequate statistical power to detectstatistically significant treatment effects;·address any noncompliance with regulatory requirements or safety concerns that arise during the course of aclinical trial;·have patients complete clinical trials or return for post‑treatment follow‑up;·have CROs or other third parties comply with regulatory requirements, adhere to the trial protocol or meetcontractual obligations in a timely manner or at all;·identify a sufficient number of clinical trial sites and initiate them within the planned timelines; and·manufacture sufficient quantities of the product candidate to complete clinical trials.Positive or timely results from preclinical or early stage clinical trials do not ensure positive or timely results in latestage clinical trials or regulatory approval by the FDA, EMA or any comparable foreign regulatory agency. In addition, manyof the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead tothe denial of regulatory approval of our product candidates. Preclinical and clinical data are often susceptible to varyinginterpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinicalstudies and clinical trials have nonetheless failed to obtain regulatory approval for the product candidates. The FDA, EMAand any comparable foreign regulatory agency have substantial discretion in the approval process and in determining whenor whether regulatory approval will be obtained for any of our product candidates. Even if we believe the data collected fromclinical trials of our product candidates are promising, such data may not be sufficient to support approval by the FDA, EMAor any comparable foreign regulatory agency.14 Table of ContentsIn some instances, there can be significant variability in safety or efficacy results between different clinical trials ofthe same product candidate due to numerous factors, including changes in clinical trial procedures set forth in protocols,differences in the size and type of the patient populations, adherence to the administration regimen and other clinical trialprotocols, and the rate of dropout among clinical trial participants. In the case of our late stage clinical product candidates,results may differ in general on the basis of the larger number of clinical trial sites and additional countries involved inPhase 3 clinical trials. Different countries have different standards of care and different levels of access to care for patients,which in part drives the heterogeneity of the patient populations that enroll in our studies.We have met with the FDA regarding the development pathway of COR‑003. The FDA recommended, but did notrequire, a control group in the clinical trial design. We concluded that it was not practical to use any approved drug to serveas an active control in our Phase 3 clinical trial of COR‑003. We are using an open‑label, single‑arm design because in thepast the FDA has deemed that the concurrent use of a placebo control as monotherapy is unethical for the treatment of activeendogenous Cushing’s syndrome due to the progressive and serious nature of the condition. In February 2016, however, aPhase 3 clinical trial was registered by another company with the FDA to evaluate their monotherapy product candidateagainst concurrent use of placebo control. In addition, based on our analysis and feedback from experts whom we haveconsulted, we concluded that it was not practical to use any approved drug to serve as an active control due to the unsuitablemode of action, route of administration and side effect profile of available approved therapies. Studies lacking an activecontrol group are more likely to be subject to unanticipated variability in study results that can potentially lead to flawedconclusions because they do not allow for discrimination of patient outcomes. As a result, even if we achieve the clinicaltrial’s end points, the FDA or other regulatory authorities could view our study results as potentially biased and mayultimately require that we conduct a randomized, controlled clinical trial of COR‑003 in order to obtain approval forcommercialization. Unfavorable data from our clinical trials may restrict the potential development and commercialization ofCOR‑003 or lead to the termination of its development.In June 2015, we acquired COR‑005 and were not involved in and had no control over the preclinical and clinicaldevelopment of this product candidate prior to such acquisition. As a result, we are dependent on the prior research anddevelopment of COR‑005 having been conducted in accordance with the applicable protocol, legal, regulatory and scientificstandards, the accuracy of reported results of all clinical trials conducted prior to our acquisition and the correctinterpretation of collected data from these clinical trials. These factors could result in increased costs and delays in thedevelopment of COR‑005, which could hurt our ability to generate future revenues from this product candidate.The regulatory approval process of the FDA, EMA or any comparable foreign regulatory agency may be lengthy, timeconsuming and unpredictable.Our future success is dependent upon our ability to successfully develop, obtain regulatory approval for and thensuccessfully commercialize one or more of our product candidates. Although certain of our employees have prior experiencewith submitting marketing applications to the FDA, EMA or any comparable foreign regulatory agency, we, as a company,have not submitted such applications for our product candidates. We cannot be certain that any of our product candidateswill be successful in clinical trials or receive regulatory approval. Applications for any of our product candidates could fail toreceive regulatory approval for many reasons, including, but not limited to, the following:·the FDA, EMA or any comparable foreign regulatory agency may disagree with the design or implementation ofour clinical trials or our interpretation of data from nonclinical trials or clinical trials;·the population studied in the clinical program may not be sufficiently broad or representative to assure safety inthe full population for which we seek approval, including reliance on foreign clinical data;·the data collected from clinical trials of our product candidates may not be sufficient to support a finding thathas statistical significance or clinical meaningfulness or support the submission of a new drug application, orNDA, or other submission, or to obtain regulatory approval in the United States or elsewhere;·we may be unable to demonstrate to the FDA, EMA or any comparable foreign regulatory agency that a productcandidate’s risk‑benefit ratio for its proposed indication is acceptable;15 Table of Contents·the FDA, EMA or any comparable foreign regulatory agency may fail to approve the manufacturing processes,test procedures and specifications or facilities of third‑party manufacturers with which we contract for clinicaland commercial supplies; and·the approval policies or regulations of the FDA, EMA or any comparable foreign regulatory agency maysignificantly change in a manner rendering our clinical data insufficient for approval.Any of our current or future product candidates could take a significantly longer time to gain regulatory approvalthan expected or may never gain regulatory approval. This could delay or eliminate any potential product revenue bydelaying or terminating the potential commercialization of our product candidates. For example, although our Phase 3clinical program for COR‑003 has an open‑label, single‑arm design because a concurrent placebo control as monotherapywas deemed unethical, and an approved drug to serve as active control (monotherapy) or as background therapy (adjunctivetherapy) suitable for an international study population was deemed impractical, the FDA has recommended the inclusion of acontrol group. In February 2016, a Phase 3 clinical trial was registered by another company with the FDA to evaluate theirmonotherapy product candidate against concurrent use of placebo control. Therefore, even if we achieve the clinical trial’sendpoints, the FDA and other regulatory authorities may ultimately require that we conduct a randomized, controlled clinicaltrial of COR‑003 in order to obtain approval for commercialization.We intend to seek formal advice and guidance from the FDA and the EMA prior to advancing COR‑005 into furtherstudies and pivotal clinical trials. If the feedback we receive is different from what we currently anticipate, this could delaythe development and regulatory approval process for this product candidate.We generally plan to seek regulatory approval to commercialize our product candidates in the United States, theEuropean Union and other key global markets. To obtain regulatory approval in other countries, we must comply withnumerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturingand controls, clinical trials, commercial sales, pricing and distribution of our product candidates. Even if we are successful inobtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. Failure toobtain marketing authorization for our product candidates will result in our being unable to market and sell such products. Ifwe fail to obtain approval in any jurisdiction, the geographic market for our product candidates could be limited. Similarly,regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercializationof our product candidates.If serious adverse, undesirable or unacceptable side effects are identified during the development of our productcandidates or following regulatory approval, if any, we may need to abandon our development of such product candidates.If our product candidates are associated with serious adverse, undesirable or unacceptable side effects, we may needto abandon their development or limit development to certain uses or sub‑populations in which such side effects are lessprevalent, less severe or more acceptable from a risk‑benefit perspective. Many compounds that initially showed promise inpreclinical or early stage testing have later been found to cause side effects that restricted their use and prevented furtherdevelopment of the compound for larger indications.For example, in our clinical trials of COR‑003 to date, adverse events have included headache, nausea, back pain,dizziness, diarrhea and liver enzyme elevations. For COR‑005, which is given by subcutaneous injections, adverse eventshave included injection site reaction such as swelling, itching and pain. In addition, headache and gastrointestinal effectssuch as nausea and diarrhea were observed for COR‑005. These adverse events can be dose‑dependent and may increase infrequency and severity if we increase the dose to increase efficacy. Occurrence of serious treatment‑related side effects couldimpede clinical trial enrollment, require us to halt the clinical trial, and prevent receipt of regulatory approval from the FDA,EMA or any comparable foreign regulatory agency. They could also adversely affect physician or patient acceptance of ourproduct candidates.Discovery of previously unknown problems, or increased focus on a known problem, with an approved product mayresult in restrictions on its permissible uses, including withdrawal of the medicine from the market. Currently, ketoconazoleis required to include a “black box” warning on its label for use as an antifungal related to liver toxicity in16 Table of Contentsthe United States. Ketoconazole is the racemic mixture, meaning it contains both mirror image forms of the molecule in a 1:1ratio, from which we draw our single enantiomer product candidate COR‑003. If COR‑003 is required to include a similar“black box” warning on its label, it may limit our ability to commercialize the product, if approved.Additionally, if one or more of our product candidates receives regulatory approval, and we or others later identifyundesirable side effects caused by such product(s), a number of potentially significant negative consequences could result,including, but not limited to:·withdrawal by regulatory authorities of approvals of such product;·seizure of the product by regulatory authorities;·recall of the product;·restrictions on the marketing of the product;·requirement by regulatory authorities of additional warnings on the label, such as a black box warning;·requirement that we create a medication guide outlining the risks of such side effects for distribution to patients;·commitment to expensive additional safety studies prior to launch as a prerequisite of approval by regulatoryauthorities of such product;·commitment to expensive post‑marketing studies as a prerequisite of approval by regulatory authorities of suchproduct;·initiation of legal action against us claiming to hold us liable for harm caused to patients; and·harm to our reputation and resulting harm to physician or patient acceptance of our products.Any of these events could prevent us from achieving or maintaining market acceptance of the particular productcandidate, if approved, and could significantly harm our business, financial condition, and results of operations.We may find it difficult to enroll patients in our clinical trials given the limited number of patients who have the diseasesfor the treatment of which our product candidates are being studied. Difficulty in enrolling patients in our clinical trialscould delay or prevent clinical trials of our product candidates.Successful and timely completion of clinical trials will require that we enroll a sufficient number of patientcandidates. Clinical trials may be subject to delays as a result of patient enrollment taking longer than anticipated or patientwithdrawal. Patient enrollment depends on many factors, including the size and nature of the patient population, eligibilitycriteria for the clinical trial, the proximity of patients to clinical sites, the design of the clinical protocol, the availability ofcompeting clinical trials, the availability of new drugs approved for the indication the clinical trial is investigating, andclinicians’ and patients’ perceptions as to the safety and potential advantages of the product candidate being studied inrelation to other available therapies.Because we are focused on addressing rare diseases, there are limited patient pools from which to draw in order tocomplete our clinical trials in a timely and cost‑effective manner. Delays in the completion of any clinical trial of our productcandidates will increase our costs, slow down our product candidate development and approval process, and delay orpotentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that maylead to a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatoryapproval of our product candidates.17 Table of ContentsWe may become exposed to costly and damaging liability claims, either when testing our product candidates in the clinicor at the commercial stage, and our product liability insurance may not cover all damages from such claims.We are exposed to potential product liability and professional indemnity risks that are inherent in the research,development, manufacturing, marketing, and use of pharmaceutical products. We currently have no products that have beenapproved for commercial sale. However, the current and future use of product candidates by us in clinical trials, and the saleof any approved products in the future, may expose us to liability claims. These claims might be made by patients that usethe product, healthcare providers, pharmaceutical companies, or others selling such products. Any claims against us,regardless of their merit, could be difficult and costly to defend, and could compromise the market acceptance of our productcandidates or any prospects for commercialization of our product candidates, if approved.Although the clinical trial process is designed to identify and assess potential side effects, it is always possible that adrug, even after regulatory approval, may exhibit unforeseen side effects. If any of our product candidates were to causeadverse side effects during clinical trials or after approval of the product candidate, we may be exposed to substantialliabilities. Physicians and patients may not comply with any warnings that identify known potential adverse effects andpatients who should not use our product candidates.We purchase liability insurance in connection with our clinical trials. It is possible that our liabilities could exceedour insurance coverage. We intend to expand our insurance coverage to include the sale of commercial products if we obtainregulatory approval for any of our product candidates. However, we may not be able to maintain insurance coverage at areasonable cost or obtain insurance coverage that will be adequate to satisfy any liability that may arise. If a successfulproduct liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, ourassets may not be sufficient to cover such claims and our business operations could be impaired.Risks Related to Commercialization of Our Product CandidatesWe have never commercialized a product candidate and we may lack the necessary expertise, personnel and resources tosuccessfully commercialize any of our products that receive regulatory approval on our own or together with suitablepartners.We have never commercialized a product candidate. Our operations to date have been limited to organizing andstaffing our company, business planning, raising capital, in‑licensing or acquiring our product candidates, identifyingpotential product candidates and undertaking preclinical studies and clinical trials of our product candidates. We currentlyhave no sales force or marketing or distribution capabilities. To achieve commercial success of our product candidates, ifapproved, we will have to develop our own sales, marketing and supply capabilities or outsource these activities to a thirdparty.Factors that may affect our ability to commercialize our product candidates on our own include recruiting andretaining adequate numbers of effective sales and marketing personnel, obtaining access to or persuading adequate numbersof physicians to prescribe our product candidates and other unforeseen costs associated with creating an independent salesand marketing organization. Developing a sales and marketing organization requires significant investment, is timeconsuming and could delay the launch of our product candidates. We may not be able to build an effective sales andmarketing organization in the United States, the European Union or other key global markets. If we are unable to build ourown distribution and marketing capabilities or to find suitable partners for the commercialization of our product candidates,we may not generate revenues from them.We operate in a highly competitive and rapidly changing industry, which may result in our competitors discovering,developing or commercializing competing products before or more successfully than we do, or our entering a market inwhich a competitor has commercialized an established competing product, and we may not be successful in competing withthem.The development and commercialization of new drug products is highly competitive and subject to significant andrapid technological change. Our success is highly dependent upon our ability to in‑license, acquire, develop and obtainregulatory approval for new and innovative drug products on a cost‑effective basis and to market them18 Table of Contentssuccessfully. In doing so, we face and will continue to face intense competition from a variety of businesses, including large,fully integrated, well‑established pharmaceutical companies who already possess a large share of the market, specialtypharmaceutical companies and biopharmaceutical companies, academic institutions, government agencies and other privateand public research institutions in Europe, the United States and other jurisdictions.We are currently aware of various companies that are marketing existing drugs that may compete with our productcandidates such as Corcept Therapeutics and Novartis. Corcept Therapeutics markets Korlym (mifepristone) in the UnitedStates. Korlym is indicated for the control of hyperglycemia secondary to hypercortisolism in patients with endogenousCushing’s syndrome who have type 2 diabetes or glucose intolerance and have failed surgery or are not candidates forsurgery. The product has already received regulatory approval from the FDA and was launched in the United States in April2012. Similarly, Novartis markets Signifor (pasireotide), a somatostatin analog approved for the treatment of adults withCushing’s disease for whom pituitary surgery is not an option or has not been curative. In 2012, Signifor was approved by theEMA for the treatment of Cushing’s disease, and was approved by the FDA in December 2012. It is also an approvedsomatostatin analog (or SSA) therapy for the treatment of acromegaly. The product has been marketed in the UnitedKingdom, Germany and other European countries since 2012, and in the United States since the first half of 2013.Additionally, in 2014, the EMA approved ketoconazole for the treatment of endogenous Cushing’s syndrome. Ketoconazoleis the most commonly prescribed drug therapy for the treatment of endogenous Cushing’s syndrome, even though it is notapproved for this use in the United States. Regulatory approval of ketoconazole in the United States for the treatment ofendogenous Cushing’s syndrome could significantly increase competition for COR‑003 due to their similar mechanisms ofaction.Other companies acquiring and developing or marketing drug therapies or products for rare diseases include Ipsen,Pfizer, GP Pharma, Italfarmaco, HRA and Chiasma. We anticipate this competition to increase in the future as new companiesenter the endocrinology and rare diseases markets. In addition, the health care industry is characterized by rapidtechnological change, and new product introductions or other technological advancements could make some or all of ourproducts obsolete.The highly competitive nature of and rapid technological changes in the biotechnology and pharmaceuticalindustries could render our product candidates or our technology obsolete or non‑competitive. Our competitors may, amongother things:·have similar or better product candidates or technologies;·possess greater financial and human resources as well as supporting clinical data;·develop and commercialize products that are safer, more effective, less expensive, or more convenient or easierto administer;·obtain regulatory approval more quickly;·establish superior proprietary positions;·have access to greater manufacturing capacity;·seek patent protection that competes with our product candidates;·implement more effective approaches to sales and marketing; or·enter into more advantageous collaborative arrangements for research, development, manufacturing andmarketing of products.The successful commercialization of our product candidates will depend in part on the extent to which governmentalauthorities and health insurers establish adequate coverage and reimbursement levels and pricing policies.The successful commercialization of our product candidates, if approved, will depend, in part, on the extent towhich coverage and reimbursement for our products or procedures using our products will be available from government19 Table of Contentsand health administration authorities, private health insurers and other third‑party payors. To manage healthcare costs, manygovernments and third‑party payors increasingly scrutinize the pricing of new technologies and require greater levels ofevidence of favorable clinical outcomes and cost‑effectiveness before extending coverage and adequate reimbursement tosuch new technologies. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003,or the Medicare Modernization Act, changed the way Medicare covers and pays for pharmaceutical products. The legislationexpanded Medicare coverage for drug purchases by the elderly under a new Part D and introduced a new reimbursementmethodology based on average sale prices for physician‑administered drugs. In addition, this legislation provided authorityfor limiting the number of drugs that will be covered in any therapeutic class. Cost‑reduction initiatives and other provisionsof this legislation could decrease the coverage and reimbursement that we receive for any approved products. While theMedicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicarecoverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction inreimbursement that results from the Medicare Modernization Act may result in a similar reduction in payments from privatepayors. In light of such challenges to prices and increasing levels of evidence of the benefits and clinical outcomes of newtechnologies, we cannot be sure that coverage will be available for any product candidate that we commercialize, and, ifavailable, that the reimbursement rates will be adequate. If we are unable to obtain adequate levels of coverage andreimbursement for our product candidates, our ability to generate revenue will be compromised.Our potential customers, including hospitals, physicians and other healthcare providers that purchase certaininjectable drugs administered during a procedure, such as our product candidates, generally rely on third‑party payors to payfor all or part of the costs and fees associated with the drug and the procedures administering the drug. These third‑partypayors may pay separately for the drug or may bundle or otherwise include the costs of the drug in the payment for theprocedure. We are unable to predict at this time whether our product candidates, if approved, will be eligible for suchseparate payments. To the extent there is no separate payment for our product candidates, there may be further uncertainty asto the adequacy of reimbursement amounts. Nor can we predict at this time the adequacy of payments, whether madeseparately for the drug and procedure or with a bundled or otherwise aggregate payment amount for the drug and procedure.In addition, obtaining and maintaining adequate coverage and reimbursement status is time consuming and costly.Because each third‑party payor individually approves coverage and reimbursement levels, obtaining coverage andadequate reimbursement is a time consuming, costly and sometimes unpredictable process. We may be required to providescientific and clinical support, medical necessity or both for the use of any product to each third‑party payor separately withno assurance that approval would be obtained, and we may need to conduct expensive pharmacoeconomic studies in order todemonstrate the cost‑effectiveness, medical necessity or both of our products. This process could delay the marketacceptance of any product and could have a negative effect on our future revenues and operating results.Third‑party payors may deny coverage and reimbursement status altogether of a given drug product, or cover theproduct, but may also establish prices at levels that are too low to enable us to realize an appropriate return on our investmentin product development. Because the rules and regulations regarding coverage and reimbursement change frequently, insome cases on short notice, even when there is favorable coverage and reimbursement, future changes may occur thatadversely impact such favorable coverage and reimbursement status. Further, the net reimbursement for drug products may besubject to additional reductions if there are changes to laws that presently restrict imports of drugs from countries where theymay be sold at lower prices than in the United States.The unavailability or inadequacy of third‑party coverage and reimbursement could negatively affect the marketacceptance of our product candidates and the future revenues we may expect to receive from those products. In addition, weare unable to predict what additional legislation or regulation relating to the healthcare industry or third‑party coverage andreimbursement may be enacted in the future, or what effect such legislation or regulation would have on our business.20 Table of ContentsOur products may not gain market acceptance, in which case we may not be able to generate product revenues.Even if the FDA, EMA or any comparable foreign regulatory agency approves the marketing of any productcandidates that we develop, physicians, healthcare providers, patients or the medical community may not accept or use them.Efforts to educate the medical community and third‑party payors on the benefits of our product candidates may requiresignificant resources and may not be successful. If COR‑003, COR‑005 or any other product candidate that we develop doesnot achieve an adequate level of acceptance, we may not generate significant product revenues or any profits fromoperations. The degree of market acceptance of COR‑003, COR‑005 or any of our product candidates that are approved forcommercial sale will depend on a variety of factors, including, but not limited to:·whether clinicians and potential patients perceive our product candidates to have better efficacy, safety andtolerability profile, and ease of use compared with our competitors;·the timing of market introduction;·the number of competing products;·our ability to provide acceptable evidence of safety and efficacy;·the prevalence and severity of any side effects;·relative convenience and ease of administration;·cost‑effectiveness;·patient diagnostics and screening infrastructure in each market;·marketing and distribution support; and·availability of coverage, reimbursement and adequate payment from health maintenance organizations andother third‑party payors, both public and private.In addition, the potential market opportunity for COR‑003, COR‑005 or any other product candidate we maydevelop is difficult to estimate precisely. Our estimates of the potential market opportunity are predicated on several keyassumptions such as industry knowledge and publications, third‑party research reports and other surveys. While we believethat our internal assumptions are reasonable, these assumptions may be inaccurate. If any of the assumptions proves to beinaccurate, then the actual market for COR‑003 or our other product candidates could be smaller than our estimates of thepotential market opportunity. If the actual market for COR‑003 or our other product candidates is smaller than we expect, orif the products fail to achieve an adequate level of acceptance by physicians, health care payors and patients, our productrevenue may be limited and we may be unable to achieve or maintain profitability. Further, given the limited number oftreating physicians, if we are unable to convince a significant number of such physicians of the value of our productcandidates, we may be unable to achieve a sufficient market share to make our products, if approved, profitable.Risks Related to Our Reliance on Third PartiesWe rely on third parties to conduct our nonclinical and clinical trials and if these third parties perform in an unsatisfactorymanner, our business could be substantially harmed.We have relied upon and plan to continue to rely upon third‑party CROs to conduct and monitor and manage datafor our ongoing nonclinical and clinical programs, and may not currently have all of the necessary contractual relationshipsin place to do so. Once we have established contractual relationships with such third‑party CROS, we will have only limitedcontrol over their actual performance of these activities. Nevertheless, we are responsible for ensuring that each of our trials isconducted in accordance with the applicable protocol, legal, regulatory, environmental and scientific standards and ourreliance on the CROs does not relieve us of our regulatory responsibilities.21 Table of ContentsWe and our CROs and other vendors are required to comply with current Good Manufacturing Practices, or cGMP,current Good Clinical Practices, or cGCP, and Good Laboratory Practice, or GLP, which are regulations and guidelinesenforced by the FDA, the Competent Authorities of the Member States of the European Union and any comparable foreignregulatory agency for all of our product candidates in nonclinical and clinical development. Regulatory authorities enforcethese regulations through periodic inspections of study sponsors, principal investigators, trial sites and other contractors. Ifwe or any of our CROs or vendors fail to comply with applicable regulations, the data generated in our nonclinical andclinical trials may be deemed unreliable and the FDA, EMA or any comparable foreign regulatory agency may require us toperform additional nonclinical and clinical trials before approving our marketing applications. We cannot assure you thatupon inspection by a given regulatory authority, such regulatory authority will determine that all of our clinical trialscomply with cGCP regulations. In addition, our clinical trials must be conducted with products produced under cGMPregulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay theregulatory approval process.Our business involves the controlled use of hazardous materials, chemicals, biologicals and radioactive compounds.Substantially all such use is outsourced to third‑party CRO manufacturers and clinical sites. Although we believe that ourthird‑party CROs safety procedures for handling and disposing of such materials comply with industry standards, there willalways be a risk of accidental contamination or injury. By law, radioactive materials may only be disposed of at certainapproved facilities. If liable for an accident, or if it suffers an extended facility shutdown, we or our CROs could incursignificant costs, damages or penalties.Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, wecannot control whether or not they devote sufficient time and resources to our ongoing nonclinical and clinical programs. Ifour CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to bereplaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols,regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated, and we may not beable to obtain regulatory approval for or successfully commercialize our product candidates. Our CROs may also generatehigher costs than anticipated. As a result, our results of operations and the commercial prospects for our product candidateswould be harmed, our costs could increase, and our ability to generate revenue could be delayed.If any of our relationships with these third‑party CROs terminates, we may not be able to enter into arrangementswith alternative CROs or to do so on commercially reasonable terms. If we are able to replace a CRO, switching or addingadditional CROs involves additional cost and requires management time and focus and there is a natural transition periodwhen a new CRO commences work. As a result, delays could occur, which could hurt our ability to meet our desired clinicaldevelopment timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we willnot encounter similar challenges or delays in the future.The failure of our suppliers to supply us with the agreed upon drug substance or drug product could hurt our business.We do not currently, and do not expect to in the future, independently conduct manufacturing activities for ourproduct candidates. We expect to rely on third‑party suppliers for the drug substance and drug product for our productcandidates. The failure of these suppliers to perform as contracted, or the need to identify new suppliers, could result in adelay in the development of our product candidates. A delay in the development of our product candidates or having to enterinto a new agreement with a different third party on less favorable terms than we have with our current suppliers could hurtour business.We and our collaborators and contract manufacturers are subject to significant regulation with respect to manufacturingour product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirementsor may not be able to meet supply demands.All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existingcontract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeuticproduct approved for commercial sale or used in late‑stage clinical trials must be manufactured in accordance22 Table of Contentswith cGMP. These regulations govern manufacturing processes and procedures, including record keeping, and theimplementation and operation of quality systems to control and assure the quality of investigational products and productsapproved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertentchanges in the properties or stability of our product candidates that may not be detectable in final product testing. We, ourcollaborators or our contract manufacturers must supply all necessary documentation in support of an NDA or foreignequivalent on a timely basis and must adhere to GLP and cGMP regulations enforced by the FDA and other regulatoryagencies through their facilities inspection program. Some of our contract manufacturers have never produced acommercially approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvalsto do so. The facilities and quality systems of some or all of our collaborators and third‑party contractors must pass apre‑approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our productcandidates or any of our other potential products. In addition, the regulatory authorities may, at any time, audit or inspect amanufacturing facility involved with the preparation of our product candidates or our other potential products or theassociated quality systems for compliance with the regulations applicable to the activities being conducted. Although weoversee the contract manufacturers, we cannot control the manufacturing process of, and are completely dependent on, ourcontract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a pre‑approvalplant inspection, regulatory approval of the products may not be granted or may be substantially delayed until anyviolations are corrected to the satisfaction of the regulatory authority, if ever.The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturingfacilities of our collaborators and third‑party contractors. If any such inspection or audit identifies a failure to comply withapplicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such aninspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or timeconsuming for us or a third party to implement, and that may include the temporary or permanent suspension of a clinicaltrial or commercial sales or the temporary or permanent closure of a facility.If we, our collaborators or any of our third‑party manufacturers fail to maintain regulatory compliance, the FDA oranother applicable regulatory authority could impose regulatory sanctions including, among other things, refusal to approvea pending application our product candidates, withdrawal of an approval or suspension of production.Additionally, if the supply from one approved manufacturer is interrupted, an alternative manufacturer would needto be qualified through an NDA supplement or equivalent foreign regulatory filing, which could result in further delay. Theregulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production.Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical andcommercial timelines.These factors could cause us to incur higher costs and could cause the delay or termination of clinical trials,regulatory submissions, required approvals or commercialization of our product candidates. Furthermore, if our suppliers failto meet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at asubstantially equivalent cost, our clinical trials may be delayed or we could lose potential revenue.Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor willdiscover them or that our trade secrets will be misappropriated or disclosed.Because we rely on third parties to develop and manufacture our product candidates, we must, at times, share tradesecrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, ifapplicable, material transfer agreements, collaborative research agreements, consulting agreements or other similaragreements with our collaborators, advisors, employees, and consultants prior to beginning research or disclosing proprietaryinformation. These agreements typically limit the rights of the third parties to use or disclose our confidential information,such as trade secrets. Despite the contractual provisions employed when working with third parties, the need to share tradesecrets and other confidential information increases the risk that such trade secrets become known by our competitors, areinadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given thatour proprietary position is based, in part, on our know‑how and trade secrets, a competitor’s23 Table of Contentsdiscovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may harmour business.Risks Related to Our Intellectual PropertyIf we or our licensors are unable to obtain and maintain effective patent rights for our technologies, product candidates orany future product candidates, or if the scope of the patent rights obtained is not sufficiently broad, we may not be able tocompete effectively in our markets.In addition to the exclusivity provided for our product candidates with regulatory orphan drug status, we rely upona combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related toour technologies and product candidates. Our success depends in large part on our and our licensors’ ability to obtain andmaintain patent and other intellectual property protection in the United States and in other countries with respect to ourproprietary technology and product candidates.We have sought to protect our proprietary position by filing patent applications in the United States and abroadrelated to our novel technologies and products that are important to our business. This process is expensive and timeconsuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, ina timely manner or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our research anddevelopment output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have theright to control the preparation, filing and prosecution of patent applications, or to maintain the patents, coveringtechnology that we license from third parties. Therefore, these patents and applications may not be prosecuted and enforcedin a manner consistent with the best interests of our business.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involvescomplex legal and factual questions for which legal principles remain unsolved. The patent applications that we own orin‑license may fail to result in issued patents with claims that cover our product candidates in the United States or in foreigncountries. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patentapplications in the United States and other jurisdictions remain confidential for a period of time after filing, and some remainso until issued. Therefore, we cannot be certain that we were the first to file any patent application related to our productcandidates, or whether we were the first to make the inventions claimed in our owned patents or pending patent applications,nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the firstto file. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highlyuncertain. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has beenfound, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents dosuccessfully issue, and even if such patents cover our product candidates, third parties may challenge their validity,enforceability or scope, which may result in such patents being narrowed, found unenforceable or invalidated, which couldallow third parties to commercialize our technology or products and compete directly with us, without payment to us, orresult in our inability to manufacture or commercialize products without infringing third‑party patent rights. Furthermore,even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property,provide exclusivity for our product candidates, prevent others from designing around our claims or provide us with acompetitive advantage. Any of these outcomes could impair our ability to prevent competition from third parties.We and/or our licensors have filed several patent applications covering various aspects of our product candidates.We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent, or whether any issuedpatents will be found invalid and unenforceable or will be challenged by third parties. Any successful opposition to thesepatents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for thesuccessful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatoryapprovals, the period of time during which we could market a product candidate under patent protection could be reduced.24 Table of ContentsWe may not have sufficient patent terms to effectively protect our products and business.Patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it isfirst filed. Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Giventhe amount of time required for the development, testing and regulatory review of new product candidates, patents protectingsuch candidates might expire before or shortly after such product candidates are commercialized. As a result, our owned andlicensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similaror identical to ours or otherwise provide us with a competitive advantage. Even if patents covering our product candidatesare obtained, once the patent life has expired for a product, we may be open to competition from generic medications.While patent term extensions in the United States and under supplementary protection certificates in the EuropeanUnion may be available to extend the patent exclusivity term for our product candidates, we cannot provide any assurancesthat any such patent term extension will be obtained and, if so, for how long.Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patentapplications and the enforcement or defense of our issued patents.Changes in either the patent laws or interpretation of the patent laws in the United States and other countries maydiminish the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protectour rights to the same extent as the laws of the United States. Assuming the other requirements for patentability are met, inthe United States prior to March 15, 2013, the first to invent the claimed invention is entitled to the patent, while outside theUnited States, the first to file a patent application is entitled to the patent. After March 15, 2013, under the Leahy‑SmithAmerica Invents Act, or the AIA, enacted on September 16, 2011, the United States has moved to a first inventor to filesystem. The AIA also includes a number of significant changes that affect the way patent applications will be prosecuted andmay also affect patent litigation. The effects of these changes are currently unclear as the United States Patent and TrademarkOffice, or the USPTO, is still implementing various regulations, the courts have yet to address many of these provisions andthe applicability of the act and new regulations on specific patents discussed herein have not been determined and wouldneed to be reviewed. In general, the AIA and its implementation could increase the uncertainties and costs surrounding theprosecution of our patent applications and the enforcement or defense of our issued patents. In addition, recent U.S. SupremeCourt rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights ofpatent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in thefuture, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending onfuture actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents couldchange in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents andpatents that we might obtain in the future.Third‑party claims of intellectual property infringement may expose us to substantial liability or prevent or delay ourdevelopment and commercialization efforts.Our commercial success depends in part on our ability to develop, manufacture, market and sell our productcandidates, if approved, and use our proprietary technology without alleged or actual infringement, misappropriation orother violation of the patents and proprietary rights of third parties. There have been many lawsuits and other proceedingsinvolving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patentinfringement lawsuits, interferences, oppositions and reexamination proceedings before the USPTO, and correspondingforeign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by thirdparties, exist in the fields in which we are developing product candidates. Some claimants may have substantially greaterresources than we do and may be able to sustain the costs of complex intellectual property litigation to a greater degree andfor longer periods of time than we could. In addition, patent holding companies that focus solely on extracting royalties andsettlements by enforcing patent rights may target us. As the biotechnology and pharmaceutical industries expand and morepatents are issued, the risk increases that our product candidates may be subject to claims of infringement of the intellectualproperty rights of third parties.25 Table of ContentsThird parties may assert that we are employing their proprietary technology without authorization. There may bethird‑party patents or patent applications with claims to compositions, formulations, methods of manufacture or methods oftreatment related to the use or manufacture of our product candidates. We cannot be sure that we know of each and everypatent and pending application in the United States and abroad that is relevant or necessary to the commercialization of ourproduct candidates. Because patent applications can take many years to issue, there may be currently pending patentapplications that may later result in issued patents upon which our product candidates may infringe. In addition, third partiesmay obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third‑party patentswere held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, anycompositions formed during the manufacturing process or any final product itself, the holders of any such patents may beable to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents,or until such patents expire or are finally determined to be invalid or unenforceable. Similarly, if any third‑party patents wereheld by a court of competent jurisdiction to cover aspects of our compositions, formulations, or methods of treatment,prevention or use, the holders of any such patents may be able to block our ability to develop and commercialize theapplicable product candidate unless we obtained a license or until such patent expires or is finally determined to be invalidor unenforceable. In either case, such a license may not be available on commercially reasonable terms, or at all. Even if wewere able to obtain a license, it could be non‑exclusive, thereby giving our competitors access to the same technologieslicensed to us.Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block ourability to further develop and commercialize one or more of our product candidates, if approved. Defense of these claims,regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employeeresources from our business. In the event of a successful claim of infringement against us, we may have to pay substantialdamages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringingproducts or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetaryexpenditure.Additional competitors could enter the market with generic versions of our products, which may result in a decline in salesof affected products.Under the Hatch‑Waxman Act, a pharmaceutical manufacturer may file an abbreviated new drug application, orANDA, seeking approval of a generic copy of an approved innovator product. Under the Hatch‑Waxman Act, a manufacturermay also submit an NDA under section 505(b)(2) that references the FDA’s prior approval of the innovator product. A 505(b)(2) NDA product may be for a new or improved version of the original innovator product. Hatch‑Waxman also provides forcertain periods of regulatory exclusivity, which preclude FDA approval, or, in some circumstances, FDA filing and reviewing,of an ANDA or 505(b)(2) NDA. These include, subject to certain exceptions, the period during which an FDA‑approved drugis subject to orphan drug exclusivity. Although COR‑003 is being developed as a new chemical entity, or NCE, we intend torely on orphan drug exclusivity rather than NCE exclusivity for nonpatent protection of COR‑003. In addition to the benefitsof regulatory exclusivity, an innovator NDA holder may have patents claiming the active ingredient, product formulation oran approved use of the drug, which would be listed with the product in the FDA publication, “Approved Drug Products withTherapeutic Equivalence Evaluations,” known as the “Orange Book.” If there are patents listed in the Orange Book, a genericor 505(b)(2) applicant that seeks to market its product before expiration of the patents must include in the ANDA what isknown as a “Paragraph IV certification,” challenging the validity or enforceability of, or claiming non‑infringement of, thelisted patent or patents. Notice of the certification must be given to the innovator, too, and if within 45 days of receivingnotice the innovator sues to protect its patents, approval of the ANDA is stayed for 30 months, or as lengthened or shortenedby the court.Accordingly, if COR‑003 or any of our other product candidates is approved, competitors could file ANDAs forgeneric versions of our product candidates, or 505(b)(2) NDAs that reference our product candidates, respectively. If there arepatents listed for our product candidates in the Orange Book, those ANDAs and 505(b)(2) NDAs would be required to includea certification as to each listed patent indicating whether the ANDA applicant does or does not intend to challenge thepatent. We cannot predict whether any patents issuing from our pending patent applications will be eligible for listing in theOrange Book, how any generic competitor would address such patents, whether we would sue on any such patents or theoutcome of any such suit.26 Table of ContentsWe may not be successful in securing or maintaining proprietary patent protection for products and technologies wedevelop or license. Moreover, if any patents that are granted and listed in the Orange Book are successfully challenged byway of a Paragraph IV certification and subsequent litigation, the affected product could immediately face genericcompetition and its sales would likely decline rapidly and materially. Should sales decline, we may have to write off aportion or all of the intangible assets associated with the affected product and our ability to generate revenue could becompromised.Although we are not currently involved in any litigation, we may be involved in lawsuits to protect or enforce our patentsor the patents of our licensors, which could be expensive, time consuming and unsuccessful.Competitors may infringe upon our patents or the patents of our licensors. Although we are not currently involvedin any litigation, if we or one of our licensing partners were to initiate legal proceedings against a third party to enforce apatent covering one of our product candidates, the defendant could counterclaim that the patent covering our productcandidate is invalid and/or unenforceable, or request declaratory judgment that there is no infringement. In patent litigationin the United States, defendant counterclaims alleging invalidity, noninfringement and/or unenforceability arecommonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements,including lack of novelty, nonobviousness or non‑lack of enablement. Grounds for an unenforceability assertion could be anallegation that someone connected with prosecution of the patent withheld material relevant information from the USPTO, ormade a misleading statement, during prosecution. The outcome following legal assertions of invalidity and unenforceabilityis unpredictable.Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may benecessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors.An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from theprevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonableterms, or at all. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantialcosts, and distract our management and other employees. In addition, the uncertainties associated with litigation couldcompromise our ability to raise the funds necessary to continue our clinical trials, continue our research programs, licensenecessary technology from third parties or enter into development partnerships that would help us bring our productcandidates to market, if approved.Furthermore, because of the substantial amount of discovery required in connection with intellectual propertylitigation, there is a risk that some of our confidential information could be compromised by disclosure during this type oflitigation. There could also be public announcements of the results of hearings, motions or other interim proceedings ordevelopments. If securities analysts or investors perceive these results to be negative, it could hurt the market price of ourordinary shares.We have not yet registered a trademark and failure to secure or maintain adequate protection for our trademarks couldadversely affect our business.We have filed a U.S., Canadian and International (Madrid Protocol) trademark application designating Australia,China, European Community, India, Israel, Japan, Mexico and Turkey for the mark, “Strongbridge Biopharma.” If the U.S. orany foreign trademark offices raise any objections, we may be unable to overcome such objections. In addition, in the USPTOand in comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pendingtrademark applications and to seek to cancel registered trademarks. Oppositions or cancellation proceedings have been filedand may in the future be filed against our trademarks, and our trademarks may not survive such proceedings.Furthermore, third parties may allege in the future, that a trademark or trade name that we elect to use for our productcandidates may cause confusion in the marketplace. We evaluate such potential allegations in the course of our business, andsuch evaluations may cause us to change our commercialization or branding strategy for our product candidates, which mayrequire us to incur additional costs. Moreover, any name we propose to use with our product candidate in the United Statesmust be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDAtypically conducts a review of proposed product names, including an evaluation of27 Table of Contentspotential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, wemay be required to expend significant additional resources in an effort to identify a suitable substitute name that wouldqualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to buildbrand identity and possibly leading to market confusion. Over the long term, if we are unable to establish name recognitionbased on our trademarks and trade names, then we may not be able to compete effectively and our business may be adverselyaffected. Our efforts to enforce or protect our proprietary rights related to trademarks, domain names or copyrights may beineffective and could result in substantial costs and diversion of resources.In addition, there could be potential trade name or trademark infringement claims brought by owners of otherregistered trademarks alleging that the use of a corporate name or logo, product names or other signs by which we distinguishour products and services are infringing their trademark rights. The outcome of such claims is uncertain and may adverselyaffect our freedom to use our corporate name or other relevant signs. If litigation arises in this area, it may lead to significantcosts and diversion of management and employee attention.We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosedconfidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets oftheir former employers.We may employ individuals who were previously employed at universities or other biotechnology orpharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that ouremployees, consultants and independent contractors do not use the proprietary information or know‑how of others in theirwork for us, and we are not currently subject to any claims that our employees, consultants or independent contractors havewrongfully used or disclosed confidential information of third parties, we may in the future be subject to such claims.Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to payingmonetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defendingagainst such claims, litigation could result in substantial costs and be a distraction to management and other employees.We may be subject to claims challenging the inventorship of our patents and other intellectual property.Although we are not currently experiencing any claims challenging the inventorship of our patents or ownership ofour intellectual property, we may in the future be subject to claims that former employees, collaborators or other third partieshave an interest in our patents or other intellectual property as an inventor or co‑inventor. For example, we may haveinventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our productcandidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail indefending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, suchas exclusive ownership of, or right to use, valuable intellectual property. Even if we are successful in defending against suchclaims, litigation could result in substantial costs and be a distraction to management and other employees.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting and defending patents on product candidates in all countries throughout the world would beprohibitively expensive, and our intellectual property rights in some countries outside the United States can be lessextensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual propertyrights to the same extent as federal and state laws in the United States. Further, licensing partners may not prosecute patentsin certain jurisdictions in which we may obtain commercial rights, thereby precluding the possibility of later obtainingpatent protection in these countries. Consequently, we may not be able to prevent third parties from practicing ourinventions in all countries outside the United States, or from selling or importing products made using our inventions in andinto the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have notobtained patent protection to develop their own products and may also export infringing products to28 Table of Contentsterritories where we have patent protection, but enforcement is not as strong as that in the United States. These products maycompete with our products, and our patents or other intellectual property rights may not be effective or sufficient to preventthem from competing.Many companies have encountered significant problems in protecting and defending intellectual property rights inforeign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor theenforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnologyproducts, which could make it difficult for us to stop the infringement of our patents or marketing of competing products inviolation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or notsuccessful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could putour patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing, and couldprovoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or otherremedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual propertyrights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property thatwe develop or license.Risks Related to Government and RegulationEven if one or more of our product candidates obtains regulatory approval, we will be subject to ongoing obligations andcontinued regulatory requirements, which may result in significant additional expense.If regulatory approval is obtained for any of our product candidates, the product will remain subject to continualregulatory review. Any regulatory approvals that we receive for our product candidates may be subject to limitations on theapproved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements forpotentially costly post‑marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacyof the product candidate. In addition, if the FDA, the EMA or any comparable foreign regulatory authority approves any ofour product candidates, we will be subject to ongoing regulatory obligations and oversight by regulatory authorities,including with respect to the manufacturing processes, labeling, packing, distribution, adverse event reporting, storage,advertising and marketing restrictions, and recordkeeping and, potentially, other post‑marketing obligations, all of whichmay result in significant expense and limit our ability to commercialize such products. These requirements includesubmissions of safety and other post‑marketing information and reports, registration, as well as continued compliance withcGMPs and cGCPs for any clinical trials that we conduct post‑regulatory approval. Because our Phase 3 clinical trial ofCOR‑003 will collect safety data for only 90 patients, we currently expect that we would be required by the FDA and theEMA to collect additional safety data post‑approval.In addition, approved products, manufacturers and manufacturers’ facilities are subject to continual review andperiodic inspections. Later discovery of previously unknown problems with a product, including adverse events ofunanticipated severity or frequency, or with our third‑party manufacturers or manufacturing processes, or failure to complywith regulatory requirements, may result in, among other things:·restrictions on the marketing or manufacturing of the product;·withdrawal of the product from the market, or voluntary or mandatory product recalls;·fines, disgorgement of profits or revenues, warning letters or holds on clinical trials;·refusal by the FDA to approve pending applications or supplements to approved applications filed by us;·suspension or revocation of product approvals;·product seizure or detention, or refusal to permit the import or export of products; and·injunctions or the imposition of civil or criminal penalties.If any of these events occurs, our ability to sell such product may be impaired, and we may incur substantialadditional expense to comply with regulatory requirements. The policies of the FDA, the EMA or any comparable29 Table of Contentsforeign regulatory agency may change, and additional government regulations may be enacted that could prevent, limit ordelay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements orthe adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose anyregulatory approval that we may have obtained, which would compromise our ability to achieve or sustain profitability.Although we have obtained orphan drug designation for our key product candidates from the FDA and EMA, orphan drugdesignation may not ensure that we will enjoy market exclusivity in a particular market, and if we fail to obtain ormaintain orphan drug exclusivity for our product candidates, we may be subject to earlier competition and our potentialrevenue will be reduced.Under the Orphan Drug Act of 1983, the FDA may designate a product as an orphan drug if it is intended to treat anorphan disease or condition, defined as a patient population of fewer than 200,000 in the United States, or a patientpopulation greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing thedrug will be recovered from sales in the United States. In the European Union, the EMA’s Committee for Orphan MedicinalProducts grants orphan drug designation to promote the development of products that are intended for the diagnosis,prevention, or treatment of a life‑threatening or chronically debilitating condition affecting not more than 5 in 10,000persons in the European Union. Additionally, designation is granted for products intended for the diagnosis, prevention ortreatment of a life‑threatening, seriously debilitating or serious and chronic condition when, without incentives, it is unlikelythat sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug orbiological product or where there is no satisfactory method of diagnosis, prevention or treatment, or, if such a method exists,the medicine must be of significant benefit to those affected by the condition.In the United States, orphan drug designation entitles a party to financial incentives, such as opportunities for grantfunding towards clinical trial costs, tax advantages and user‑fee waivers. In addition, if a product receives the first FDAapproval for the indication for which it has orphan drug designation, the product is entitled to orphan drug exclusivity,which means the FDA may not approve any other application to market the same drug for the same indication for a period ofseven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphanexclusivity or where the manufacturer is unable to assure sufficient product quantity. In the European Union, orphan drugdesignation entitles a party to financial incentives such as a reduction of fees or fee waivers and ten years of marketexclusivity following drug or biological product approval. This period may be reduced to six years if the orphan drugdesignation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justifymaintenance of market exclusivity.COR‑003 has been granted orphan drug designation for the treatment of endogenous Cushing’s syndrome in theUnited States and Europe. COR‑005 has been granted orphan drug designation for the treatment of acromegaly in the UnitedStates and in Europe. Even though we have obtained orphan drug designation for our key product candidates, we may not bethe first to obtain regulatory approval for any particular orphan indication due to the uncertainties associated withdeveloping biopharmaceutical products. For example, ketoconazole was granted orphan drug exclusivity in Europe and isnow being marketed for the treatment of endogenous Cushing’s syndrome. Therefore, COR-003 will need to showsignificant benefit compared to ketoconazole in order to be marketed in Europe prior to the expiration of the ketoconazoleorphan drug exclusivity. Further, even though we have obtained orphan drug designation for our key product candidates,that exclusivity may not effectively protect the product from competition because different drugs with different activemoieties can be approved for the same condition. Orphan drug designation neither shortens the development time orregulatory review time of a drug nor gives the drug any advantage in the regulatory review or approval process.Enacted and future legislation may increase the difficulty and cost for us to obtain regulatory approval of andcommercialize our product candidates, and may affect the prices we may set.In the United States and the European Union, there have been a number of legislative, regulatory and proposedchanges regarding the healthcare system. These changes could prevent or delay regulatory approval of our productcandidates, restrict or regulate post‑approval activities, and affect our ability to sell profitably any products for which weobtain regulatory approval and begin to commercialize.30 Table of ContentsAs a result of legislative proposals and the trend toward managed health care in the United States, third‑party payorsare increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of newdrugs. In the United States, the Medicare Modernization Act changed the way Medicare covers and pays for pharmaceuticalproducts. The legislation expanded Medicare coverage for drug purchases by the elderly under a new Part D and introduced anew reimbursement methodology based on average sale prices for physician‑administered drugs. In addition, this legislationprovided authority for limiting the number of drugs that will be covered in any therapeutic class. Cost‑reduction initiativesand other provisions of this legislation could decrease the coverage and reimbursement that we receive for any approvedproducts. While the Medicare Modernization Act applies only to drug benefits for Medicare beneficiaries, private payorsoften follow the Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, anyreduction in reimbursement that results from the Medicare Modernization Act may result in a similar reduction in paymentsfrom private payors.In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by theHealth Care and Education Reconciliation Act, or collectively, PPACA, a sweeping law intended, among other things, tobroaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraudand abuse, add new transparency requirements for health care and health insurance industries, impose new taxes and fees onthe health industry, and impose additional health policy reforms. PPACA, among other things: increased the statutoryminimum Medicaid rebates a manufacturer must pay under the Medicaid Drug Rebate Program; addressed a newmethodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs thatare inhaled, infused, instilled, implanted or injected; and established a new Medicare Part D coverage gap discount programin which manufacturers must provide 50% point‑of‑sale discounts on negotiated prices of applicable brand drugs to eligiblebeneficiaries during their coverage gap period as a condition for the manufacturer’s outpatient drugs to be covered underPart D and implemented payment system reforms, including a national pilot program on payment bundling to encouragehospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare servicesthrough bundled payment models. Further, the PPACA imposed a significant annual nondeductible fee on entities thatmanufacture or import specified branded prescription drug products and biologic agents, apportioned among these entitiesaccording to their market share in certain government healthcare programs. We expect that additional healthcare reformmeasures will likely be adopted in the future, any of which may increase our regulatory burdens and operating costs and limitthe amounts that federal, state and foreign governments will reimburse for healthcare products and services, which couldresult in reduced demand for our products, if approved, or additional pricing pressures.Moreover, other legislative changes have also been proposed and adopted in the United States since PPACA wasenacted. On August 2, 2011, the Budget Control Act of 2011, among other things, created measures for spending reductionsby Congress. A Joint Select Committee on Deficit Reduction tasked with recommending a targeted deficit reduction of atleast $1.2 trillion for the years 2013 through 2021 was unable to reach required goals, thereby triggering the legislation’sautomatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providersof up to 2% per fiscal year, which went into effect on April 1, 2013 and will stay in effect through 2024 unless additionalCongressional action is taken. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of2012, which, among other things, further reduced Medicare payments to several providers, including hospitals, imagingcenters and cancer treatment centers, and increased the statute of limitations period for the government to recoveroverpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and otherhealth care funding, which could compromise the ability of patients and third‑party payors to purchase our productcandidates.In the European Union, proposed new clinical trial regulations will centralize clinical trial approval, whicheliminates redundancy, but in some cases this may extend timelines for clinical trial approvals due to potentially longer waittimes. Proposals to require specific consents for use of data in research, among other measures, may increase the costs andtimelines for our product development efforts. Austerity measures in certain European nations may also affect the prices weare able to seek if our products are approved, as discussed below.Both in the United States and in the European Union, legislative and regulatory proposals have been made toexpand post‑approval requirements and restrict sales and promotional activities for pharmaceutical products. We do not31 Table of Contentsknow whether additional legislative changes will be enacted, whether the regulations, guidance or interpretations will bechanged, or what the impact of such changes on the regulatory approvals of our product candidates, if any, may be.Our relationships with customers, consultants and payors will be subject to applicable fraud and abuse, privacy andsecurity, transparency and other healthcare laws and regulations, which, if violated, could expose us to criminal sanctions,civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminishedprofits and future earnings.Healthcare providers, physicians and others play a primary role in the recommendation and prescription of anyproducts for which we may in the future obtain regulatory approval and commercialize. Our current and future arrangementswith third‑party payors, consultants, customers, physicians and others may expose us to broadly applicable fraud and abuseand other healthcare federal and state laws and regulations, including in the United States, that may constrain the business orfinancial arrangements and relationships through which we market, sell and distribute our products for which we obtainregulatory approval. Potentially applicable healthcare laws and regulations include, but are not limited to, the following:·the U.S. federal Anti‑Kickback Statute, which prohibits, among other things, persons or entities from knowinglyand willfully soliciting, offering, receiving or paying remuneration, directly or indirectly, overtly or covertly, incash or in kind, to induce or in return for, purchasing, leasing, ordering, arranging for, or recommending thepurchase, lease, or order of, any good, facility, item or service for which payment may be made under U.S.government healthcare programs such as Medicare and Medicaid;·the federal civil and criminal false claims laws and civil monetary penalties laws, including civil whistlebloweror qui tam actions, which prohibit, among other things, any person or entity from knowingly presenting, orcausing to be presented, a false or fraudulent claim for payment or approval to the federal government orknowingly making, using or causing to be made or used a false record or statement material to a false orfraudulent claim to the federal government, or knowingly concealing or knowingly and improperly avoiding ordecreasing an obligation to pay or transmit money or property to the federal government;·though we are not currently regulated under the Privacy Rule or the Security Rule of the Health InsurancePortability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology forEconomic and Clinical Health Act, or HITECH, and its implementing regulations, which impose variousobligations with respect to safeguarding the privacy, security and transmission of individually identifiablehealth information, it may implicate certain aspects of our business relationships;·the health care fraud provisions of HIPAA, which impose criminal liability for, among other things, knowinglyand willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program,including private third‑party payors, or to obtain, by means of false or fraudulent pretenses, representations orpromises, any of the money or property owned by, or under the custody or control of, any healthcare benefitprogram, and knowingly and willfully falsifying, concealing or covering up a material fact or making anymaterially false, fictitious or fraudulent statement in connection with the delivery of, or payment for, healthcarebenefits, items or services;·the federal Physician Payments Sunshine Act under PPACA and its implementing regulations, which requirescertain manufacturers of drugs, devices, biologics and medical supplies to annually report to the Centers forMedicare & Medicaid Services information related to payments and other transfers of value made by suchmanufacturers to physicians and teaching hospitals, and ownership and investment interests held by physiciansor their immediate family members; and·analogous laws and regulations, such as state anti‑kickback and false claims laws, which may apply to sales ormarketing arrangements, research, distribution and claims involving healthcare items or services reimbursed bystate governmental and non‑governmental third‑party payors, including private insurers, state laws that requirepharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines andthe relevant compliance guidance promulgated by the federal government, and32 Table of Contentsstate requirements for manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and other restrictions on drug manufacturer marketing practices.Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available underthe U.S. federal Anti‑Kickback Statute and analogous state laws, it is possible that some of our current and future businessactivities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation hasstrengthened these laws. For example, PPACA, among other things, amends the intent requirement of the U.S. federalAnti‑Kickback Statute and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge ofthese statutes or specific intent to violate them in order to be in violation. Moreover, PPACA provides that the governmentmay assert that a claim including items or services resulting from a violation of the U.S. federal Anti‑Kickback Statuteconstitutes a false or fraudulent claim for purposes of the federal False Claims Act.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws andregulations will involve substantial costs. It is possible that governmental authorities will conclude that our businesspractices may not comply with current or future statutes, regulations, agency guidance or case law involving applicablehealthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmentalregulations that may apply to us, we may be subject to, without limitation, significant civil, criminal and administrativepenalties, damages, fines, exclusion from U.S. government funded healthcare programs, such as Medicare and Medicaid,imprisonment, disgorgement, enhanced government reporting and oversight, contractual damages, reputational harm,diminished profits and future earnings and/or the curtailment or restructuring of our operations. Any action against us forviolation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses or divertour management’s attention from the operations of our business. If any of the physicians or other providers or entities withwhom we expect to do business are found to be not in compliance with applicable laws, they may be subject to similarpenalties, including, without limitation, criminal, civil or administrative sanctions, including exclusions fromgovernment‑funded healthcare programs.We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti‑corruption laws andanti‑money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete indomestic and international markets. We can face criminal liability and other serious consequences for violations whichcan harm our business.We are subject to export control and import laws and regulations, including the U.S. Export AdministrationRegulations, U.S. Customs regulations, various economic and trade sanctions regulations administered by the U.S. TreasuryDepartment’s Office of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S.domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act and other state andnational anti‑bribery and anti‑money laundering laws in the countries in which we conduct activities. Anti‑corruption lawsare interpreted broadly and prohibit companies and their employees, agents, contractors and other partners from authorizing,promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in thepublic or private sector. We may engage third parties for clinical trials outside of the United States, to sell our productsabroad once we enter a commercialization phase and/or to obtain necessary permits, licenses, patent registrations and otherregulatory approvals. We have direct or indirect interactions with officials and employees of government agencies orgovernment‑affiliated hospitals, universities and other organizations. We can be held liable for the corrupt or other illegalactivities of our employees, agents, contractors and other partners, even if we do not explicitly authorize or have actualknowledge of such activities. Any violations of the laws and regulations described above may result in substantial civil andcriminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach ofcontract and fraud litigation, reputational harm and other consequences.33 Table of ContentsRisks Related to Our Ordinary SharesThe price of our ordinary shares may be volatile and may fluctuate due to factors beyond our control.The market price of our ordinary shares may be volatile and subject to wide fluctuations in response to a variety offactors, many of which are beyond our control, including:·positive or negative results of testing and clinical trials by us, strategic partners or competitors;·delays in in‑licensing or acquiring additional complementary product candidates;·any delay in the commencement, enrollment and the ultimate completion of clinical trials;·technological innovations or commercial product introductions by us or competitors;·failure to successfully develop and commercialize any of our product candidates, if approved;·changes in government regulations;·developments concerning proprietary rights, including patents and litigation matters;·public concern relating to the commercial value or safety of any of our product candidates;·financing or other corporate transactions, or inability to obtain additional funding;·failure to meet or exceed expectations of the investment community;·announcements of significant licenses, acquisitions, strategic partnerships or joint ventures by us or ourcompetitors;·publication of research reports or comments by securities or industry analysts; or·general market conditions in the pharmaceutical industry or in the economy as a whole.The share price of publicly traded emerging biopharmaceutical and drug discovery and development companies hasbeen highly volatile and is likely to remain highly volatile in the future. In addition, the stock market in general hasexperienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operatingperformance of individual companies. Broad market and industry factors may hurt the market price of companies’ stock,including ours, regardless of actual operating performance.An active market in our ordinary shares may not develop or be liquid enough for investors to resell our ordinary shares.Prior to our initial public offering in October 2015, there was no U.S. public market for our ordinary shares. Thelisting of our common stock on the NASDAQ Global Select Market does not assure that a meaningful, consistent and liquidtrading market exists. Although our ordinary shares are listed on the NASDAQ Global Select Market, trading volume in ourordinary shares has been limited and an active trading market for our shares may never develop or be sustained. If an activemarket for our ordinary shares does not develop, it may be difficult for investors to sell their shares without depressing themarket price for the shares or at all.Future sales, or the possibility of future sales, of a substantial number of our ordinary shares could adversely affect theprice of our ordinary shares.Future sales of a substantial number of our ordinary shares, or the perception that such sales will occur, could cause adecline in the market price of our ordinary shares. We currently have 21,205,382 ordinary shares outstanding. A significantportion of these ordinary shares are subject to lock‑up agreements executed in connection with our initial public offering ofordinary shares in October 2015. These lock-up agreements expire in April 2016. If, after the end of34 Table of Contentssuch lock‑up agreements, these shareholders sell substantial amounts of ordinary shares in the public market, or the marketperceives that such sales may occur, the market price of our ordinary shares and our ability to raise capital through anissuance of equity securities in the future could be adversely affected. We also intend to register all ordinary shares that wemay issue under our equity compensation plans. Once we register these ordinary shares, they can be freely sold in the publicmarket upon issuance, subject to volume limitations applicable to affiliates and the lock‑up agreements. If a large number ofour ordinary shares or securities convertible into our ordinary shares are sold in the public market after they become eligiblefor sale, the sales could reduce the trading price of our ordinary shares and impede our ability to raise future capital.We expect to be classified a passive foreign investment company for U.S. federal income tax purposes, which could result inadverse U.S. federal income tax consequences to U.S. Holders of our ordinary shares.A non‑U.S. corporation generally will be classified as a passive foreign investment company, or PFIC, for U.S.federal income tax purposes for any taxable year if either (1) 75% or more of its gross income for such year consists of certaintypes of “passive” income or (2) 50% or more of the value of its assets (determined on the basis of a quarterly average) duringsuch year produce or are held for the production of passive income. For this purpose, “passive income” generally includes,among other items of income, dividends, interest, royalties, rents and gains from commodities and securities transactions andfrom the sale or exchange of property that gives rise to passive income, and a non‑U.S. corporation is treated as owning aproportionate share of the assets and earning a proportionate share of the income of any other corporation in which suchnon‑U.S. corporation owns, directly or indirectly, more than 25% of the value of such other corporation’s stock. Based on ourprojected income, assets and activities, we expect that we will be treated as a PFIC for the current taxable year and for theforeseeable future. Accordingly, a U.S. Holder, would be subject to substantially increased U.S. federal income tax liability,including upon the receipt of any “excess distributions” from us and upon the sale or other disposition of our ordinary shares.Although certain elections may be available to mitigate the adverse impact of the PFIC rules, such elections may result in acurrent U.S. federal tax liability prior to any distribution on or disposition of our ordinary shares. Further, there can be noassurances that we will supply U.S. Holders with information that such U.S. Holders are required to report under the rulesgoverning such elections. Accordingly, the acquisition of our ordinary shares may not be an appropriate investment forcertain holders that are not tax‑exempt organizations. U.S. Holders should consult their tax advisers regarding the applicationof the PFIC rules to an investment in our ordinary shares.If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about ourbusiness, the price of our ordinary shares and our trading volume could decline.The trading market for our ordinary shares will depend in part on the research and reports that securities or industryanalysts publish about us or our business. If no or too few securities or industry analysts commence or continue coverage ofour company, the trading price for our ordinary shares would likely be negatively affected. In the event securities or industryanalysts initiate coverage, if one or more of the analysts who cover us downgrade our ordinary shares or publish inaccurate orunfavorable research about our business, the price of our ordinary shares would likely decline. If one or more of theseanalysts cease coverage of our company or fail to publish reports on us regularly, demand for our ordinary shares coulddecrease, which might cause the price of our ordinary shares and trading volume to decline.We have never paid cash dividends, do not expect to pay dividends in the foreseeable future and our ability to paydividends, or repurchase or redeem our ordinary shares, is limited by law.We have not paid any dividends since our inception and do not anticipate paying any dividends on our ordinaryshares in the foreseeable future. Even if future operations lead to significant levels of distributable profits, we currentlyintend that any earnings will be reinvested in our business and that dividends will not be paid until we have an establishedrevenue stream to support continuing dividends. The proposal to pay future dividends to shareholders will in additioneffectively be at the sole discretion of our board of directors after taking into account various factors our board of directorsdeems relevant, including our business prospects, capital requirements, financial performance and new product development.In addition, payment of future dividends is subject to certain limitations under the Irish Companies Act 2014, or the IrishCompanies Act. The Irish Companies Act, among other requirements, require Irish companies to35 Table of Contentshave distributable reserves available for distribution equal to or greater than the amount of the proposed dividend. See Part I,Item 10A “Additional Information-Share Capital.” Accordingly, investors cannot rely on dividend income from our ordinaryshares and any returns on an investment in our ordinary shares will likely depend entirely upon any future appreciation in theprice of our ordinary shares.We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Actreporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.We report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non‑U.S. company withforeign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act and although we aresubject to Irish laws and regulations with regard to such matters and intend to furnish quarterly financial information to theSecurities and Exchange Commission, we are exempt from certain provisions of the Exchange Act that are applicable to U.S.domestic public companies, including: (1) the sections of the Exchange Act regulating the solicitation of proxies, consentsor authorizations with respect to a security registered under the Exchange Act; (2) the sections of the Exchange Act requiringinsiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from tradesmade in a short period of time; and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reportson Form 10‑Q containing unaudited financial and other specified information, or current reports on Form 8‑K upon theoccurrence of specified significant events. In addition, foreign private issuers are not required to file their annual report onForm 20‑F until four months after the end of each financial year, while U.S. domestic issuers that are accelerated filers arerequired to file their annual report on Form 10‑K within 75 days after the end of each fiscal year. Foreign private issuers arealso exempt from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of materialinformation. As a result of the above, you may not have the same protections afforded to shareholders of companies that arenot foreign private issuers.As a foreign private issuer and as permitted by the listing requirements of NASDAQ, we rely on certain home countrygovernance practices rather than the corporate governance requirements of NASDAQ.We are a foreign private issuer. As a result, in accordance with NASDAQ Listing Rule 5615(a)(3), we comply withhome country governance requirements and certain exemptions thereunder rather than complying with certain of thecorporate governance requirements of NASDAQ.Irish law does not require that a majority of our board of directors consist of independent directors. Our board ofdirectors therefore may include fewer independent directors than would be required if we were subject to NASDAQ ListingRule 5605(b)(1). In addition, we are not subject to NASDAQ Listing Rule 5605(b)(2), which requires that independentdirectors must regularly have scheduled meetings at which only independent directors are present.Our articles of association (hereinafter referred to as our Articles) provide that at any meeting of shareholders, ashareholder may designate another person to attend, speak and vote at the meeting on their behalf by proxy, but no suchproxy shall be voted or acted upon at any subsequent meeting, unless the proxy expressly provides for this. Irish law does notrequire shareholder approval for the issuance of securities in connection with the establishment of or amendments toequity‑based compensation plans for employees. To this extent, our practice varies from the requirements of NASDAQListing Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities inconnection with such events.See Part I, Item 10B “Additional Information-Memorandum and Articles of Association.” As a result of the above,you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.We may lose our foreign private issuer status, which would then require us to comply with the Exchange Act’s domesticreporting regime and cause us to incur significant legal, accounting and other expenses.We are a foreign private issuer and therefore we are not required to comply with all of the periodic disclosure andcurrent reporting requirements of the Exchange Act applicable to U.S. domestic issuers. Losing our status as a foreign privateissuer would require us to comply with all of the periodic disclosure and current reporting requirements36 Table of Contentsof the Exchange Act applicable to U.S. domestic issuers. In order to maintain our current status as a foreign private issuer,either (1) a majority of our ordinary shares must be either directly or indirectly owned of record by non‑residents of theUnited States or (2)(A) a majority of our executive officers or directors may not be United States citizens or residents,(B) more than 50% of our assets cannot be located in the United States and (C) our business must be administered principallyoutside the United States. If we lost this status, we would be required to comply with the Exchange Act reporting and otherrequirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreignprivate issuers. We may also be required to make changes in our corporate governance practices in accordance with variousSEC and stock exchange rules. The regulatory and compliance costs to us under U.S. securities laws if we are required tocomply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost wewould incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase ourlegal and financial compliance costs and would make some activities highly time consuming and costly. We also expect thatif we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it moredifficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reducedcoverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficultfor us to attract and retain qualified members of our board of directors.Our shareholder’s rights are governed by Irish law and differ from the rights of shareholders under U.S. law.We are a public limited company incorporated under the laws of Ireland. Therefore, the rights of holders of ordinaryshares are governed by Irish law and by our memorandum and articles of association. These rights differ from the typicalrights of shareholders in U.S. corporations. In certain cases, facts that, under U.S. law, would entitle a shareholder in a U.S.corporation to claim damages may not give rise to a cause of action under Irish law entitling a shareholder in an Irishcompany to claim damages. For example, the rights of shareholders to bring proceedings against us or against our directors orofficers in relation to public statements are more limited under Irish law than under the civil liability provisions of the U.S.securities laws.Our shareholders may have difficulties enforcing, in actions brought in courts in jurisdictions located outside theUnited States, judgments obtained in the U.S. courts under the U.S. securities laws. In particular, if a shareholder sought tobring proceedings in Ireland based on U.S. securities laws, the Irish court might consider that:·it did not have jurisdiction;·it was not the appropriate forum for such proceedings;·applying Irish conflict of laws rules, U.S. laws (including U.S. securities laws) did not apply to the relationshipbetween you and us or our directors and officers; or·the U.S. securities laws were of a penal nature or violated Irish public policy and should not be enforced by theIrish court.Our shareholders should also be aware that Irish law does not allow for any form of legal proceedings directlyequivalent to the class action available in the United States.To the extent our financial statements will be audited by a registered public accounting firm in Ireland, because thePCAOB is not currently permitted to inspect registered public accounting firms in the Republic of Ireland, including ourindependent registered public accounting firm, you may not benefit from such inspections.Auditors of U.S. public companies, including our independent registered public accounting firm, are required by thelaws of the United States to undergo periodic PCAOB inspections to assess their compliance with U.S. law and professionalstandards in connection with performance of audits of financial statements filed with the SEC. The laws of certain EuropeanUnion countries, including the Republic of Ireland, do not currently permit the PCAOB to conduct inspections of accountingfirms established and operating in such European Union countries. Accordingly, to the extent our financial statements will beaudited by a registered public accounting firm in Ireland, the PCAOB would be prevented from fully evaluating theeffectiveness of our independent registered public accounting firm’s audit procedures37 Table of Contentsor quality control procedures. Unlike shareholders or potential shareholders of most U.S. public companies, our shareholderswould be deprived of the possible benefits of such PCAOB inspections.A future transfer of our ordinary shares, other than one effected by means of the transfer of book‑entry interests in DTC,may be subject to Irish stamp duty.The rate of stamp duty, when applicable, on the transfer of shares in an Irish‑incorporated company is 1% of theprice paid, or the market value of the shares acquired, whichever is greater. Payment of Irish stamp duty is generally a legalobligation of the transferee. We expect that most of our ordinary shares will be traded through the Depositary TrustCompany, or DTC, or through brokers who hold such shares on behalf of customers through DTC. As such, the transfer ofordinary shares should be exempt from Irish stamp duty based on established practice of the Irish Revenue Commissioners.We received written confirmation from the Irish Revenue Commissioners on June 22, 2015 that a transfer of our ordinaryshares held through DTC and transferred by means of a book‑entry interest would be exempt from Irish stamp duty. However,if you hold your ordinary shares directly of record, rather than beneficially through DTC, or through a broker that holds yourordinary shares through DTC, any transfer of your ordinary shares may be subject to Irish stamp duty. The potential for stampduty to arise could adversely affect the price and liquidity of our ordinary shares. In addition, the terms of our eligibilityagreement with DTC will require us to provide certain indemnities relating to Irish stamp duty to third parties. If liabilitywere to arise as a result of the indemnities provided under the terms of the eligibility agreement, we may face significantunexpected costs.The process to acquire full ownership of Cortendo AB is lengthy and may cause us to incur unanticipated costs. Any delayin our acquiring full ownership of Cortendo AB could result in increased administrative costs and burdens and couldadversely affect our day‑to‑day operations.As the holder of more than 90% of Cortendo AB’s shares following the settlement of the Exchange Offer, we willpursue a squeeze‑out process permitted under Swedish law, which will allow us to acquire the remaining shares of CortendoAB that were not exchanged as part of the Exchange Offer. This process and any delays may cause us to incur unexpectedcosts or result in unanticipated structuring or tax costs. Further, the act of redomiciling may impair our ability to utilize ourNOLs. This process will be conducted by arbitration proceedings. The final arbitration award in which the squeeze‑out priceis determined will likely not be rendered until 12 to 18 months or more from initiation of the proceedings. We will have thepossibility to request advance title to the remaining Cortendo AB shares before such time, which normally can be obtainedwithin six to nine months from initiation of the proceedings, provided that we provide sufficient security for the finalsqueeze‑out price and interest thereon. In such case, we would receive title to such shares and would also be required to pay apreliminary per‑share squeeze‑out price for the remaining Cortendo AB shares that corresponds to the value of the per‑shareExchange Offer consideration, together with interest thereon. Until advance title is granted, Cortendo AB shareholders whodid not participate in the Exchange Offer will hold a minority interest in Cortendo AB. After advance title has been granted,the former Cortendo AB shareholders will merely have a claim for the final squeeze‑out price, reduced by the preliminaryamount we paid in connection with the advance title.The existence of minority shareholders in Cortendo AB may, among other things, make it more difficult or delay ourability to implement changes to our legal structure and interfere with our day‑to‑day business operations and corporategovernance. For example, intra‑group transfers of entities and transactions between us and our subsidiaries and affiliates, oramong our subsidiaries and affiliates, will need to be carried out on market terms and on an arm’s‑length basis, which mayimpair the efficiency of our day‑to‑day operations. As a matter of Swedish law, minority Cortendo AB shareholders will alsohave the ability to request special investigations, convene general meetings of shareholders and propose agenda items for ourannual general meetings. Each of these circumstances, along with other measures we may need to take to recognize thecontinuing legal rights of the remaining minority Cortendo AB shareholders, may result in increased costs and administrativeburden.In addition, holders of Cortendo AB shares who have chosen not to exchange their shares pursuant to the ExchangeOffer will have a pro rata claim upon any dividends or other distributions payable by Cortendo AB and will be entitled toreceive a proportionate share of any dividend payments or other distributions made by Cortendo AB, consequently reducingthe amount of any dividend payments or other distributions that we might make to holders of our shares.38 Table of ContentsWe expect to expend cash in connection with the squeeze‑out proceedings.The actual price per share purchased pursuant to the Swedish squeeze‑out proceedings will be determined by thearbitration tribunal. As a result of the squeeze‑out proceedings, we may ultimately have to pay, in the aggregate, a higherprice per share in order to purchase the remaining 78,621 Cortendo AB shares that are outstanding following the completionof the Exchange Offer. Such price will also under Swedish law have to be paid in cash, which will have an impact on ourliquidity and cash reserves, and therefore may have an adverse effect on our financial and operational flexibility.Anti‑takeover provisions in our Articles and under Irish law could make an acquisition of us more difficult, limit attemptsby our shareholders to replace or remove our current directors and management team, and limit the market price of ourordinary shares.Our Articles contain provisions that may delay or prevent a change of control, discourage bids at a premium over themarket price of our ordinary shares and adversely affect the market price of our ordinary shares and the voting and otherrights of the holders of our ordinary shares. These provisions include:·dividing our board of directors into three classes, with each class serving a staggered three‑year term;·permitting our board of directors to issue preference shares without shareholder approval, with such rights,preferences and privileges as they may designate;·provisions which allow our board of directors to adopt a shareholder rights plan upon such terms and conditionsas it deems expedient and in our best interests;·establishing an advance notice procedure for shareholder proposals to be brought before an annual meeting,including proposed nominations of persons for election to our board of directors; and·the ability of our board of directors to fill vacancies on our board in certain circumstances.These provisions do not make us immune from takeovers. However, these provisions will apply even if the offer maybe considered beneficial by some shareholders. In addition, these provisions may frustrate or prevent any attempts by ourshareholders to replace or remove our current management team by making it more difficult for shareholders to replacemembers of our board of directors, which is responsible for appointing the members of our management.Irish law differs from the laws in effect in the United States with respect to defending unwanted takeover proposals andmay give our board of directors less ability to control negotiations with hostile offerors.We are subject to the Irish Takeover Rules. Under the Irish Takeover Rules, our board of directors is not permitted totake any action that might frustrate an offer for our ordinary shares once our board of directors has received an approach thatmay lead to an offer or has reason to believe that such an offer is or may be imminent, subject to certain exceptions.Potentially frustrating actions such as (1) the issue of shares, options, restricted share units or convertible securities,(2) material acquisitions or disposals, (3) entering into contracts other than in the ordinary course of business or (4) anyaction, other than seeking alternative offers, which may result in frustration of an offer, are prohibited during the course of anoffer or at any earlier time during which our board of directors has reason to believe an offer is or may be imminent. Theseprovisions may give our board of directors less ability to control negotiations with hostile offerors than would be the case fora corporation incorporated in the United States. See Part I, Item 10B “Additional Information-Memorandum and Articles”.We are an “emerging growth company,” and we cannot be certain if the reduced reporting requirements applicable to“emerging growth companies” will make our ordinary shares less attractive to investors.We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an “emerginggrowth company,” we may take advantage of exemptions from various reporting requirements that are39 Table of Contentsapplicable to other public companies that are not “emerging growth companies,” including not being required to complywith the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act exemptions from the requirements toprovide certain executive compensation disclosures, exemptions from the requirements of holding a nonbinding advisoryvote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Asan “emerging growth company,” in our initial registration statement, we were required to report only two years of financialresults and selected financial data compared to three and five years, respectively, for comparable data reported by otherpublic companies. We could be an “emerging growth company” for up to five years, although circumstances could cause usto lose that status earlier, including if the market value of our ordinary shares held by non‑affiliates exceeds $700 million asof any June 30 before that time, in which case we would no longer be an “emerging growth company” as of the followingDecember 31, our fiscal year end. We cannot predict if investors will find our ordinary shares less attractive because we mayrely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less activetrading market for our ordinary shares and the price of our ordinary shares may be more volatile. ITEM 4. INFORMATION ON THE COMPANYCorporate InformationStrongbridge Biopharma plc, an Irish public limited company, was established on May 26, 2015 under the nameCortendo plc. On September 4, 2015, Cortendo plc changed its name to Strongbridge Biopharma plc. We also have amajority-owned subsidiary, Cortendo AB, organized under the laws of Sweden. See Part I, Item 10I “Subsidiary Information”a for list of subsidiaries of the Company.Cortendo AB was established in October 1996 under the name Stefan Kronvall Medical AB and registered inSweden in December 1996 for the purpose of developing medically innovative products for pharmaceutical diagnostics andother health care products. Stefan Kronvall Medical AB changed its name to Cortendo AB in 1997, to Cortendo Invest AB in2003 and then to Cortendo AB (publ) in 2011. Cortendo AB has three wholly owned subsidiaries, Cortendo Invest AB, acompany organized under the laws of Sweden, BioPancreate Inc., a Delaware corporation, and Cortendo Cayman Ltd., anexempted company incorporated in the Cayman Islands.In order to effect a corporate reorganization, on September 8, 2015 we settled an exchange offer, which we refer to asthe Exchange Offer, pursuant to which holders of 99.449% of the outstanding shares of Cortendo AB exchanged their sharesfor beneficial interests in ordinary shares of Strongbridge Biopharma plc in the form of depositary receipts on a 1‑for‑1 basisand non‑accredited holders of Cortendo AB shares located within the United States, representing 0.133% of the outstandingshares of Cortendo AB, agreed to exchange their shares for cash, which cash settlement occurred on September 14, 2015.Non‑accredited U.S. holders of ordinary shares of Cortendo AB received cash in an amount equivalent to the value of oneordinary share of Strongbridge Biopharma plc for each share of Cortendo AB validly exchanged. Pursuant to individualagreements with the holders of options to purchase shares of Cortendo AB, the outstanding options of Cortendo AB wereconverted to options to purchase an equivalent number of ordinary shares of Strongbridge Biopharma plc.We intend to acquire the remaining 0.418% of the outstanding shares of Cortendo AB held by shareholders whodeclined to participate in the Exchange Offer, pursuant to a process permitted by Swedish law. For additional information onthis process, see Part I, Item 3D “Risk Factors—Risks Related to Our Ordinary Shares—The process to acquire full ownershipof Cortendo AB is lengthy and may cause us to incur unanticipated costs. Any delay in our acquiring full ownership ofCortendo AB could result in increased administrative costs and burdens and could adversely affect our day‑to‑dayoperations.”Following the settlement of the Exchange Offer, Strongbridge Biopharma plc became the parent of Cortendo ABand its subsidiaries. As a result of the settlement of the Exchange Offer, the historical financial statements of Cortendo ABbecame, for financial reporting purposes, the historical consolidated financial statements of Strongbridge Biopharma plc andits subsidiaries as a continuation of the predecessor.40 Table of ContentsOur principal executive offices are located at 900 Northbrook Drive, Suite 200, Trevose, Pennsylvania, 19053 andour telephone number is +1 610‑254‑9200. For the purposes of Irish law, our registered office is Arthur Cox Building,Earlsfort Terrace, Dublin 2, Ireland.Our website is www.strongbridgebio.com. The information on, or that can be accessed through, our website is notpart of and should not be incorporated by reference into this Annual Report on Form 20-F. Solely for convenience, the trademarks and trade names in this Annual Report on Form 20-F are referred to withoutthe and ™ symbols, but such the absence of references should not be construed as any indicator that their respective ownerswill not assert, to the fullest extent under applicable law, their rights thereto. The trademarks, trade names and service marksappearing in this Annual Report on Form 20-F are the property of their respective owners.Implications of Being an “Emerging Growth Company”We qualify as an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012 or theJOBS Act. An emerging growth company may take advantage of specified reduced reporting and regulatory requirements incontrast to those otherwise applicable generally to public companies. These provisions include:·exemption from the auditor attestation requirement in the assessment of our internal control over financialreporting pursuant to Section 404 the Sarbanes‑Oxley Act of 2002;·an exemption from the requirement to provide certain executive compensation disclosure;·an exemption from the requirement to hold a non-binding advisory vote on executive compensation or to seekshareholder approval of any golden parachute payments not previously approved;·an exemption from any requirements adopted by the Public Oversight Board (PCAOB) requiring mandatoryaudit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provideadditional information about the audit and the financial statements of the issuer.We may take advantage of these reduced reporting and other regulatory requirements for up to five years or suchearlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if wehave more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held bynon‑affiliates or issue more than $1.0 billion of non‑convertible debt over a three‑year period. In addition, the JOBS Actprovides that an emerging growth company may delay adopting new or revised accounting standards until those standardsapply to private companies. We have irrevocably elected not to avail ourselves of this delayed adoption of new or revisedaccounting standards and, therefore, we will be subject to the same new or revised accounting standards as public companiesthat are not emerging growth companies. If we choose to take advantage of any of these reduced reporting burdens, theinformation that we provide shareholders may be different than you might get from other public companies. Implications of Being a Foreign Private IssuerAs a foreign private issuer under the Exchange Act, we are exempted from certain provisions of the Exchange Actthat are applicable to U.S. domestic public companies, including:•the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of asecurity registered under the Exchange Act;•the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and tradingactivities and liability for insiders who profit from trades made in a short period of time; and•the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission of quarterlyreports on Form 10‑Q containing unaudited financial and other specified information, or current reports onForm 8‑K upon the occurrence of specified significant events.41 ®Table of Contents OverviewWe are a biopharmaceutical company focused on the development, in‑licensing, acquisition and eventualcommercialization of multiple complementary products and product candidates within franchises that target rare diseases.Our primary focus has been to build our rare endocrine franchise, which includes product candidates for the treatment ofendogenous Cushing’s syndrome and acromegaly, two rare diseases with a high unmet need for innovative treatment options.Given the well‑identified and concentrated prescriber base addressing our target markets, we believe we can use a small,focused sales force to effectively market our products, if approved, in the United States, the European Union and other keyglobal markets. We believe that our ability to execute on this strategy is enhanced by the significant clinical developmentand commercial experience of key members of our management team. We also intend to identify and in‑license or acquireproducts or product candidates that would be complementary to our existing rare endocrine franchise or that would form thebasis for new rare disease franchises. We believe this approach will enable us to maximize our commercial potential byfurther leveraging our existing resources and expertise.Our rare endocrine franchise includes the following product candidates:·COR‑003 (levoketoconazole), a cortisol synthesis inhibitor, in Phase 3 clinical development for the treatmentof endogenous Cushing’s syndrome. Endogenous Cushing’s syndrome is a rare endocrine disordercharacterized by sustained elevated cortisol levels that most commonly result from a benign tumor of thepituitary gland. We believe that COR‑003 has the potential to become the new standard of care for the drugtherapy of endogenous Cushing’s syndrome. COR‑003 may provide a favorable efficacy, safety and tolerabilityprofile compared to current drug therapies, including ketoconazole, the most commonly used drug therapy forendogenous Cushing’s syndrome. COR‑003 has been granted orphan drug designation by the U.S. Food andDrug Administration, or the FDA, and the European Medicines Agency, or the EMA. We are developingCOR‑003, a single enantiomer of ketoconazole, as a new chemical entity, or NCE, under the FDA 505(b)(2)regulatory approval pathway, and intend to reference the FDA’s prior conclusions of preclinical data, potentialfor drug interaction and use in special populations for ketoconazole. Molecules of ketoconazole occur in twoforms, which are mirror images of each other. These mirror image pairs are referred to as enantiomers. Singleenantiomer drugs may offer safety and efficacy advantages because one of the enantiomer versions can havesafety issues or be less effective in treatment of the disorder or disease. The 505(b)(2) regulatory approvalpathway allows companies developing drug products to rely in part on FDA conclusions of preclinical andclinical data that were not conducted by or for the applicant. Because approval can rest in part on data alreadyaccepted by the FDA or otherwise publicly available, an abbreviated and reduced development program may bepossible. We are currently conducting SONICS, a pivotal Phase 3 clinical trial for COR‑003, and expect toreport top‑line data from this trial in the first half of 2017. The activities necessary to be completed in order toprepare and file an application for regulatory approval for COR-003 will be sequenced to ensure that theCompany’s cash resources are sufficient to fund planned operations through the receipt of top-line data fromthe SONICS trial.·COR‑005, a novel SSA, in Phase 2 clinical development for the treatment of acromegaly. Based on thedifferentiated activation pattern of COR‑005 to somatostatin receptor subtypes, or SSTRs, and preclinical andclinical data, we believe that COR‑005 may offer an improved efficacy and safety profile relative to existingdrug therapies for acromegaly. COR‑005 has been granted orphan drug designation by the FDA and the EMA. We expect to select and finalize the technology to be utilized for a proprietary long-acting formulation of COR-005 in 2016. Additional COR-005 development activities will be sequenced to ensure that the Company’sexisting cash resources are sufficient to fund planned operations through the receipt of top-line data from theCOR-003 SONICS trial.Since the introduction of our new management team beginning in August 2014, we have established a rare disease,franchise‑based business model focused on expansion through a disciplined in‑licensing and acquisition strategy. In pursuitof our growth strategy, we have raised over $95 million since December 2014 from leading life42 Table of Contentssciences investors, including RA Capital, New Enterprise Associates, Broadfin Capital, HealthCap, Acuta Capital, TVMCapital and Granite Point Capital. Leveraging this capital and our experience in sourcing, selecting, in‑licensing andacquiring product candidates, we were successful in augmenting our rare endocrine franchise by adding COR‑005 to ourproduct pipeline. We believe that this clinical product candidate, if successful, will benefit from significant development andcommercial synergies with our lead product candidate, COR‑003, because both Cushing’s syndrome and acromegaly aretypically caused by benign pituitary tumors and are mainly treated by pituitary endocrinologists.In May 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, with AntisenseTherapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ product candidate,ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and the treatment ofany complications of diabetes). We refer to this product candidate as COR‑004. Under the terms of the Antisense LicenseAgreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash, and we also invested$2.0 million in Antisense Therapeutics equity. The terms of the Antisense License Agreement provide that we couldterminate the Antisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believe thefurther development and commercialization of COR‑004 was no longer feasible due to a material change that was beyond ourcontrol. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would berequired to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to AntisenseTherapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because, based on receipt offeedback from regulatory authorities, we believe the further development and commercialization of COR‑004 is no longerfeasible due to material changes that were beyond our control. We have received a reply from Antisense Therapeuticsobjecting to our termination notice and to our assertion that the further development and commercialization of COR-004 wasno longer feasible due to material changes that were beyond our control. The reply also requests that the parties appoint anindependent expert to resolve this dispute in accordance with the terms of the Antisense License Agreement. Our StrategyOur goal is to transform the lives of patients by building a leading franchise‑based, commercially orientedbiopharmaceutical company addressing rare diseases with significant unmet medical needs. We are focused on developing,in‑licensing, acquiring and eventually commercializing products and product candidates that target rare diseases acrossseveral complementary therapeutic areas.To achieve our goal, we are pursuing the following strategies:·Focus on rare diseases. We are developing treatments for rare diseases, initially endogenous Cushing’ssyndrome and acromegaly. Rare diseases typically have a high unmet need for innovative treatment options.Drug development for the treatment of rare diseases often requires smaller clinical trials and has the potentialfor accelerated regulatory review. Product candidates focused on rare diseases also often qualify for orphan drugdesignation, which in the United States provides for seven years of market exclusivity and in the EuropeanUnion provides for 10 years of market exclusivity after regulatory approval has been granted. In addition, giventhe well‑identified and concentrated prescriber base addressing our target markets, we believe we can use asmall, focused sales force to effectively promote our products in key geographies. We believe thesecharacteristics enable more efficient resource allocation.·Independently commercialize products in the United States and the European Union. We intend toindependently commercialize our rare disease product candidates, if approved, in the United States and theEuropean Union, and selectively in other key global markets. Given the concentrated specialty prescriber base,we plan to create a sales force of approximately 30 representatives in the United States as well as in theEuropean Union to market our rare endocrine disease product candidates, if approved. We believe that ourability to execute on this strategy is enhanced by the significant prior commercial experience of key membersof our management team. Prior to joining our company, members of our management team were involved in thelaunch or commercialization of over 20 pharmaceutical products.43 Table of Contents·Expand our portfolio through a disciplined in‑licensing and acquisition strategy. We plan to source newproduct candidates by in‑licensing or acquiring them. Our management team seeks to mitigate the potentialrisks of this strategy by adhering to our disciplined criteria of focusing on in‑licensing or acquisitionopportunities of products that are already commercially available or that have human clinical data that webelieve suggest a high probability of success for development progression and an attractive potential return oninvestment. As a result of our management team’s experience in sourcing, selecting, in‑licensing and acquiringproduct candidates, we were successful in augmenting our rare endocrine franchise by adding COR‑005 to ourproduct pipeline.·Utilize a franchise model built on rare disease therapeutic areas. We intend to build our company by creatingfranchises in areas where there is a significant commercial opportunity. We seek to in‑license and acquireproducts and product candidates that target rare diseases in therapeutically aligned franchises. We believe thatcomplementary products and product candidates will allow us to significantly leverage our expertise as well asour development and commercial infrastructure. For example, our product candidates for the treatment ofendogenous Cushing’s syndrome and acromegaly, if approved, will serve as the basis for our rare endocrinefranchise.·Expand indications of products and product candidates within our franchises. In addition to identifyingproducts and product candidates that can form the basis of new rare disease franchises, we also intend toleverage opportunities to develop potential products and product candidates for additional indications withintheir respective therapeutic franchises. We believe that this approach will enable us to maximize ourcommercial potential by further leveraging our existing resources and expertise.Our Product Candidate PipelineThe following table illustrates our product candidates by stage:Our Rare Endocrine FranchiseWe have two product candidates within our rare endocrine franchise. Our lead product candidate, COR‑003, is acortisol synthesis inhibitor and is a single enantiomer of ketoconazole that we are developing for the treatment ofendogenous Cushing’s syndrome. In June 2015, we acquired COR‑005, a novel SSA that has the potential to provide a44 Table of Contentsnew and differentiated treatment option for patients with acromegaly. We believe that these clinical product candidates, ifsuccessful, will benefit from significant development and commercial synergies based on the fact that both endogenousCushing’s syndrome and acromegaly are typically caused by benign pituitary tumors and are mainly treated by pituitaryendocrinologists. We believe that we can address the markets for both of these product candidates by targeting theendocrinologists that are focused on the treatment of rare pituitary disorders.Overview of COR‑003—Phase 3 Product Candidate for the Treatment of Endogenous Cushing’s Syndrome We are developing COR-003 for the treatment of endogenous Cushing’s syndrome, a rare endocrine disordercharacterized by excessive cortisol levels. In endogenous Cushing’s syndrome, elevated circulating cortisol levels give riseto a severe disease with variable clinical symptoms, including weight gain, characteristic changes in fat distribution,diabetes, hypertension, osteoporosis, muscle loss and depression. The active pharmaceutical ingredient in COR 003,levoketoconazole (single enantiomer of ketoconazole, 2S,4R ketoconazole) is a small molecule and exerts its effect byblocking the synthesis of cortisol leading to the reduction and normalization of cortisol levels. COR 003 has been grantedorphan drug designation by the FDA and the EMA and is being developed for twice daily oral administration. We arecurrently conducting SONICS, a pivotal Phase 3 clinical trial for COR 003, and expect to report top-line data from this trialin the first half of 2017. The activities necessary to be completed in order to prepare and file an application for regulatoryapproval for COR-003 will be sequenced to ensure that the Company’s cash resources are sufficient to fund plannedoperations through the receipt of top-line data from the SONICS trial. Ketoconazole, used off‑label in the United States, is the most frequently prescribed and efficacious drug therapy forendogenous Cushing’s syndrome. It is used to reduce cortisol levels and ameliorate significant comorbidities. Molecules ofketoconazole occur in two forms, which are mirror images of each other. These mirror image pairs are referred to asenantiomers. Manufactured ketoconazole contains a 1:1 mixture of the two enantiomers, 2R,4S‑ketoconazole and2S,4R‑ketoconazole, and is therefore referred to as a racemic mixture. COR‑003 is a single‑enantiomer drug, a pure form ofone of the two enantiomers (2S,4R‑ketoconazole) of racemic ketoconazole. Single‑enantiomer drugs may offer safety andefficacy advantages because one of the enantiomer versions in the racemic mixture can have safety issues or be less effectivein treatment of the disorder or disease. COR‑003, like ketoconazole, is a cortisol synthesis inhibitor that inhibits the cortisolsynthesis pathway at several points. In light of the shared mechanism of action with ketoconazole and the data from Phase 2clinical trials, which were conducted in diabetes patients, we believe COR‑003 may have a similar beneficial impact on thereduction of significant comorbidities of endogenous Cushing’s syndrome, including those associated withcardiovascular‑related mortality risk, such as diabetes, weight, hypertension and elevation in cholesterol. In addition, basedon preclinical and clinical results, we believe that COR‑003 may offer an improved safety profile relative to existingapproved drug therapies. As a result, we believe that COR‑003 has the potential to become the new standard of care for thedrug therapy of endogenous Cushing’s syndrome.Overview of Cushing’s SyndromeThere are two variants of Cushing’s syndrome: exogenous, which is caused by factors outside the body; andendogenous, which is caused by factors within the body. The symptoms for both are the same. The more common form isexogenous Cushing’s syndrome, which is often found in people taking cortisol‑like medications for long periods of time athigh dosages. Cortisol‑like medications are often used to treat inflammatory disorders such as asthma and rheumatoidarthritis. Unlike the endogenous variant, this type of Cushing’s syndrome is temporary and clinical signs and symptomssubside in part after the patient has finished taking the cortisol‑like medication.Endogenous Cushing’s syndrome is a rare endocrine disorder characterized by sustained elevated cortisol levels.Cortisol is a hormone produced in the adrenal gland and is naturally secreted as an end product of the activity of thehypothalamic‑pituitary‑adrenal axis, a major part of the endocrine system. Corticotropin‑releasing‑hormone, or CRH, issecreted from the hypothalamus and stimulates the secretion and release of adrenocorticotropin, or ACTH, from the pituitarygland, which in turn stimulates cortisol secretion from the adrenal gland. Cortisol itself exerts negative feedback control onboth CRH in the hypothalamus and ACTH in the pituitary gland, thereby reducing CRH and ACTH secretion and keepingcortisol levels in a normal range.45 Table of ContentsThe most common form of endogenous Cushing’s syndrome is Cushing’s disease, which is typically caused by abenign pituitary tumor that secretes ACTH. Cushing’s disease represents approximately 70% to 80% of patients withendogenous Cushing’s syndrome. Other less frequent causes of endogenous Cushing’s syndrome include extrapituitarytumors producing ACTH, or ectopic ACTH syndrome. The source of ectopic ACTH secretion is most often small‑cellcarcinoma of the lung or bronchial carcinoid tumors, but can also arise with almost any endocrine tumor from many differentorgans. In a smaller number of cases, approximately 20%, endogenous Cushing’s syndrome can be ACTH‑independent,resulting from excess secretion of cortisol by unilateral adrenocortical tumors, either benign or malignant, or bynon‑malignant enlargement of the adrenal glands.In patients with endogenous Cushing’s syndrome, the normal feedback mechanism of thehypothalamic‑pituitary‑adrenal axis for cortisol secretion is disrupted as a result of a tumor secreting ACTH, CRH or cortisol.This causes chronic exposure to high circulating cortisol levels that give rise to the clinical state of Cushing’s syndrome. Themost common signs and symptoms include: weight gain, especially in the upper body; rounded face and extra fat on theupper back and above the collarbones; high blood sugar or diabetes; high blood pressure or hypertension; thin bones orosteoporosis; muscle loss and weakness; thin, fragile skin that bruises easily; purple‑red stretch marks, usually over theabdomen and under the arms; depression and difficulty thinking clearly; too much facial hair in women; irregular or absentmenstrual periods and infertility; reduced sex drive; and in children, poor height growth and obesity.An estimated 25,000 patients in the United States and 40,000 patients in Europe are currently diagnosed withendogenous Cushing’s syndrome. Patients are most commonly adults aged 20 to 50 and five times more women than men areaffected. However, endogenous Cushing’s syndrome is believed to be underdiagnosed due to lack of disease recognition bythe treating physician, which often leads to a delay in diagnosis of six years on average. Endogenous Cushing’s syndromepatients are believed to have a mortality risk up to five times that of the general population, with cardiovascular disease,venous thrombosis and infections being the primary causes of death.Current Treatment Landscape and Limitations on Current Treatment OptionsTreatment of endogenous Cushing’s syndrome varies depending on the cause of the disease. For patients withCushing’s disease, a subset representing the majority of patients with endogenous Cushing’s syndrome, initial treatment isalmost always the attempted surgical removal of the tumor. In anticipation of surgery and when surgery is not effective or notfeasible, drug or radiation therapy, or both, is used to suppress excessive cortisol production and the accompanying clinicalsymptoms.A typical approach of drug therapy is to inhibit cortisol biosynthesis through the oral administration of an inhibitorof enzymes of adrenal cortisol synthesis. Ketoconazole is the most widely used drug therapy for endogenous Cushing’ssyndrome, but it is not approved for this indication in the United States. The percentage of endogenous Cushing’s syndromepatients who achieve normalized levels of cortisol, assessed by measuring urinary free cortisol, or UFC, with ketoconazolehas been reported from retrospective uncontrolled studies to vary between 33% and 100%. Data from one retrospective studyof 200 patients in 14 French centers solely treated with ketoconazole off label for active Cushing’s syndrome between 1995and 2012 showed ketoconazole controlled cortisol secretion in approximately 50% of patients and improved clinicalsymptoms. Also, beneficial effects on clinical symptoms and signs that drive the morbidity and mortality of endogenousCushing’s syndrome have been reported, such as the reduction in high blood pressure, improvement of diabetes, andnormalization of hypokalemia, or low potassium blood levels. However, a significant proportion of patients treated withketoconazole experience tolerability issues and, in some cases, hepatotoxicity. As a result of the hepatotoxicity risk,including in patients without existing liver disease, the FDA has issued a black box warning concerning the use ofketoconazole to treat fungal infections, its approved indication. Although the elevations in liver function tests associatedwith ketoconazole are generally modest in nature, in rare cases, severe hepatotoxicity may occur (one in every 10,000 to15,000 patients). In extremely rare cases, this adverse reaction may be irreversible and result in death or require livertransplantation. In Europe, ketoconazole was taken off the market for the treatment of fungal infections due to similar safetyconcerns, but was recently approved for the treatment of endogenous Cushing’s syndrome without any clinical trials basedon significant unmet need, well‑established use in medical practice and documentation in scientific literature.46 Table of ContentsAn alternative approach to treatment is the use of drugs that target pituitary tumors that produce ACTH. Thisapproach is only useful in the subset of patients whose endogenous Cushing’s syndrome is caused by a pituitary tumor, orCushing’s disease. Among Cushing’s disease patients, the dopamine agonist cabergoline, which is not approved for use inCushing’s disease, has been shown to achieve normalization of UFC levels in about 30% of patients. The SSA pasireotide,which is marketed as Signifor for the treatment of Cushing’s disease, has shown normalization of UFC levels in 15% ofpatients at a 600 µg dose and in 26% of patients at a 900 µg dose. Certain SSAs, including Signifor, are known to haveundesirable side effects on glucose metabolism. Forty percent of patients with Cushing’s disease treated with Signifor in itsPhase 3 clinical trial reported the occurrence of hyperglycemia‑related adverse events.Another alternative, Korlym, or mifepristone, works by inhibiting the action of cortisol at the receptor level, butdoes not lower cortisol levels. As a result of this mechanism of action, it is not possible to monitor response by measuringUFC levels, which is the standard for physicians who treat endogenous Cushing’s syndrome. Korlym has been approved inthe United States to control hyperglycemia secondary to hypercortisolism in patients with endogenous Cushing’s syndrome.Korlym is contra‑indicated in pregnant women and in women with a history of unexplained vaginal bleeding, as its sideeffects include termination of pregnancy, endometrial thickening and vaginal bleeding.We believe that efficacy limitations and safety concerns with currently available drug therapies for endogenousCushing’s syndrome have resulted in a significant unmet medical need among endogenous Cushing’s syndrome patients foralternative drug therapies. In a survey we commissioned in 2014 of 89 U.S. physicians treating patients with Cushing’ssyndrome, when asked, “Of your patients on medication to manage cortisol levels, what percentage are well controlled?”, thephysicians estimated that only approximately 37% of such patients were well controlled. Thus, we believe that our potentialaddressable market for COR‑003 would be the one‑third of all diagnosed endogenous Cushing’s syndrome patients that atany one point in time are eligible for drug therapy, a figure that represents patients anticipating surgery, for whom surgery orradiation is not feasible, is contraindicated or has been unsuccessful. This unmet need may also be impacted by what webelieve to be the current lack of disease awareness among physicians and patients, resulting in a low rate of diagnosis.Our Solution—COR‑003We believe that COR‑003 has the potential to become the new standard of care for the drug therapy of endogenousCushing’s syndrome because it may provide a favorable efficacy, safety and tolerability profile compared to current drugtherapies, including ketoconazole, the most commonly used drug therapy for the treatment of endogenous Cushing’ssyndrome. We believe COR‑003, based on its similar mechanism of action to that of ketoconazole, may improve UFC levels,in contrast to Korlym, and may have an anti‑diabetic effect, in contrast to Signifor. In addition, we believe COR‑003 mayhave an improved safety profile, compared with that of ketoconazole.47 Table of ContentsCOR‑003, like ketoconazole, is a cortisol synthesis inhibitor that inhibits the cortisol synthesis pathway at threepoints. The following graphic illustrates the cortisol synthesis pathway: Our preclinical and pharmacokinetic data suggest that COR‑003 may have an efficacy profile at least as favorable asketoconazole and may have less risk for impairing liver function:·In in vitro studies, COR‑003 was found to have higher potency than ketoconazole and the mirror‑image singleenantiomer, 2R,4S‑ketoconazole, in inhibiting the key enzymes in cortisol synthesis (CYP11B1, CYP17, andCYP 21). Thus, we believe COR‑003 may have the same or higher efficacy compared to ketoconazole at lowerdoses, which may in turn reduce the drug load for the liver and may contribute to increased safety andtolerability.·The pharmacokinetics of the enantiomers also suggest potentially greater safety of COR‑003 relative toketoconazole. Enantiomers in racemic ketoconazole are present in equal proportions, but in a Phase 1 clinicaltrial in healthy subjects, it was observed that following administration of ketoconazole, blood concentrations ofthe single enantiomer, 2S,4R‑ketoconazole (i.e., COR‑003) exceeded those of the other single enantiomer,2R,4S‑ketoconazole, by approximately three times. This may suggest that the single enantiomer,2R,4S‑ketoconazole, is extracted by the liver to a greater extent than the other single enantiomer,2S,4R‑ketoconazole (i.e., COR‑003), and may therefore contribute more than COR‑003 to the observed livertoxicity of racemic ketoconazole.·Compared with racemic ketoconazole, it was observed in in vitro studies that COR‑003 is less potent than theother enantiomer in inhibiting the activity of CYP7A. CYP7A is the first and rate‑limiting enzyme forproduction of bile acids in the liver. While a role of CYP7A in liver injury is not established, this findingsuggests a possible differential effect of the ketoconazole enantiomers on metabolic and detoxifying enzymesin the liver contributing to potentially reduced hepatotoxicity of COR‑003.Previously, COR‑003 was studied for the treatment of type 2 diabetes. DiObex, our licensee from 2004 to 2008,initiated five clinical trials to investigate the use of COR‑003 for type 2 diabetes. In December 2005, prior to the initiation ofthe first clinical trial by DiObex, the FDA placed a clinical hold relating to a safety concern for use of a dosage above600 mg/day. DiObex modified the clinical trial protocol to limit the highest dose to 600 mg/day, and the clinical hold waslifted by the FDA in February 2006. In a Phase 2 clinical trial of type 2 diabetes patients, COR‑003 demonstrated asignificant dose response in the reduction in mean levels of C‑reactive protein, or CRP, whereas for ketoconazole, an increasein CRP was found. Higher levels of CRP indicate the presence of inflammation, including in the liver and the cardiovascularsystem. Thus, we believe that COR‑003 may be associated with a decrease in inflammatory processes compared to racemicketoconazole. COR‑003, with the same mechanism of action as ketoconazole, may also have, like ketoconazole, beneficialeffects on cardiovascular risk factors, which are the leading48 Table of Contentscause of mortality for endogenous Cushing’s syndrome, including weight loss, reduction in blood sugar, lowering ofcholesterol and reduction in blood pressure.Clinical and Preclinical Development of COR‑003Phase 3 Clinical TrialWe are conducting SONICS, a pivotal Phase 3 clinical trial of COR‑003 investigating the safety and efficacy ofCOR‑003 in subjects with endogenous Cushing’s syndrome, and expect to report top‑line data from this trial in the first halfof 2017. This clinical trial is being conducted pursuant to an IND we filed in April 2013. The activities necessary to becompleted in order to prepare and file an application for regulatory approval for COR-003 will be sequenced to ensure thatthe Company’s cash resources are sufficient to fund planned operations through the receipt of top-line data from the SONICStrial. COR‑003 is an NCE for which we intend to pursue regulatory approval under the FDA’s 505(b)(2) regulations,referencing the FDA’s conclusions of preclinical data, potential for drug interaction, and special populations in the new drugapplication, or NDA, for ketoconazole. The 505(b)(2) regulatory approval pathway was established to allow companiesdeveloping drug products to obtain approval by relying in part on agency conclusions of safety and efficacy from studiesthat were not conducted by or for the applicant. Because approval can rest in part on data already accepted by the FDA orotherwise available in the public domain, an abbreviated and reduced development program may be required, thusmitigating costs and shortening development time. The FDA has acknowledged that no additional preclinical investigationswill be required for COR‑003. The EMA’s Committee for Medical Products for Human Use, or CHMP, has requested a studyof reproductive toxicity that will be completed prior to filing in Europe.Several elements of the clinical trial design have been informed by the clinical development pathway of currentlyapproved drug therapies in the United States and the European Union. Additionally, we incorporated advice from the CHMPand FDA into the design of the clinical trial. In discussions we had with the FDA, they recommended, but did not require, acontrol group. We are using an open‑label, single‑arm design because in the past the FDA has deemed that the concurrent useof a placebo control as monotherapy is unethical for the treatment of patients with active endogenous Cushing’s syndromedue to the progressive and serious nature of the condition. In February 2016, however, a Phase 3 clinical trial was registeredby another company with the FDA to evaluate their monotherapy product candidate against concurrent use of placebocontrol. In addition, based on our analysis and feedback from experts whom we have consulted, we concluded that it was notpractical to use any approved drug to serve as an active control due to the unsuitable mode of action, route of administrationand side effect profile of available approved therapies. Studies lacking an active control group are more likely to be subjectto unanticipated variability in study results that can potentially lead to flawed conclusions because they do not allow fordiscrimination of patient outcomes. As a result, even if we achieve the clinical trial’s endpoints, the FDA or other regulatoryauthorities could view our study results as potentially biased and may ultimately require that we conduct a randomized,controlled clinical trial of COR‑003 in order to obtain approval for commercialization.If we can (1) demonstrate consistent and significant clinical benefit by meeting the primary endpoint of the trial,specifically the responder rate measured as normalization of UFC levels and (2) show consistent improvement of objectivelyquantifiable biomarkers of endogenous Cushing’s syndrome comorbidities, such as blood glucose, blood lipids, bloodpressure and weight, and improvement of other clinical signs and symptoms of endogenous Cushing’s syndrome, we believethis would be regarded by regulators as adequate proof of efficacy in this rare disease with a high unmet medical need.We are conducting this clinical trial in up to 90 clinical sites in approximately 19 countries, including in the UnitedStates, Canada, the European Union and the Middle East. We enrolled our first patient in the clinical trial in August 2014.Our U.S. IND for COR‑003 for the treatment of endogenous Cushing’s syndrome took effect in May 2013. We plan to recruit90 patients and collect safety and efficacy data over a treatment period of at least one year. Because our Phase 3 clinical trialwill collect safety data for only 90 patients, we currently expect that we would be required by the FDA and the EMA tocollect additional safety data post‑approval. If we are able to confirm a favorable safety profile of COR‑003 in clinical use,we plan to discuss differentiated safety and tolerability labeling from ketoconazole with regulatory authorities.49 Table of ContentsOur Phase 3 clinical trial is being conducted, after an appropriate washout period, if required, in three phases:·a dose titration phase that is two weeks to 21 weeks in duration and has up to seven dose levels, or DLs;·a maintenance phase that is six months in duration; and·an extended evaluation phase that is six months in duration.During the dose titration phase, patients will start at 150 mg twice daily dosing (300 mg total daily dose) and titratein 150 mg increments up to a maximum 600 mg twice daily dosing (1,200 mg total daily dose). Following the dose titrationphase, once the therapeutic dose has been reached, the patient will enter the maintenance phase, during which the dose willbe fixed and cannot be changed other than for safety reasons. At the end of the six month maintenance phase, UFC levels willbe measured and the responder rate, which is the primary endpoint of the clinical trial, will be determined. Patients who havecompleted the maintenance phase may enter the extended evaluation phase, which we expect will provide additional safetyand efficacy data. Throughout the entire clinical trial, various measurements for safety and efficacy will be taken.·The primary endpoint of the clinical trial is the proportion of subjects with response to COR‑003, defined as areduction in mean 24‑hour UFC levels to levels that are equal to or less than the upper level of normal rangefollowing six months of treatment in the maintenance phase without a dose increase.·Key secondary endpoints will include the number of patients with at least a 50% decrease in UFC levels, as wellas changes in blood sugar, blood pressure, cholesterol and weight compared to baseline, and effects on clinicalsigns and symptoms of endogenous Cushing’s syndrome, quality of life measures obtained from theendogenous Cushing’s syndrome quality of life questionnaire and the severity of depression obtained from theBeck’s Depression Inventory II.·The clinical trial is also designed to investigate the pharmacokinetics of COR‑003 in patients with endogenousCushing’s syndrome.Below is a diagram of our clinical trial design:Clinical Trials in Type 2 DiabetesHistorically, COR‑003 was studied as a treatment for type 2 diabetes. An IND was filed in 2005 for investigation ofthe use of COR‑003 in diabetes. DiObex, our licensee at the time, initiated five clinical trials to investigate the use ofCOR‑003 for type 2 diabetes. A total of 159 subjects were dosed in these clinical trials, including 41 healthy subjects duringPhase 1 clinical trials, and 118 in patients with type 2 diabetes during Phase 2 clinical trials. Doses of COR‑003 wereadministered over the range of 200 mg to 600 mg once a day, or QD, and 400 mg twice a day, or BID, for a single patient forup to 14 days, and 150 mg to 450 mg QD for up to four months.The pharmacokinetics of COR‑003 were studied in patients with type 2 diabetes and in normal volunteers in whomthe effects of COR‑003 on the pharmacokinetics of felodipine, a drug used to treat high blood pressure, and atorvastatin(Lipitor), a drug used to lower cholesterol, were evaluated. In the completed Phase 2 clinical trial, dose dependent reductionsfrom baseline in cholesterol levels contained in lipoproteins, in the form of low‑density50 Table of Contentslipoprotein-cholesterol, or LDL-chol, and cholesterol incorporated into high‑density lipoprotein, or HDL-chol, as well astotal cholesterol were observed, but no differences in measures of glycemic control relative to placebo were detected.In 2008, in light of negative safety reports for other diabetes treatments such as Avandia, DiObex made the decision tovoluntarily terminate the development of COR‑003 for the treatment of diabetes due to the perceived high regulatory andcommercial hurdles for its approval and use in type 2 diabetes. Thereafter, the IND was closed and DiObex terminated the twoongoing Phase 2 clinical trials.DiObex conducted the following five clinical trials with COR‑003 in type 2 diabetes pursuant to an IND filed bythem in November 2005:Clinical TrialNumber Clinical Trial Description SubjectsEnrolled Year andStatus Location DoseDIO‑501 Phase 1/2a, Trial of COR‑003 or Placebo inPatients with Type 2 Diabetes Mellitus 37 2006/2007Completed. Studyreport issued. United States 200‑600 mg QD;400 mg BIDDIO‑502 Phase 2b Trial of COR‑003 or Placebo inAddition to Metformin and Atorvastatin orAtorvastatin Placebo for Type 2 DiabetesMellitus 133 2007/2008Terminated early.Study report issued. United States,Australia, NewZealand 150‑450 mg QDDIO‑503 Phase 2 Open‑Label Trial andPharmacodynamic for 24‑Week Study withCOR‑003 in Combination with Metformin andAtorvastatin in Patients with Type 2 DiabetesMellitus 13 2007/2008Terminated early.Study report issued. United States,Australia, NewZealand 150‑450 mg QDAA34509 Phase 1 Pharmacokinetic Drug Interaction Trialof COR‑003 with Felodipine in Healthy AdultVolunteers Under Fasting Conditions 18 2006/2007Completed. Studyreport issued. United States 400 mg QDAA34510 Phase 1 Pharmacokinetic Drug Interaction Trialof COR‑003 and Racemic Ketoconazole withAtorvastatin in Healthy Adult VolunteersUnder Fasting Conditions 24 2006/2007Completed. Studyreport issued. United States 400 mg QD Phase 2 Clinical TrialsDIO‑501 Clinical TrialThis clinical trial was a double‑blind, placebo‑controlled, parallel‑group clinical trial conducted in patients aged 18to 70 with a known diagnosis of type 2 diabetes. A total of 35 patients were treated: 21 with COR‑003 (10 at 200 mg QD, sixat 400 mg QD, four at 600 mg QD and one at 400 mg BID); eight with ketoconazole (400 mg QD); and six with placebo. Trialdrugs were administered for 14 days.In this clinical trial, the mean 12‑hour plasma cortisol area under the concentration‑time curve, or AUC, levels weremodestly reduced in the COR‑003 treatment groups at day 15 compared to baseline, which is consistent with the knownmechanism of action of COR‑003. However, counter‑regulation in diabetic patients with a normal hypothalamic pituitaryadrenal axis may have limited the observed cortisol suppression. Similarly, only a small, nonsignificant effect on glycatedhemoglobin, or HbA1c, and fasting glucose levels was observed. However, consistent with the known inhibitory effect ofketoconazole on cholesterol synthesis, total cholesterol, LDL-chol, and to a lesser extent HDL-chol levels, but nottriglycerides, were significantly decreased in a dose‑dependent manner by COR‑003. The mean change from baseline in totalcholesterol, LDL-chol and HDL-chol at a dose of 400 mg QD was similar to those observed in 400 mg QD ketoconazole andhigher in the 600 mg QD COR‑003 group. Also, for the COR‑003 treatment groups, there was a statistically significant doseresponse in the reduction in mean levels of CRP on day 15 compared with baseline. This result was statistically significant,with a p‑value of 0.027. P‑value is a conventional statistical method for measuring the significance of clinical results.Typically, a p‑value of 0.05 or less represents statistical significance, meaning that there is a 1‑in‑20 or less statisticalprobability that the observed results occurred by chance. In contrast, mean levels of CRP increased in theketoconazole‑treated group and less so in the placebo group. CRP is an indicator of inflammation, including vascularinflammation. The reduction in cholesterol and CRP observed in patients with type 2 diabetes may51 Table of Contentsindicate a potential beneficial effect of COR‑003 on cardiovascular risk factors observed in patients with endogenousCushing’s syndrome.Plasma AUCs and maximum concentration in blood, or Cmax, increased in a non‑proportional manner over the doserange of 200 mg to 400 mg on days one and 14. Clearance values were similar for the 200 mg and 400 mg doses of COR‑003,but significantly decreased at the 600 mg COR‑003 dose, on days one and 14.Administration of COR‑003 in this trial in patients with type 2 diabetes was observed to be well‑tolerated. Headacheand nausea were the most frequently reported adverse events, some of which were considered drug‑related. There were noserious adverse events, and no clinically meaningful changes in hematology, blood chemistry and urinalysis were noted inany treatment group. No treatment‑related changes in liver function tests, or LFTs, were detected.DIO‑502 and DIO‑503 Clinical TrialsThis clinical trial was a four‑month, double‑blind, randomized, placebo‑controlled clinical trial of dose‑rangingCOR‑003 with metformin and atorvastatin that enrolled 133 of a planned 200 patients with type 2 diabetes, consisting ofmales and females between the ages of 18 and 70. Included patients were on concomitant metformin treatment with aminimum daily dose of 500 mg with an HbA1c level of 7% to 10%. Additionally, all patients were treated with 10 mgatorvastatin or its placebo to evaluate the effect of COR‑003 on lipid profiles given cholesterol‑lowering drugs. Thus,patients were randomized into eight separate arms in the clinical trial: placebo or COR‑003 at 150 mg; 300 mg; and 450 mgwith either atorvastatin 10 mg or atorvastatin placebo.Clinical trial DIO‑503 was an open‑label, follow‑on extension to DIO‑502 to evaluate safety, tolerability andpharmacodynamics after 24 weeks of dosing with COR‑003 in combination with metformin, and with and withoutatorvastatin in subjects with type 2 diabetes.DiObex terminated these clinical trials prior to completion. At the time of trial termination, a total of 133 patientswere enrolled in the DIO‑502 and DIO‑503 trials, and 129 patients had been treated. Efficacy and pharmacokinetics were notanalyzed due to the early termination. The frequency of adverse events reported was generally similar across treatment arms.Diarrhea was the most frequently reported adverse event overall with administration of COR‑003. No serious adverse eventswere reported in the terminated studies.A safety signal of elevated liver enzymes was identified in 10 of the 129 treated patients in the DIO‑502 andDIO‑503 trials. No case of Hy’s law (i.e., an increase of liver transaminases at or above three times the upper level of normalvalues; increase to total bilirubin at or above two times the upper level of the normal value; no or little sign of cholestasis; orabsence of other reasons for liver injury, such as viral hepatitis) was observed. An observation of Hy’s Law would haveindicated a high risk of potentially serious drug-related hepatotoxicity. Three of the treated patients were withdrawn fromthe clinical trials as required in the safety monitoring plan. In these three patients, LFT levels returned to normal after studydrug was discontinued. In addition, three other patients had modest elevations in LFT levels. While these levels did notrequire termination by the trial protocol, the investigators elected to terminate these patients from the clinical trial. LFTs inthese patients also returned to normal after the study drug was discontinued. Four additional patients required closemonitoring per the protocol, and had resolution of their LFT abnormalities while on the study drug. The first case of elevatedliver enzymes occurred in a patient who admitted to excessive alcohol consumption. The remaining cases developed over thefollowing three months. An independent external safety review committee recommended continuation of the studies with nomodifications.Due to the design of these clinical trials, the independent data safety monitoring board for the trials stated that it wasimpossible to interpret which of the two drugs, COR‑003 or atorvastatin, was primarily associated with the side effect profileobserved in these trials. A more detailed analysis of the liver transaminase elevations in this clinical trial showed that therewas no correlation between the dose of COR‑003 and abnormal liver transaminases.52 Table of ContentsPhase 1 Clinical TrialsAA34509 Clinical TrialThis clinical trial was designed primarily to evaluate the effect of COR‑003 on the pharmacokinetics of concurrentlyadministered felodipine. Subjects were administered 400 mg of COR‑003 or placebo QD for eight days. On the fifth day ofthe trial, subjects received a single 5 mg dose of felodipine. Beginning on day five, pharmacokinetics of COR‑003 weremonitored for 24 hours, and pharmacokinetics of felodipine were monitored for 72 hours. The trial was a cross‑over trialinvolving 18 subjects, 16 of whom completed the trial.AA34510 Clinical TrialThis clinical trial was designed primarily to evaluate the effect of concomitant administration of COR‑003 orracemic ketoconazole on the pharmacokinetics of atorvastatin. Subjects were administered 400 mg of COR‑003, 400 mg ofracemic ketoconazole or placebo daily for seven days. On day five, all subjects received a single 80 mg dose of atorvastatin.After administration of the racemic mixture, ketoconazole, pharmacokinetics of the two single enantiomers2R,4S‑ketoconazole and 2S,4R‑ketoconazole, were evaluated for 24 hours on day five using a chiral bioanalytical method.Pharmacokinetics of atorvastatin were evaluated for 60 hours starting at the time of administration on day five. The trial wasa cross‑over trial involving 24 subjects, all of whom completed the clinical trial.Key Findings from the Clinical Trials of COR‑003Phase 2 Efficacy and Safety Trials in Diabetic Patients:·AUCs and Cmax values were approximately 50% higher with COR‑003 in comparison with ketoconazole at thesame dose of 400 mg. All pharmacokinetic parameters were highly variable, in the sense that they differed inand among patients.·Following administration of racemic ketoconazole, plasma levels of COR‑003 were approximately three timesthose of the other enantiomer, 2R,4S‑ketoconazole. Possible explanations could be reduced absorption orincreased uptake and metabolism of COR‑003 in the liver compared to the other enantiomer.·COR‑003 produced a decrease in some lipid measures, or blood fat, including reduced total cholesterol, LDL-chol and HDL-chol.·A significant dose‑related effect of COR‑003 for reduction of CRP was observed.·Trends for reductions in serum cortisol, measured as AUC (0-12 hours), were found after 14 days of treatmentwith COR‑003 in diabetic patients.·In the DIO‑501 clinical trial, headache and nausea were the most frequently reported adverse events. Notreatment related changes in LFTs were detected. In the DIO‑502/503 clinical trials, diarrhea was the mostfrequently reported adverse event.·LFTs were elevated in the DIO‑502/503 clinical trials in 10 out of the 129 patients treated with either thecombination of COR‑003 and atorvastatin or COR‑003 alone, in each case co‑administered with metformin.The independent data safety monitoring board for the trial stated that it was impossible to interpret which ofdrugs was primarily associated with the side effect profile observed in the trial.Phase 1 Drug Interaction Clinical Trials in Normal Volunteers:·The AUC and the Cmax of felodipine were 10‑fold higher when taken with COR‑003 compared with felodipinealone.·The total exposure of atorvastatin was increased by 50% when administered with COR‑003 compared withatorvastatin alone.53 Table of Contents·A small, but statistically significant decrease of serum cortisol (AUC zero to six hours) was found for COR‑003compared with placebo and ketoconazole.·Headache, nausea, dizziness and back pain were reported as the most frequent adverse events across the twostudies.·In the drug interaction study with atorvastatin, two subjects had elevated LFT values. The subjects had receivedCOR‑003 plus atorvastatin or ketoconazole plus atorvastatin in the immediately previous study periods in thiscross‑over study.Overview of COR‑005—Phase 2 Product Candidate for the Treatment of AcromegalyWe are developing COR‑005 for the treatment of acromegaly. We acquired COR‑005 in 2015 as part of our strategyto build our rare endocrine franchise. Acromegaly is a rare endocrine disorder that most commonly results from a benigntumor of the pituitary gland, leading to excess production of GH and IGF‑1. The treatment goal is the normalization of GHand IGF‑1, which is the main cause of the detrimental clinical signs and symptoms of acromegaly. COR 005 is a novel SSA in Phase 2 clinical development for the treatment of acromegaly patients who have notadequately responded to surgery, or acromegaly patients for whom surgery is not appropriate. SSAs are peptides that areadministered as deep subcutaneous or intramuscular injections, typically as long-acting formulations for monthlyinjections. They are the most commonly used drug therapy for the treatment of acromegaly and work by binding to specificsubtypes of SSTRs that are expressed by the tumor. Binding of SSAs to these SSTRs leads to the beneficial inhibition of GHsecretion, but also unwanted inhibition of secretion of other endocrine hormones such as insulin and glucagon in otherorgans. Like other SSAs, COR-005 is a peptide that we are developing for subcutaneous injection. Based on thedifferentiated activation pattern of COR 005 to SSTR subtypes and preclinical and clinical data, we believe that it may offeran improved efficacy and safety profile relative to existing drug therapies for acromegaly. In the five clinical studiescompleted to date in healthy subjects and patients with acromegaly outside the United States, a beneficial reduction of GHwas observed, and, when compared with octreotide, there was no or less reduction of insulin. In addition to a dose rangingclinical trial, we anticipate that our clinical program will include at least one multinational pivotal clinical trial forregistration comparing COR 005 to other treatments or placebo, including at least six months of controlled treatment toevaluate efficacy and one year of observation to evaluate safety. COR 005 has been granted orphan drug designation by theFDA and the EMA. We expect to select and finalize the technology to be utilized for a proprietary long-acting formulation ofCOR-005 in 2016. Additional COR-005 development activities will be sequenced to ensure that the Company’s existingcash resources are sufficient to fund planned operations through the receipt of top-line data from the COR-003 SONICS trial. Overview of AcromegalyAcromegaly is a rare endocrine disorder that most commonly results from a benign tumor of the pituitary gland, oradenoma, leading to excess production of GH and IGF‑1, key regulators of growth and metabolism. High levels of GHover‑activate receptors resulting in excess IGF‑1 in patients with acromegaly. A common criterion for the successfultreatment of acromegaly is normalization of IGF‑1 levels, since reduction of excess IGF‑1 correlates closely with relief ofclinical symptoms.The progression of acromegaly is typically slow, and acromegaly often is not clinically diagnosed for 10 years ormore. As the disease advances, patients typically exhibit abnormal growth throughout the body. Acromegaly mostcommonly affects middle‑aged patients with the mean age of onset being 40 to 45 years. In adults, the condition results inthe expansion of the circumference of bones and increased density of bone, causing pain and altered appearance. This alteredappearance is most apparent in the head and face, but also impacts the entire body. Patients may experience abnormalcartilage growth and pressure in joints, enlargement of visceral organs and cardiovascular disease. Upper airway obstructionwith sleep apnea occurs in approximately 40% to 50% of patients, and is associated with both soft tissue laryngeal airwayobstruction and central sleep dysfunction. Patients may also experience metabolic disruptions such as insulin resistance anddiabetes, which is estimated to develop in 10% to 15% of patients. In addition, some patients with large tumors experiencesymptoms caused by the tumor itself, including headaches, vision problems,54 Table of Contentsimpotence, low sex drive and changes in the menstrual cycle. These problems, if left untreated, lead to disfigurement,disability, and ultimately premature death.We estimate the acromegaly drug therapy market in 2014, including octreotide and lanreotide for acromegaly andtotal pegvisomant, was approximately $990 million worldwide. Based on recent publications, we estimate the diagnosedprevalence of acromegaly to be approximately 24,000 in the United States, and approximately 43,000 in the EuropeanUnion. Prevalence estimates vary considerably and it is believed that acromegaly is underdiagnosed. Estimates of themortality rate in patients with acromegaly varies, with published estimates reporting values as high as 2.7 times normal.Current Treatment Landscape and Limitations on Current Treatment OptionsInitial treatment for acromegaly is usually surgery with or without radiation therapy. An estimated 80% of patientsare eligible for surgery. The initial surgical cure rate is estimated at approximately 80% to 90% for patients withmicroadenomas, which are tumors less than 10 mm in diameter, and less than 50% for patients with macroadenomas, whichare tumors greater than 10 mm in diameter. Three percent to 10% of patients will experience a recurrence in the yearsfollowing an initially successful surgery. An estimated 40% to 50% of acromegaly patients will be prescribed for drugtherapy, including those for whom surgery is not feasible, is contraindicated or has been unsuccessful. This representsapproximately 9,600 to 12,000 patients in the United States and 17,000 to 22,000 patients in the European Union. The goalof drug therapy is primarily to normalize IGF‑1 levels and GH levels. Currently, SSAs are the most commonly used drugtherapy for the treatment of patients with acromegaly.Less than one‑half of treated patients do not adequately respond toSSAs with full IGF‑1 normalization and need alternative or adjunctive drug therapies.Somatostatin is a naturally occurring cyclic peptide, which is a biological molecule consisting of linked aminoacids. Somatostatin inhibits the secretion of a broad array of hormones secreted by the pituitary gland, the pancreas and thegastrointestinal tract, or the GI tract, including GH, insulin and glucagon. It also modulates the rate of gastric emptying, theflow of bile from the gallbladder and intestinal blood flow, and inhibits the growth of normal and tumor cells. Thesefunctions are mediated primarily by the binding of somatostatin to a family of five SSTRs. There is considerable overlapbetween activation of these different receptors and their effects on biological functions. GH secretion is inhibited byactivation of some of these receptors.Pituitary adenomas express various patterns of SSTRs depending on whether they produce primarily GH, ACTH orother pituitary hormones. This excessive production leads to acromegaly, Cushing’s disease or other diseases, respectively.SSAs are structurally similar to somatostatins and have a therapeutic effect in pituitary adenomas, since they bind to theSSTRs on these tumors and inhibit secretion of hormones such as GH or ACTH. Currently approved SSAs used to treatacromegaly are: octreotide which is available in two formulations, one that is typically injected three times a day, or TID,subcutaneously (Sandostatin), and a second that is a long‑acting intramuscular depot for monthly injection (SandostatinLAR); lanreotide (Somatuline), a slow release or autogel formulation for deep subcutaneous injection once a month; andpasireotide available as a long‑acting intramuscular depot for monthly injection (Signifor LAR).There is a significant unmet need in the treatment of acromegaly. Although long‑acting SSAs are the mostcommonly used drugs, they have several limitations, including: ·Variable efficacy: Estimates of responder rate vary significantly by study design, but the proportion of patientswho are effectively managed on SSA monotherapies is now believed to be less than 50%.·Disruption of glucose metabolism: SSAs can inhibit insulin and glucagon secretion, potentially leading to anexacerbation of glucose control issues already experienced by some acromegaly patients. Clinical trials with allapproved SSAs for acromegaly showed increased rates of hyperglycemia and hypoglycemia, and pasireotidealso showed an increased rate of diabetes.·Tolerability issues due to gastrointestinal side effects: Up to one‑third of patients experience gastrointestinalside effects, which can often be transient, but sometimes may require the adjustment of55 Table of Contentsdosing or choice of drug. Up to 62% of patients have gallbladder complications, such as gallstones or sludge inthe gallbladder. Physicians we surveyed estimate that approximately 38% of their SSA patients take medicationto prevent gallstones and approximately 20% have had gallbladder surgery in the last five years.·Convenience: All of the long-acting SSA formulations in the United States require administration by a healthcare professional, and often necessitate monthly office visits to receive injections.While long‑term monthly administration controls GH hypersecretion in two‑thirds of treated patients, some patientsdo not respond to SSAs with full IGF‑1 normalization and need to move to other drug therapies, which are used asalternatives to or in combination with SSAs. These additional drug therapies also aim to reduce IGF‑1. Somavert(pegvisomant) is a human GH receptor antagonist that binds to the GH receptor, but does not activate the mediators leadingto IGF‑1 production and secretion, thereby acting as a functional GH receptor antagonist, or blocker. The resulting clinicaleffect is a dose‑dependent inhibition of IGF‑1. However, because it is administered as a subcutaneous injection on a dailybasis, we believe patient acceptance and compliance may be reduced. Dopamine receptor agonists such as cabergoline alsoinhibit GH secretion by pituitary adenomas expressing the dopamine receptor, which leads to a moderate inhibition of IGF‑1.This class of drugs is not approved by the FDA for the treatment of acromegaly.A number of products are currently in development for the treatment of acromegaly that may potentially competeagainst COR‑005. Chiasma has filed an NDA in the United States for RG-3806, an oral octreotide formulation. The majorityof compounds in development for the treatment of acromegaly are reformulations of octreotide acetate that potentially offerimproved convenience to patients and physicians. These compounds are unlikely to address the market’s key unmet need fordrugs with improved efficacy and safety profile.Our Solution—COR‑005, a Novel Somatostatin AnalogCOR‑005, or veldotide, also referred to as DG3173, is a novel multi‑receptor targeted SSA in Phase 2 clinicaldevelopment for the treatment of acromegaly. In contrast to approved SSAs, COR‑005 activates a different subset of SSTRs.Like pasireotide, it activates SSTR2 and SSTR5. However, in contrast to pasireotide, it possesses a similar affinity for SSTR2than SSTR5. COR‑005 is also the only SSA with a high affinity for SSTR4. COR‑005 does not bind to SSTR3 or the opiatereceptor at physiological concentrations. While the functional consequences of the binding of SSAs to the opiate receptor arenot fully understood, it has been suggested as a mechanism contributing to inhibition of insulin secretion by SSAs and mayalso influence their effect on gastrointestinal motility. In vitro data suggest that a higher number of adenomas are a target forGH inhibition by COR‑005 as compared to octreotide, which is referred to as a single receptor targeted SSA that bindspredominantly to SSTR2 only, potentially resulting in an increased responder rate. Preclinical data from animal studies, andclinical data in healthy subjects and patients with acromegaly, showed that insulin secretion was less inhibited, potentiallyresulting in reduced side effects on blood glucose and an improved safety and tolerability profile. Preclinical data furthersuggest a reduced effect on gallbladder motility, or flow from the gallbladder.In four clinical trials with single subcutaneous injections or infusion and in one six‑day clinical trial, all of whichwere conducted with an immediate release formulation of COR‑005 in healthy subjects or patients with acromegaly,COR‑005 was observed to have a tolerability profile comparable to that of octreotide. However, unlike octreotide, subjectstreated with COR‑005 were observed to have less or no reduction in peak insulin secretion after a meal. We believe thesepreliminary clinical findings corroborate the profile of COR‑005 observed in preclinical studies, which suggested inhibitionof GH secretion without detrimental effects on post‑meal insulin or glucose metabolism. These studies were too short toassess the effect on flow from the gallbladder. These preliminary findings contrast favorably with the well‑described insulinand glucose perturbations caused by octreotide, lanreotide and pasireotide, and we intend to conduct additional clinicaltrials to evaluate the clinical profile of COR‑005 and its differentiation from existing SSAs. With the potentially superiorefficacy, safety and tolerability profile suggested by preclinical studies and early clinical trials, we believe COR‑005 has thepotential to become the standard‑of‑care SSA, with distinct therapeutic advantages relative to currently approved SSAs astreatment of acromegaly.56 Table of ContentsCompleted Clinical TrialsFive clinical trials of COR‑005 have been performed to date: three in healthy male volunteers and two in patientswith acromegaly, all of which employed an immediate release, short‑acting formulation injected subcutaneously. At the timethe clinical trials described below were conducted, COR‑005 was named DG3173. These trials were conducted by AspireoPharmaceuticals Ltd., other than DG3173‑I‑001, which was conducted by Develogen AG.The following table summarizes these trials.Clinical TrialNumber Clinical Trial Descriptions SubjectsEnrolled Year and Status Location DoseDG3173‑II‑02 Phase 2 The Effect ofSubcutaneous Infusion of ThreeDoses of COR‑005 on GrowthHormone Levels in UntreatedAcromegaly Patients 8 2013/2014 Completed.Bioanalytical reportissued. Ukraine 920‑5520 µgcontinuousinfusion over23 hoursDG3173‑II‑01 Phase 2 Trial of the Effect ofCOR‑005 and 300 µgOctreotide on Human GrowthHormone Levels in UntreatedAcromegaly Patients 20 2012 Completed. Studyreport issued. Ukraine 300‑1800 µg QDDG3173‑I‑003 Phase 1 Placebo‑Controlled,Phase 1 Trial to Assess thePharmacodynamics Effect onGlucose Metabolism of SingleDoses Compared to COR‑005Octreotide and Placebo inHealthy Male Subjects 8 2013 Completed. Studyreport issued. Switzerland 300‑1800 µg QDDG3173‑I‑002 Phase 1 Trial to Compare theSafety and PharmacologicActivity of Repeated Doses ofCOR‑005 and COR‑005 PlusOctreotide with Octreotide andPlacebo and Establish TheirPharmacokinetic Interaction inHealthy Male Subjects 42 2012/2013 Completed.Study report issued. Switzerland 100‑1800 µg TIDDG3173‑I‑001 Phase 1 Double‑Blind Trial toInvestigate Safety, Tolerabilityand Pharmacokinetics of SingleEscalating Dosing of COR‑005in Healthy Male Subjects 72 2008 Completed. Studyreport issued. Germany 10‑2000 µg QD The clinical trials involved 122 healthy subjects in the Phase 1 trials and 28 patients with acromegaly in the Phase 2clinical trials. No serious adverse events were observed, and mostly mild adverse events typical for SSAs such as injectionsite reactions and gastrointestinal side effects were reported. There was no evidence that COR‑005 adversely affects the liver,kidneys or other organ systems, including the cardiovascular system. Data from the multiple ascending dose clinical trial inhealthy subjects (Study I‑002) showed inhibition of GH comparable to octreotide, but no or less inhibition of insulinsecretion and less effect on glucose levels. The single ascending dose trial in patients with acromegaly (Study II‑01) and thecontinuous infusion study in patients with acromegaly (Study II‑02) confirmed that COR-005 also suppresses excessivelyproduced growth hormone to a similar maximal extent as octreotide.57 Table of ContentsPhase 2 Clinical TrialsDG3173‑II‑02 Clinical TrialThis clinical trial was an open‑label, crossover, active‑ and placebo‑controlled, continuous 23‑hour infusion,randomized dose‑ranging clinical trial in eight male or female acromegaly patients aged 31 to 54 years that was intended toassess the effect on GH levels of 23-hour constant subcutaneous infusions of different doses of COR-005 or placebo and threesubcutaneous injections of a standard dose of octreotide, administered over the same time frame. Postprandial insulin andglucose were also assessed over a 4-hour period following a standardized midday meal on the second study day.Pharmacokinetics, safety, and tolerability were also assessed.COR‑005 at doses of 920 µg, 2760 µg, and 5520 µg per 23 hours were infused in a random visit sequence at a rate of0.04 mg, 0.12 mg, and 0.24 mg per hour spaced one week apart. The placebo, saline, was always infused one week prior toCOR‑005, and octreotide at a dose of 300 µg was injected TID one week after the last COR‑005 dose. Patients had notreceived any specific treatment for acromegaly in the 12 months prior to the clinical trial and had to have blood IGF‑1concentration greater than or equal to 1.2 times the upper limit of normal reference range adjusted for age plus random bloodGH greater than or equal to 5 µg/L in the 12 months prior to the clinical trial and increased values at screening.There was a decrease in AUC11-23h for serum GH following COR-005 treatment compared to baseline (placebo). Thedecrease in AUC11-23h was greater with octreotide than with placebo and the lower and middle doses of DG3173. Thereduction in GH of the 5520 µg dose of COR-005 closely approached that of octreotide (mean percentage reduction 67% vs.73%). Six of 8 patients receiving the mid or high dose of COR-005 achieved at least a 50% reduction in GH AUC11-23h versus placebo, compared with 7 of 8 achieving the same threshold reduction during octreotide injections.Prior to eating a standardized meal begun 19 hours after the treatments were started, glucose levels were reduced ascompared to pre-dose baseline glucose values among placebo and the two lower COR-005 treatment groups (median percentreductions of 12%, 8.8%, 4.2%, respectively), whereas they were similar to pre-dose values in the highest COR-005 group(median increase 3.4%) and had increased in the octreotide group above baseline (median increase 24%). Following thestandardized meal, serum glucose increased to a similar extent in placebo and the two lower COR-005 dose groups (medianpercent change 27% to 33% above pre-dose baseline), whereas the maximal excursions were somewhat higher in the highestCOR-005 dose group (median 46% above pre-dose) and in the octreotide group (median 63% above pre-dose). Pre-doseinsulin values were reduced by all treatments prior to receiving the standardized meal, placebo (median reduction of 25%)less so than the active drugs (median reductions of 49% to 74%), presumably reflecting improved glucose control amongactive treatments. Insulin excursions following the meal were highly variable and no apparent effect of treatment was readilydiscernible. Additional analyses, including an assessment of AUC values for glucose and insulin are planned.There were no serious adverse events or adverse events leading to withdrawal during the study; all adverse eventswere mild or moderate in severity. There was no notable effect of COR-005 dose on overall incidence of adverse events inthis small number of patients. Four events in one patient, all following octreotide treatment, were assessed as having asuspected relationship to study treatment, all other events were assessed as not suspected. The only adverse event reported bymore than one patient was headache, reported by four patients receiving COR-005. There were no trends or clinicallymeaningful changes over time in laboratory safety analytes, vital signs or the incidence of abnormal ECGs following COR-005 or octreotide treatment, overall or in any individual.DG3173‑II‑01 Clinical TrialThis clinical trial was an open‑label, single‑center, single‑dose, active‑controlled, cross‑over clinical trial in 20 maleor female acromegaly patients. In a fixed sequence with one week washout between treatments, untreated patients receivedoctreotide 300 µg and then each of four doses of subcutaneous COR‑005 (100 µg, 300 µg, 900 µg, 1800 µg in that sequence).58 Table of ContentsPatients had not received any specific treatment for acromegaly in the 12 months prior to the trial and had to haveblood IGF‑1 concentration greater than or equal to 1.2 times the upper limit of normal reference range adjusted for age, plusrandom blood growth hormone greater than or equal to 5 µg/L in the six months prior to the trial. Mean age was 48 years,90% were female, and mean body mass index was 29. Thirteen patients had received prior treatment for acromegaly,including nine with prior surgery (three of these with subsequent radiation therapy), and nine with medications.GH values were obtained at baseline, or prior to treatment, and at intervals over eight hours following eachtreatment. GH was rapidly suppressed by all treatments, and the effect of COR‑005 was dose‑dependent, both in terms ofsuppression extent and duration of effect. The 1800 µg dose of COR‑005 and octreotide maximally suppressed GH to asimilar extent (mean percentage change 60% for each), with a slightly lesser maximal suppression with the 900 µg dose ofCOR‑005. This suppression resulted in a similar proportion of patients achieving GH levels less than or equal to 2.5 ng/mLamong the two highest doses of COR‑005 and octreotide (37% to 42%). Also, the time to achieve maximal suppression wasshorter for the two highest doses of COR‑005 than for octreotide (median two hours for octreotide compared to one hour forthe maximally effective COR‑005 dose). However, the duration of GH suppression following single dosing was longer foroctreotide than COR‑005 at all doses, resulting in greater suppression by octreotide of GH as measured by AUC 0 to 8 hours(octreotide 60% mean percentage suppression compared to COR‑005 1800 µg 37% mean percentage suppression). We intendto optimize the formulation of COR‑005 to prolong exposure, which should lead to increased sustained GH suppression.Fasting glucose was assessed at screening and at eight hours after each single dose of study drug. Mean glucoseconcentrations during COR‑005 treatments were similar to the screening values, but were elevated by approximately2.8 mmol/L after eight hours of treatment with octreotide. At the time of glucose sampling, growth hormone levels were stillclose to maximally suppressed by octreotide (median 74% below baseline) but had returned to baseline levels in all COR-005 dose groups except the highest dose group (1800 µg), which was suppressed by a median of 17% below baseline.Glucose values for octreotide were always determined shortly after clinical trial entry. In contrast, glucose values for thehigher doses of COR‑005 were drawn several weeks after trial entry. Participation in the clinical trial per se would beexpected to result in improved glucose control due to observed behavioral changes in trial participants.There were no serious adverse events. Three out of the 20 patients reported a combined total of three adverse events.One adverse event, a moderately severe headache reported in a 62 year old female as encephalopathy exacerbation, led toearly clinical trial discontinuation after the 300 µg dose of COR‑005 follow‑up visit. The patient who discontinued early hadlong‑standing acromegaly with a very high IGF‑1 at baseline (5.5x upper limit of normal, or ULN) and a history ofencephalopathy. The investigator considered the relationship to study drug as unassessable. Pharmacokinetic outcomes forCOR‑005 were similar to those from Phase 1 clinical trials.Phase 1 Clinical TrialsDG3173‑I‑003 Clinical TrialThis clinical trial was a single‑blind, placebo‑ and active‑controlled, single ascending dose, randomized cross‑overclinical trial in eight healthy male subjects, aged 18 to 45 years. Octreotide at a dose of 300 µg and COR‑005 at doses of 300µg, 900 µg and 1800 µg were injected subcutaneously in random order following a mixed meal test, with four‑ to five‑daywashouts between administrations.Relative to placebo, both COR‑005 and octreotide were associated with a delay in the time to peak post‑mealinsulin. However, the magnitude of peak insulin was similar between placebo and COR‑005. In contrast, octreotide delayedand suppressed insulin release during the meal, with peak insulin diminished by 81% and AUC by 62% relative to placebo.The differences in all of these measures, including time to peak, magnitude of peak and AUC, between COR‑005 andoctreotide were statistically significant with a p‑value of less than 0.02 for all parameters. Relative to placebo, all four druginjections were associated with post‑meal glucose excursions. The effect of COR‑005 on glucose AUC was dose‑related.Glucose was maintained at a high level for a longer time following octreotide relative to COR‑005. The glucose AUC foroctreotide during the test was elevated relative to all doses of COR‑005.59 Table of ContentsPeak post‑meal glucagon was not influenced appreciably by COR‑005, whereas a suppression by 50% relative toplacebo was observed for octreotide. There was a modest effect of COR‑005 at 900 µg and 1800 µg doses, with up to 28%suppression of glucagon AUC. In contrast, octreotide had a pronounced effect on glucagon AUC, suppressed by 63% relativeto placebo.There were no serious adverse events. Adverse events were mostly mild in severity and did not result in anydiscontinuations. Injection site redness or itching and gastrointestinal system‑related complaints (most commonly diarrhea)were the most commonly reported adverse events for both octreotide and COR‑005.DG3173‑I‑002 Clinical TrialThis clinical trial was a single‑blind, placebo‑ and active‑controlled, multiple escalating dose clinical trial in 42healthy male subjects, aged 18 to 45 years. COR‑005 was given TID eight hours apart from days two through eight. Therewere seven clinical trial groups, with six subjects total per group. In the first four clinical trial groups, four subjects receivedCOR‑005 in doses that ranged from 100 µg to 1800 µg TID, one received octreotide 300 µg TID, and one received placebo.In the three remaining clinical trial groups, four subjects received COR‑005 plus octreotide, one received placebo plusplacebo and one received octreotide plus placebo.The effects of COR‑005 with or without added octreotide on GH, insulin and glucose levels were ascertained using agrowth hormone‑releasing hormone, or GHRH, test on days one (pretreatment) and three. COR‑005 and octreotide given asmonotherapy for four doses both suppressed the GHRH‑induced rise in GH, with 900 µg of COR‑005 approximatelyequivalent to 300 µg of octreotide, with mean AUC reductions compared to pre‑drug administrations of 65% and 70%,respectively, whereas the 1800 µg dose of COR‑005 gave somewhat better reduction, with mean AUC reduction of 85%.When the two drugs were used in combination, a maximum suppression of GH response was noted during administration ofthe COR‑005 900 µg. The highest dose of COR‑005 1800 µg was not tested in combination with octreotide. Insulin levelswere suppressed following treatment with octreotide by 50% from pre‑drug, whereas no such effect was noted duringCOR‑005 administrations. Blood glucose concentrations were mostly stable following GHRH infusion. Glucose levels wereobserved to be similar before and after administrations of both COR‑005 and octreotide. There was no clear effect of eitherdrug or saline given alone or in combination with the exception of COR‑005 300 µg, for which glucose levels tended to belower after administration, both alone and in combination with octreotide.COR‑005 was generally well‑tolerated and a maximum tolerated dose was not reached. Adverse events were mostlymild in severity. Injection site redness, itching and gastrointestinal system‑related complaints (most commonly diarrhea)were the most commonly reported adverse events and appeared to occur in similar percentages of octreotide‑ andCOR‑005‑treated subjects. There was small to no accumulation of COR‑005 in plasma after repeated doses. Exposure toCOR‑005 was dose proportional and linear after the first and last doses. When COR‑005 was given concomitantly withoctreotide 300 µg TID, COR‑005 pharmacokinetics were similar to COR‑005 given alone.DG3173‑I‑001 Clinical TrialThis clinical trial was a double‑blind, placebo controlled, single ascending dose clinical trial in 72 healthy malesubjects, age 18 to 45 years. A single subcutaneous dose ranging between 10 µg to 2000 µg of COR‑005 or placebo wasadministered under fasting conditions. COR‑005 was generally well‑tolerated, and the maximum tolerated dose was notreached.There were no serious adverse events. There were 21 adverse events reported in 15 subjects of which twenty wereregarded as mild in severity and one was moderate (diarrhea, 800 µg dose). The time to maximum drug concentration inblood was generally within one hour. Maximum drug concentration in blood generally increased proportionally with dose.The cumulative urinary excretion of drug was proportional to dose ingested, and fractional excretion was consistently about4% to 5% of the respective doses administered.In an exploratory pharmacodynamic analysis, GH plasma concentrations were consistent with the suppression of GHby COR‑005.60 Table of ContentsAnticipated Clinical TrialsWe expect clinical trials of COR‑005 to be designed to establish the optimal dosage range for normalization ofIGF‑1 in chronic treatment of acromegaly using a proprietary subcutaneous‑injection formulation currently underdevelopment. More than one formulation may be used during later clinical development. We may also need to assesspharmacokinetics, safety and efficacy in patients with liver or kidney disease. We expect to conduct a pre‑IND meeting withthe FDA and a Scientific Advice meeting in Europe prior to advancing COR‑005 into further studies and pivotal clinicaltrials. In addition to a formulation and dosing range clinical trial, we anticipate that our clinical program will include at leastone multi‑national pivotal clinical trial for registration comparing COR‑005 to other treatments or placebo, including at leastsix months of controlled treatment to evaluate efficacy and one year of observation to evaluate safety.As a next generation SSA with potential growth‑inhibitory effects on other pituitary tumors, COR‑005 may alsohave utility in treating other rare endocrine diseases. We plan therefore to explore the utility of COR‑005 in Cushing’sdisease and neuroendocrine tumors in small pilot studies in the respective patient populations.Other Product Candidates BP‑2002 is a novel, preclinical‑stage, orally delivered biological therapeutic for diabetes. BP‑2002 is a geneticallymodified lactobacillus bacteria. Unmodified lactobacilli are natural probiotics that exist in the human GI tract and have beenshown to be beneficial in a number of ways when taken orally. The BP‑2002 technology advances this approach into a noveltherapeutic application for diabetes. The genetically engineered lactobacilli are engineered to express full‑length (1‑37)glucagon‑like peptide‑1, or GLP‑1, and deliver it into the GI tract. The GLP‑1 acts as a signaling molecule to trigger thetransformation of intestinal enteroendocrine cells into glucose‑responsive insulin secreting cells.In an animal model for diabetes, treatment with BP‑2001, the immediate predecessor to BP-2002, was observed toresult in a reduction in hyperglycemia. Diabetic rats that were fed daily with human lactobacilli engineered to secreteGLP‑1(1‑37) showed significant increases in insulin levels and were significantly more glucose tolerant than those fed theunmodified bacterial strain. These rats developed insulin‑producing cells within the upper intestine in numbers sufficient toreplace 25% to 33% of the insulin capacity of nondiabetic healthy rats. We have decided not to invest further in thedevelopment of BP-2002, and are currently exploring potential partnership and out-licensing opportunities for BP-2002. Discontinued License AgreementAntisense TherapeuticsIn May 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, with AntisenseTherapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ product candidate,ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and the treatment ofany complications of diabetes). We refer to this product candidate as COR‑004. Under the terms of the Antisense LicenseAgreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash, and we also invested$2.0 million in Antisense Therapeutics equity. The terms of the Antisense License Agreement provide that we couldterminate the Antisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believe thefurther development and commercialization of COR‑004 was no longer feasible due to a material change that was beyond ourcontrol. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would berequired to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to AntisenseTherapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because, based on receipt offeedback from regulatory authorities, we believe the further development and commercialization of COR‑004 is no longerfeasible due to material changes that were beyond our control. We have received a reply from Antisense Therapeuticsobjecting to our termination notice and to our assertion that the further development and commercialization of COR-004 wasno longer feasible due to material61 Table of Contentschanges that were beyond our control. The reply also requests that the parties appoint an independent expert to resolve thisdispute in accordance with the terms of the Antisense License Agreement. Commercialization StrategyGiven our current stage of product development, we do not have a commercialization infrastructure. We intend toindependently commercialize our rare disease‑focused product candidates, if approved, in the United States, the EuropeanUnion and other key global markets. We believe that we can address the markets of our current product candidates bytargeting endocrinologists that are focused on the treatment of rare pituitary disorders primarily stemming from benigntumors. Given the relatively concentrated specialty prescriber base, we plan to create a sales force of approximately 30representatives in the United States as well in the European Union to market our endocrine product candidates, if approved.In building our sales force, we intend to recruit representatives with experience calling on endocrinologists or marketingorphan drug designated products.Our commercial strategy for our product candidates, if approved, will encompass promoting their benefits comparedto other treatment alternatives, as well as a concerted effort to raise awareness about the underlying disease among physicianswith the goal of increasing the rate of diagnosis when the symptoms may otherwise be overlooked. We believe thecombination of our commercial effort and our product candidate profiles will facilitate our ability to successfully penetrateour target markets.In-Licensing and Acquisition AgreementsOn June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd., an Israeli company, its product candidate,DG3173. We refer to this product candidate as COR‑005. Under the terms of the acquisition agreement, we issued to AspireoPharmaceuticals 2,062,677 common shares, which had a value of $33.2 million on June 30, 2015. In connection with thisacquisition, we made a payment to the Office of the Chief Scientist of the Israeli Ministry of Economy, or OCS, in the amountof $3.0 million, which represents the repayment of amounts previously granted by OCS to Aspireo Pharmaceuticals, plusinterest, that were used in support of research and development conducted by Aspireo Pharmaceuticals for the developmentof DG3173. The approval by OCS of the transfer of the assets relating to DG3173 by Aspireo to the Company was subject tothe repayment of the original grant plus interest.On March 30, 2011, a license agreement was executed between BioPancreate and the Cornell Center for TechnologyEnterprise and Commercialization (CCTEC). Under the terms of the license agreement, BioPancreate obtained certain rightsfrom the CCTEC for commercial development, use and sale of products that use the technology associated with the license.License issue fees payable to the CCTEC include $15,000 paid within 30 days after the execution of the agreement(Effective Date) and $235,000 to be paid in five equal installments of $47,000 payable annually within 30 day of theEffective Date’s respective anniversary. We are obligated to make milestone payments upon the achievement of certainregulatory and clinical milestones up to $2.6 million in the aggregate. For years in which licensed products are sold, we arerequired to pay a royalty based on a low single‑digit percentage of net sales. The minimum annual royalty in such years is$100,000.In the event the product is sublicensed, up to $3.5 million of certain fees we receive that are not earned royalties orreimbursements for direct costs are due to the CCTEC upon achievement of certain regulatory and clinical milestones.ManufacturingThe manufacturing, packaging and distribution of COR‑003 drug product for clinical trials following GoodManufacturing Practices, or GMPs, is currently outsourced under contracts to third parties. We expect to enter into similararrangements for our other drug product candidates.62 Table of ContentsIntellectual PropertyWe actively seek to protect the intellectual property and proprietary technology that we believe is important to ourbusiness, including seeking, maintaining, enforcing and defending patent rights for our product candidates and methods oftreatment, whether developed internally or licensed from third parties. Our success will depend on our ability to obtain andmaintain patent and other protection including data or market exclusivity for our product candidates and methods oftreatment, preserve the confidentiality of our know‑how and operate without infringing the valid and enforceable patents andproprietary rights of third parties.Our policy is to seek to protect our proprietary position generally by filing patent applications initially at theUSPTO. After this initial phase, patent applications claiming priority to the initial application are filed in various countries,including the United States, Europe and Canada. In each case, we determine the strategy and territories required afterdiscussion with our patent professionals with the goal of obtaining relevant coverage in territories that are commerciallyimportant to us and our product candidates. We will additionally rely on data exclusivity and patent term extensions whenavailable, including the relevant exclusivity through orphan drug designation. We also rely on trade secrets and know‑howrelating to our underlying product technologies. Prior to making any decision on filing any patent application, we considerwith our patent professionals whether patent protection is the most sensible strategy for protecting the invention concernedor whether the invention should be maintained as confidential.We own or license 76 granted patents, of which six are U.S.‑issued patents, and 37 pending patent applications, ofwhich 13 are U.S. patent applications.We have one pending United States, one pending Canadian and one pending International (Madrid Protocol)trademark application designating Australia, China, European Community, India, Israel, Japan, Mexico, and Turkey for themark “Strongbridge Biopharma.”COR‑003We own 43 granted patents related to our product candidate, COR‑003. Issued claims in these patents are directed tomethods of treatment of various diseases or conditions associated with elevated cortisol levels or activity using COR‑003,including methods of reducing C-reactive protein levels and systemic inflammation through administration of a once-dailydose of COR-003. The patents have been granted in major territories including Europe, China and Japan. We have fivepatent applications pending in the United States directed to methods of treating a disease or condition associated withelevated cortisol levels or activity with COR‑003. We also have three pending foreign or PCT patent applications fornext‑generation product candidates, including new chemical entities. We have National Phase applications pending inCanada, Japan and the U.S. and are preparing to file additional National Phase applications in Canada, China, Europe and theU.S. Patents in this portfolio, if and when issued, are expected to expire in 2026, 2027 and 2030 if there are no patent termadjustments or extensions.COR‑005While we own granted patents in the United States and other major territories, including Europe, Canada and Japan,and pending applications in the United States, the terms of the patents may not extend beyond the launch date of thisproduct candidate. We intend to rely on orphan and data/marketing exclusivity for COR‑005.Laws and Regulations Regarding Patent TermsThe term of individual patents depends upon the legal term of the patents in the countries in which they areobtained. In most countries in which we file, the patent term is 20 years from the earliest date of filing a non‑provisionalapplication. In the United States, a patent term may be shortened if a patent is terminally disclaimed over another patent or asa result of delays in a patent prosecution by the patentee. A patent’s term may be lengthened by a patent term adjustment,which compensates a patentee for administrative delays by the USPTO in granting a patent. The patent term of a Europeanpatent is 20 years from its effective filing date, which, unlike in the United States, is not subject to patent term adjustments inthe same way as U.S. patents.63 Table of ContentsThe term of a patent that covers a FDA‑approved drug or biologic may also be eligible for patent term extension,which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. TheDrug Price Competition and Patent Term Restoration Act of 1984, or the Hatch‑Waxman Act, permits a patent term extensionof up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of timethe drug or biologic is under regulatory review. Patent extensions cannot extend the remaining term of a patent beyond atotal of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended.Similar provisions are available in Europe and other jurisdictions to extend the term of a patent that covers an approved drug,for example Supplementary Protection Certificates. In the future, if and when our products receive FDA approval, we expectto apply for patent term extensions on patents covering those products. We anticipate that some of our issued patents may beeligible for patent term extensions but such extensions may not be available and therefore our commercial monopoly may berestricted.CompetitionThe biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intensecompetition and a strong emphasis on proprietary products. While we believe that our scientific knowledge, technology, anddevelopment experience provide us with competitive advantages, we face potential competition from many different sources,including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions,governmental agencies and public and private research institutions. Any product candidates that we successfully developand commercialize will compete with existing products and new products that may become available in the future. Many ofour competitors, alone or with their strategic partners, have greater experience than we do in conducting preclinical studiesand clinical trials, and obtaining FDA, EMA and other regulatory approvals, and have substantially greater financial,technical and other resources than we do, such as larger research and development, clinical, marketing and manufacturingorganizations. As a result, these companies may obtain regulatory approval for competing products more rapidly than we areable and may be more effective in selling and marketing their products. Companies that complete clinical trials, obtainrequired regulatory authority approvals and commence commercial sale of their drugs before their competitors may achieve asignificant competitive advantage, and our commercial opportunity could be reduced or eliminated if competitors developand commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or areless expensive than any products that we may develop. Drugs resulting from our research and development efforts or from ourjoint efforts with collaboration partners therefore may not be commercially competitive with our competitors’ existingproducts or products under development.We are aware of several companies focused on developing or marketing therapies for rare endocrine disorders. Forour product candidates, the main competitors include:·COR‑003: A number of therapies are currently approved and in various stages of development for endogenousCushing’s syndrome. Currently, the marketed therapies for the treatment of endogenous Cushing’s syndromepatients who fail or are ineligible for surgery in the United States and Europe are: Korlym (mifepristone)marketed by Corcept Therapeutics in the United States; and Signifor (pasireotide) marketed by Novartis in theEuropean Union, and ketoconazole, metyrapone and mitotane marketed by HRA in the European Union.Additionally, Signifor (pasireotide) LAR and LCI‑699 are currently in Phase 3 clinical development byNovartis in Cushing’s disease patients.·COR‑005: A number of acromegaly therapies are currently approved and in various stages of development. There are currently three approved SSA therapies for acromegaly: Sandostatin LAR (octreotide) marketed byNovartis; Signifor LAR (pasireotide) marketed by Novartis; and Somatuline Depot (lanreotide) marketed byIpsen. There is one growth hormone receptor antagonist, Somavert (pegvisomant), marketed by Pfizer. Chiasma has filed an NDA in the U.S. for RG-3806, an oral octreotide formulation. Six additional therapies arein Phase 2 clinical development for acromegaly: octreotide solid‑dose injectable (GP‑02) developed by GlidePharma and Canadian licensee Paladin Labs; ITF‑2984 developed by Italfarmaco; octreotide LAR depotdeveloped by GP Pharma; octreotide long‑acting depot (CAM‑2029) developed by Novartis; octreotidesustained release developed by Q‑Chip; and ATL-1103 developed by Antisense Therapeutics.64 Table of ContentsGovernment RegulationProduct Approval ProcessThe clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import,export and marketing, among other things, of our product candidates are subject to extensive regulation by governmentalauthorities in the United States and other countries. The FDA under the Federal Food, Drug, and Cosmetic Act regulatespharmaceutical products in the United States. The steps required before a drug may be approved for marketing in the UnitedStates generally include:·the completion of preclinical laboratory tests and animal tests conducted under Good Laboratory Practices, orGLPs, and other applicable regulations;·the submission to the FDA of an IND application for human clinical testing, which must be reviewed by theFDA and become effective before human clinical trials commence;·the successful performance of adequate and well‑controlled human clinical trials conducted in accordance withGood Clinical Practices to establish the safety and efficacy of the product candidate for each proposedindication;·analysis of clinical trial data and preparation of submission to the FDA of an NDA;·the submission to the FDA of an NDA;·the FDA’s acceptance of the NDA;·satisfactory completion of an FDA inspection of the manufacturing facilities at which the product is made toassess compliance with cGMPs to assure that the facilities, methods and controls are adequate to preserve thedrug’s identity, strength, quality and purity;·satisfactory completion of FDA inspections of clinical trial sites and GLP toxicology studies; and·the FDA’s review and approval of an NDA prior to any commercial marketing or sale of the drug in the UnitedStates.The testing and approval process requires substantial time, effort and financial resources, and the receipt and timingof any approval is uncertain.Preclinical studies include laboratory evaluations of the product candidate, as well as animal studies to assess thepotential safety and efficacy of the product candidate. The results of the preclinical studies, together with manufacturinginformation, analytical data and a proposed clinical trial protocol, are submitted to the FDA as part of the IND, which mustbecome effective before clinical trials may be commenced. The IND will become effective automatically 30 days after receiptby the FDA, unless the FDA raises concerns or questions about the conduct of the clinical trials as outlined in the IND priorto that time and places the IND on clinical hold. In this case, the IND sponsor and the FDA must resolve any outstandingconcerns before clinical trials can proceed. A clinical hold may occur at any time during the life of an IND, due to safetyconcerns or non‑compliance, and may affect one or more specific studies or all studies conducted under the IND.Clinical trials involve the administration of the product candidates to healthy volunteers or patients with the diseaseto be treated under the supervision of a qualified principal investigator. Clinical trials are conducted under protocolsdetailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety, and theefficacy criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must besubmitted to the FDA as part of the IND. Further, each clinical trial must be reviewed and approved by an independentinstitutional review board, or IRB, either centrally or individually at each institution at which the clinical trial will beconducted. The IRB will consider, among other things, ethical factors, the safety of human subjects and the possible liabilityof the institution. Progress reports detailing the status of the clinical trials must be submitted to the FDA65 Table of Contentsannually. Sponsors must also report to the FDA serious and unexpected adverse reactions, any clinically important increasein the rate of a serious suspected adverse reaction over that listed in the protocol or investigation brochure, or any findingsfrom other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug. There are alsorequirements governing the reporting of ongoing clinical trials and clinical trial results to public registries.Clinical trials are typically conducted in three sequential phases prior to approval, but the phases may overlap.These phases generally include the following:·Phase 1.Phase 1 clinical trials represent the initial introduction of a product candidate into human subjects,frequently healthy volunteers. In Phase 1, the product candidate is usually tested for safety, including adverseeffects, dosage tolerance, absorption, distribution, metabolism, excretion and pharmacodynamics.·Phase 2.Phase 2 clinical trials usually involve studies in a limited patient population to (1) evaluate theefficacy of the product candidate for specific indications, (2) determine dosage tolerance and optimal dosage, and(3) identify possible adverse effects and safety risks.·Phase 3.Phase 3 clinical trials are conducted to further demonstrate clinical efficacy, optimal dosage and safetywithin an expanded patient population at geographically dispersed clinical trial sites, and to provide sufficient datafor the statistically valid evidence of safety and efficacy.Phase 4 clinical trials are conducted after approval to gain additional experience from the treatment of patients inthe intended therapeutic indication and to document a clinical benefit in the case of drugs approved under acceleratedapproval regulations, or when otherwise requested by the FDA in the form of post‑market requirements or commitments.Failure to promptly conduct any required Phase 4 clinical trials could result in withdrawal of approval. Clinical trials are inherently uncertain and any phase may not be successfully completed. A clinical trial may besuspended or terminated by the FDA, IRB or sponsor at any time on various grounds, including a finding that the subjects orpatients are being exposed to an unacceptable health risk. Additionally, some clinical trials are overseen by an independentgroup of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee.This group provides ongoing oversight and safety reviews to determine whether or not a clinical trial may move forward atdesignated check points based on access to certain data from the clinical trial. We may also suspend or terminate a clinicaltrial based on evolving business objectives and/or competitive climate.Sponsors have the opportunity to meet with the FDA at certain points during the development of a new drug to shareinformation about the data gathered to date and for the FDA to provide advice on the next phase of development. Thesemeetings may be held prior to the submission of an IND, at the end of Phase 2 and/or before an NDA is submitted. Meetingsmay be requested at other times as well.The results of preclinical studies and clinical trials, including negative or ambiguous results as well as positivefindings, together with detailed information on the manufacture, composition and quality of the product, proposed labelingand other relevant information are submitted to the FDA in the form of an NDA requesting approval to market the product.The NDA must be accompanied by a significant user fee payment. The FDA has substantial discretion in the approval processand may refuse to accept any application, for example if the NDA is not sufficiently complete, or decide that the data isinsufficient for approval and require additional preclinical, clinical or other studies.In addition, under the Pediatric Research Equity Act, or PREA, an NDA or supplement to an NDA must contain datato assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and tosupport dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA maygrant deferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not applyto any drug for an indication for which orphan drug designation has been granted. However, if only one indication for aproduct has orphan drug designation, a pediatric assessment may still be required for any applications to market that sameproduct for the non‑orphan indication(s).66 Table of ContentsOnce the NDA submission has been submitted, the FDA has 60 days after submission of the NDA to conduct aninitial review to determine whether it is sufficient to accept for filing. NDAs receive either a standard or priority review.Under the Prescription Drug User Fee Act, the FDA sets a goal date by which it plans to complete its review. For a standardreview, this is typically 12 months from the date of submission of the NDA application. The review process is often extendedby FDA requests for additional information or clarification. Before approving an NDA, the FDA will inspect the facilities atwhich the product is manufactured and will not approve the product unless the manufacturing facility complies with cGMPsand may also inspect clinical trial sites for integrity of data supporting safety and efficacy. The FDA may also convene anadvisory committee of external experts to provide input on certain review issues relating to risk, benefit and interpretation ofclinical trial data. The FDA is not bound by the recommendations of an advisory committee, but generally follows suchrecommendations in making its decisions. The FDA may delay approval of an NDA if applicable regulatory criteria are notsatisfied and/or the FDA requires additional testing or information. The FDA may require post‑marketing testing andsurveillance to monitor safety or efficacy of a product.After the FDA evaluates the NDA and conducts inspections of manufacturing facilities where the drug productand/or its API will be produced, it may issue an approval letter or a Complete Response Letter. An approval letter authorizescommercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Lettergenerally outlines the deficiencies in the NDA submission and may require substantial additional clinical testing, such as anadditional pivotal Phase 3 clinical trial(s), clinical data, and/or other significant, expensive and time consumingrequirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information is submitted,the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.The FDA may approve the NDA with a Risk Evaluation and Mitigation Strategy, or REMS, plan to mitigate risks,which could include medication guides, physician communication plans, or elements to assure safe use, such as restricteddistribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, amongother things, changes to proposed labeling, development of adequate controls and specifications, or a commitment toconduct one or more post‑market studies or clinical trials. Such post‑market testing may include Phase 4 clinical trials andsurveillance to further assess and monitor the product’s safety and effectiveness after commercialization.Orphan Drug DesignationUnder the Orphan Drug Act of 1983, the FDA may grant orphan drug designation to a drug or biological productintended to treat an orphan disease or condition, which is a disease or condition that affects fewer than 200,000 individualsin the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation thatthe cost of developing and making a drug product available in the United States for this type of disease or condition will berecovered from sales of the product. Orphan product designation must be requested before submitting an NDA. After the FDAgrants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publiclyby the FDA. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory reviewand approval process.If a product that has orphan drug designation subsequently receives the first FDA approval for the disease orcondition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDAmay not approve any other applications to market the same drug or biological product for the same indication for sevenyears, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity. Thedesignation of such drug also entitles a party to financial incentives, such as opportunities for grant funding towards clinicaltrial costs, tax advantages and user‑fee waivers. Competitors, however, may receive approval of different products for theindication for which the orphan product has exclusivity or obtain approval for the same product but for a different indicationfor which the orphan product has exclusivity. Orphan product exclusivity also could block the approval of one of ourproducts for seven years if a competitor obtains approval of the same drug or biological product as defined by the FDA or ifour product candidate is determined to be contained within the competitor’s product for the same indication or disease. If adrug product designated as an orphan product receives regulatory approval for an indication broader than that for which it isdesignated, it may not be entitled to orphan product exclusivity. Orphan drug status in the European Union has similar butnot identical benefits in that jurisdiction.67 Table of ContentsPost‑Approval RequirementsDrugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation bythe FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product distribution,advertising and promotion, and reporting of adverse experiences with the product. After approval, most changes to theapproved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval andmay require additional clinical trials and NDA submissions. There also are continuing, annual user fee requirements for anymarketed products and the establishments at which such products are manufactured, as well as new application fees forsupplemental applications with clinical data.In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugsare required to register their establishments with the FDA and state agencies, and are subject to periodic unannouncedinspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturingprocess are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also requireinvestigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon thesponsor and any third‑party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue toexpend time, money, and effort in the area of production and quality control to maintain cGMP compliance.Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements andstandards is not maintained, or if problems occur after the product reaches the market. Later discovery of previously unknownproblems with a product, including adverse events of unanticipated severity or frequency, with manufacturing processes, orfailure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safetyinformation, imposition of post‑market studies or clinical trials to assess new safety risks, or imposition of distribution orother restrictions under a REMS program. Other potential consequences include, but are not limited to:·restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from themarket or product recalls;·fines, warning letters or holds on post‑approval clinical trials;·refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation ofproduct license approvals;·product seizure or detention, or refusal to permit the import or export of products; or·injunctions or the imposition of civil or criminal penalties.The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label. TheFDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off‑label uses, and a companythat is found to have improperly promoted off‑label uses may be subject to significant liability.Moreover, the recently enacted federal Drug Supply Chain Security Act imposes new obligations on manufacturersof pharmaceutical products, among others, related to product tracking and tracing. Among the requirements of this newfederal legislation, manufacturers will be required to provide certain information regarding the drug product to individualsand entities to which product ownership is transferred, label drug product with a product identifier, and keep certain recordsregarding the drug product. Further, under this new legislation, manufacturers will have drug product investigation,quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulteratedproducts, as well as products that are the subject of fraudulent transactions or which are otherwise unfit for distribution suchthat they would be reasonably likely to result in serious health consequences or death.68 Table of ContentsForeign RegulationIn order to market any product outside of the United States, we would need to comply with numerous and varyingregulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, amongother things, clinical trials, marketing authorization, commercial sales and distribution of our products. Whether or not weobtain FDA approval for a product, we would need to obtain the necessary approvals by the comparable foreign regulatoryauthorities before we can commence clinical trials or marketing of the product in foreign countries and jurisdictions.Although many of the issues discussed above with respect to the United States apply similarly in the context of the EuropeanUnion, the approval process varies between countries and jurisdictions and can involve additional product testing andadditional administrative review periods. The time required to obtain approval in other countries and jurisdictions mightdiffer from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction doesnot ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country orjurisdiction may negatively impact the regulatory process in others.Other Healthcare LawsIn addition to FDA restrictions on the marketing of pharmaceutical products, federal and state healthcare lawsrestrict certain business practices in the biopharmaceutical industry. Although we currently do not have any products on themarket, we may be subject, and once our product candidates are approved and we begin commercialization, will be subject toadditional healthcare laws and regulations enforced by the federal government and by authorities in the states and foreignjurisdictions in which we conduct our business. These laws include, but are not limited to, anti‑kickback, false claims, dataprivacy and security, and transparency statutes and regulations.The federal Anti‑Kickback Statute prohibits, among other things, knowingly and willfully offering, paying,soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in returnfor, purchasing, leasing, arranging for, ordering or recommending any good, facility, item or service for which payment ismade, in whole or in part, under Medicare, Medicaid or any other federal healthcare programs. The term “remuneration” hasbeen broadly interpreted to include anything of value, including for example, gifts, discounts, the furnishing of supplies orequipment, credit arrangements, payments of cash, waivers of payment, ownership interests and providing anything at lessthan its fair market value. The federal Anti‑Kickback Statute has been interpreted to apply to arrangements betweenpharmaceutical manufacturers on the one hand, and prescribers, purchasers and formulary managers on the other. Althoughthere are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution,the exceptions and safe harbors are drawn narrowly, and our future practices may not in all cases meet all of the criteria for astatutory exception or safe harbor protection. Practices that involve remuneration that may be alleged to be intended toinduce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safeharbor. Failure to meet all of the requirements of a particular applicable regulatory safe harbor does not make the conduct perse illegal under the federal Anti‑Kickback Statute. Instead, the legality of the arrangement will be evaluated on acase‑by‑case basis based on a cumulative review of all of its facts and circumstances. Several courts have interpreted thestatute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referralsof federal healthcare program covered business, the statute has been violated. Additionally, the Patient Protection andAffordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, PPACA, amended theintent requirement under the Anti‑Kickback Statute and criminal healthcare fraud statutes (discussed below) such that aperson or entity no longer needs to have actual knowledge of the statute or the specific intent to violate it in order to havecommitted a violation. In addition, PPACA provides that the government may assert that a claim including items or servicesresulting from a violation of the federal Anti‑Kickback Statute constitutes a false or fraudulent claim for purposes of the civilFalse Claims Act (discussed below). Due to the breadth of these federal and state anti‑kickback laws, and the potential foradditional legal or regulatory change in this area, it is possible that our current and future sales and marketing practicesand/or our future relationships with physicians might be challenged under these laws, which could cause harm to us.The civil monetary penalties statute imposes penalties against any person or entity who, among other things, isdetermined to have presented or caused to be presented a claim to a federal health program that the person knows or shouldknow is for an item or service that was not provided as claimed or is false or fraudulent.69 Table of ContentsThe federal false claims laws prohibit, among other things, any person or entity from knowingly presenting, orcausing to be presented, a false or fraudulent claim for payment or approval to the federal government or knowingly making,using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federalgovernment. As a result of a modification made by the Fraud Enforcement and Recovery Act of 2009, a claim includes “anyrequest or demand” for money or property presented to the U.S. government. Recently, several pharmaceutical and otherhealthcare companies have been prosecuted under these laws for, among other things, allegedly providing free product tocustomers with the expectation that the customers would bill federal programs for the product. Other companies have beenprosecuted for causing false claims to be submitted because of the companies’ marketing of the product for unapproved, andthus non‑covered, uses.The Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutesthat prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or obtain, by means of false orfraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of,any healthcare benefit program, including private third‑party payors, and knowingly and willfully falsifying, concealing orcovering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the deliveryof, or payment for, healthcare benefits, items or services.In addition, we may be subject to data privacy and security regulation by both the federal government and the statesin which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and ClinicalHealth Act, or HITECH, and its implementing regulations, imposes certain requirements relating to the privacy, security andtransmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s securitystandards directly applicable to business associates—independent contractors or agents of covered entities that receive orobtain protected health information in connection with providing a service on behalf of a covered entity. HITECH alsocreated four new tiers of civil monetary penalties, and newly empowered state attorneys general with the authority to enforceHIPAA. In January 2013, the Office for Civil Rights of the U.S. Department of Health and Human Services issued the FinalOmnibus Rule under HIPAA pursuant to HITECH that makes significant changes to the privacy, security, and breachnotification requirements and penalties. The Final Omnibus Rule generally took effect in September 2013 and enhancescertain privacy and security protections, and strengthens the government’s ability to enforce HIPAA. The Final OmnibusRule also enhanced requirements for both covered entities and business associates regarding notification of breaches ofunsecured protected health information. In addition, state laws govern the privacy and security of health information incertain circumstances, many of which differ from each other in significant ways. These state laws may not have the sameeffect and often are not preempted by HIPAA, thus complicating compliance efforts.Additionally, PPACA also included the federal Physician Payments Sunshine Act, which requires certainmanufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaidor the Children’s Health Insurance Program (with certain exceptions) to report annually information related to certainpayments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals atthe request of, or designated on behalf of, the physicians and teaching hospitals and to report annually certain ownership andinvestment interests held by physicians and their immediate family members. Failure to comply with required reportingrequirements could subject applicable manufacturers and others to substantial civil money penalties.Also, many states have similar healthcare statutes or regulations that apply to items and services reimbursed underMedicaid and other state programs, or, in several states, apply regardless of the payor. Certain states require pharmaceuticalcompanies to implement a comprehensive compliance program that includes a limit or outright ban on expenditures for, orpayments to, individual medical or health professionals and/or require pharmaceutical companies to track and report giftsand other payments made to physicians and other healthcare providers.Because we intend to commercialize products that could be reimbursed under federal and other governmentalhealthcare programs, we plan to develop a comprehensive compliance program that establishes internal controls to facilitateadherence to the rules and healthcare program requirements. Although compliance programs and adherence thereto maymitigate the risk of violation of and subsequent investigation and prosecution for violations of the above laws, the riskscannot be entirely eliminated. If our operations are found to be in violation of any of the health care laws70 Table of Contentsor regulations described above or any other laws that apply to us, we may be subject to penalties, including potentiallysignificant criminal, civil and/or administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusionof products from reimbursement under government programs, contractual damages, reputational harm, administrativeburdens, diminished profits and future earnings and/or the curtailment or restructuring of our operations, any of which couldadversely affect our ability to operate our business and our results of operations. To the extent that any of our products willbe sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance,applicable post‑marketing requirements, including safety surveillance, fraud and abuse laws, and implementation ofcorporate compliance programs and reporting of payments or transfers of value to healthcare professionals.Pharmaceutical Coverage, Pricing and ReimbursementIn both domestic and foreign markets, our sales of any future approved products, if and when commercialized, willdepend in part on the availability of coverage and adequate reimbursement from third‑party payors. Third‑party payorsinclude government authorities, managed care providers, private health insurers and other organizations. Patients who areprescribed treatments for their conditions and providers performing the prescribed services generally rely on third‑partypayors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, if approved, unlesscoverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. Sales of ourproducts will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our productswill be paid by third‑party payors. These third‑party payors are increasingly focused on containing healthcare costs bychallenging the price and examining the cost‑effectiveness of medical products and services.In addition, significant uncertainty exists as to the coverage and reimbursement status of newly approved healthcareproduct candidates. The market for our product candidates for which we may receive regulatory approval will dependsignificantly on access to third‑party payors’ drug formularies, or lists of medications for which third‑party payors providecoverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricingpressures on pharmaceutical companies. Also, third‑party payors may refuse to include a particular branded drug in theirformularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative isavailable. Furthermore, third‑party payor reimbursement to providers for our product candidates may be subject to a bundledpayment that also includes the procedure administering our products. To the extent there is no separate payment for ourproduct candidates, there may be further uncertainty as to the adequacy of reimbursement amounts. Because each third‑partypayor individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a timeconsuming, costly and sometimes unpredictable process. We may be required to provide scientific and clinical support forthe use of any product to each third‑party payor separately with no assurance that approval would be obtained, and we mayneed to conduct expensive pharmacoeconomic studies in order to demonstrate the cost‑effectiveness and/or medicalnecessity of our products. This process could delay the market acceptance of any product and could have a negative effect onour future revenues and operating results. We cannot be certain that our product candidates will be considered cost‑effectiveor medically necessary. Because coverage and reimbursement determinations are made on a payor‑by‑payor basis, obtainingacceptable coverage and reimbursement from one payor does not guarantee the Company will obtain similar acceptablecoverage or reimbursement from another payor. A payor’s decision to provide coverage for a product does not imply that anadequate reimbursement rate will be approved. If we are unable to obtain coverage of, and adequate reimbursement andpayment levels for, our product candidates from third‑party payors, physicians may limit how much or under whatcircumstances they will prescribe or administer them and patients may decline to purchase them. This in turn could affect ourability to successfully commercialize our products and impact our profitability, results of operations, financial condition andfuture success.Furthermore, in many foreign countries, particularly the countries of the European Union, the pricing of prescriptiondrugs is subject to government control. In some non‑U.S. jurisdictions, the proposed pricing for a drug must be approvedbefore it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. Forexample, the European Union provides options for its member states to restrict the range of medicinal products for whichtheir national health insurance systems provide reimbursement and to control the prices of medicinal products for human use.A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirectcontrols on the profitability of the company placing the medicinal product on the market. We71 Table of Contentsmay face competition for our product candidates from lower‑priced products in foreign countries that have placed pricecontrols on pharmaceutical products. In addition, there may be importation of foreign products that compete with our ownproducts, which could negatively impact our profitability.Healthcare ReformIn the United States and foreign jurisdictions, there have been, and we expect there will continue to be, a number oflegislative and regulatory changes to the healthcare system that could affect our future business and operations if and whenwe begin to directly commercialize our products.In particular, there have been and continue to be a number of initiatives at the U.S. federal and state level that seekto reduce healthcare costs. Initiatives to reduce the federal deficit and to reform healthcare delivery are increasingcost‑containment efforts. We anticipate that Congress, state legislatures and the private sector will continue to review andassess alternative controls on healthcare spending through limitations on the growth of private health insurance premiumsand Medicare and Medicaid spending, the creation of large insurance purchasing groups, price controls on pharmaceuticalsand other fundamental changes to the healthcare delivery system. Any proposed or actual changes could limit or eliminateour spending on development projects and affect our ultimate profitability.In March 2010, PPACA was signed into law. PPACA has substantially changed the way healthcare is financed byboth governmental and private insurers. PPACA, among other things: established an annual, nondeductible fee on any entitythat manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entitiesaccording to their market share in certain government healthcare programs; revised the methodology by which rebates owedby manufacturers for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated; increased thestatutory minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program; addressed anew methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated fordrugs that are inhaled, infused, instilled, implanted, or injected; extended the Medicaid Drug Rebate Program toprescriptions of individuals enrolled in Medicaid managed care organizations; required manufacturers to offer 50%point‑of‑sale discounts on negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gapperiod, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and implementedpayment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians andother providers to improve the coordination, quality and efficiency of certain healthcare services through bundled paymentmodels.In the future, there may continue to be additional proposals relating to the reform of the U.S. healthcare system,some of which could further limit the prices we will be able to charge for our product candidates, or the amounts ofreimbursement available for our product candidates. If future legislation were to impose direct governmental price controlsand access restrictions, it could have a significant adverse impact on our business. Managed care organizations, as well asMedicaid and other government agencies, continue to seek price discounts. Some states have implemented, and other statesare considering, measures to reduce costs of the Medicaid program, and some states are considering implementing measuresthat would apply to broader segments of their populations that are not Medicaid‑eligible. Due to the volatility in the currenteconomic and market dynamics, we are unable to predict the impact of any unforeseen or unknown legislative, regulatory,payor or policy actions, which may include cost containment and healthcare reform measures. Such policy actions couldhave a material adverse impact on our profitability.Properties and FacilitiesWe lease 14,743 square feet of office space at 900 Northbrook Drive, Suite 200, Trevose, Pennsylvania 19053 forresearch and development and administrative activities. We believe that our existing facility is adequate to meet our currentneeds, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms. Wealso lease 3,173 square feet of office space in Radnor, Pennsylvania, which was subleased in September 2015. ITEM 4A. UNRESOLVED STAFF COMMENTSNone72 Table of ContentsITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTSThe following discussion summarizes the significant factors affecting the operating results, financial condition,liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysisshould be read in conjunction with “Selected Consolidated Financial Information” and the financial statements and therelated notes thereto included elsewhere in this 2015 Annual Report on Form 20-F. The statements in this discussionregarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and allother non‑historical statements in this discussion are forward‑looking statements and are based on the beliefs of ourmanagement, as well as assumptions made by, and information currently available to, our management. Actual results coulddiffer materially from those discussed in or implied by forward‑looking statements as a result of various factors, includingthose discussed below and elsewhere in this Annual Report on Form 20-F, particularly in the section titled “Risk Factors.”OverviewWe are a biopharmaceutical company focused on the development, in‑licensing, acquisition and eventualcommercialization of multiple complementary products and product candidates within franchises that target rare diseases.Our primary focus has been to build our rare endocrine franchise, which includes product candidates for the treatment ofendogenous Cushing’s syndrome and acromegaly, two rare diseases with a high unmet need for innovative treatmentoptions. Given the well‑identified and concentrated prescriber base addressing our target markets, we believe we can use asmall, focused sales force to effectively market our products, if approved, in the United States, the European Union and otherkey global markets. We believe that our ability to execute on this strategy is enhanced by the significant clinicaldevelopment and commercial experience of key members of our management team. We also intend to identify and in‑licenseor acquire products or product candidates that would be complementary to our existing rare endocrine franchise or thatwould form the basis for new rare disease franchises. We believe this approach will enable us to maximize our commercialpotential by further leveraging our existing resources and expertise.We have never been profitable and have incurred net losses since our inception in 1996. Our operations to date havebeen focused on identifying, in‑licensing, acquiring and developing our product candidates, organizing and staffing ourcompany, business planning and raising capital. We have funded our operations primarily through equity offerings. Weincurred a net loss attributable to Strongbridge Biopharma of $9.7 million and $43.5 million for the years endedDecember 31, 2014 and 2015, respectively. At December 31, 2015, our accumulated deficit was $80.7 million.On February 10, 2015, we entered into a share purchase agreement with investors whereby we issued 4,761,078ordinary shares for $25.8 million, net of transaction costs and the subscription price was $5.54 per share.On May 13, 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, withAntisense Therapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ productcandidate, ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and thetreatment of any complications of diabetes). We refer to this product candidate as COR‑004. Under the terms of the AntisenseLicense Agreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash, and we alsoinvested $2.0 million in Antisense Therapeutics equity. The terms of the Antisense License Agreement provide that we couldterminate the Antisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believe thefurther development and commercialization of COR‑004 was no longer feasible due to a material change that was beyond ourcontrol. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would berequired to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to AntisenseTherapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because, based on receipt ofregulatory authorities, we believe the further development and commercialization of COR‑004 is no longer feasible due tomaterial changes that were beyond our control. We have received a reply from Antisense Therapeutics objecting to ourtermination notice and to our assertion that the further development and commercialization of COR-004 was no longerfeasible due to material changes that were beyond our control. The reply also requests that the parties appoint anindependent expert to resolve this dispute in accordance with the terms of the Antisense License Agreement. 73 Table of ContentsOn June 29 and 30, 2015, we raised $33.2 million in aggregate gross proceeds in a private placement of commonshares, the proceeds of which we expect to use primarily for the continued development of COR‑003, along with the planneddevelopment of our two new programs, COR‑004 and COR‑005, and for general corporate purposes. The subscription pricewas $14.54 per share and we issued 2,284,414 new shares to the investors.On June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd., an Israeli company, its product candidate,DG3173. We refer to this product candidate as COR‑005. Under the terms of the acquisition agreement, we issued to AspireoPharmaceuticals 2,062,677 common shares, which had a value of $33.2 million on June 30, 2015. In connection with thisacquisition, we made a payment to the Office of the Chief Scientist of the Israeli Ministry of Economy, or OCS, in the amountof $3.0 million, which represents the repayment of amounts previously granted by OCS to Aspireo Pharmaceuticals, plusinterest, that were used in support of research and development conducted by Aspireo Pharmaceuticals for the developmentof DG3173.On October 21, 2015, we completed an initial public offering (IPO) in the U.S. by issuing 2,500,000 shares ofcommon stock at $10.00 per share. The proceeds from the IPO were $19.5 million, net of expenses paid.Financial Operations OverviewThe following discussion sets forth certain components of our statements of operations as well as factors that impactthose items.RevenuesWe have not generated any revenue during the periods presented. Our ability to generate product revenue andbecome profitable depends upon our ability to obtain regulatory approval for and to successfully commercialize our productcandidates.Research and Development ExpensesOur research and development expenses consist primarily of costs incurred in connection with the development ofour product candidates, including:·personnel‑related costs, such as salaries, bonuses, benefits, travel and other related expenses, includingstock‑based compensation;·expenses incurred under our agreements with CROs, clinical sites, contract laboratories, medical institutionsand consultants that plan and conduct our preclinical studies and clinical trials, including, in the case ofconsultants, stock‑based compensation;·costs associated with regulatory filings;·upfront and milestone payments under in‑license agreements with third parties;·costs of acquiring preclinical study and clinical trial materials, and costs associated with formulation andprocess development;·depreciation, maintenance and other facility‑related expenses; and·costs to secure an exclusive license agreement with Antisense Therapeutics.We expense all research and development costs as incurred. Clinical development expenses for our productcandidates are a significant component of our current research and development expenses as we progress our productcandidates into and through clinical trials. Product candidates in later stage clinical development generally have higherresearch and development costs than those in earlier stages of development, primarily due to increased size and duration ofthe clinical trials. We recognize costs for each grant project, preclinical study or clinical trial that we conduct based on74 Table of Contentsour evaluation of the progress to completion, using information and data provided to us by our external research anddevelopment vendors and clinical sites.Through the first half of 2014, we were focused on product candidates that are now outside the scope of our strategicfocus, specifically the development of Crespine, an osteoarthritis program, and a next generation cortisol inhibitor, or NGCI,program. By the end of 2014, we changed our strategic focus to rare endocrine diseases and other rare diseases, specificallythe development of COR‑003. As a result, we significantly reduced activities to develop the Crespine and NGCI programs.We returned our commercial rights to Crespine to the originator in the first half of 2014. We expect to spend only suchamounts as are necessary to maintain our intellectual property on the NGCI program.We incurred research and development expenses of $2.5 million, $5.8 million and $20.1 million for the years endedDecember 31, 2013, 2014 and 2015, respectively.We expect our research and development expenses to increase in absolute dollars in the future as we continue toin‑license or acquire product candidates and as we advance our existing and any future product candidates into and throughclinical trials and pursue regulatory approval of our product candidates. The process of conducting the necessary clinicalresearch to obtain regulatory approval of a product candidate is costly and time consuming. The probability that any of ourproduct candidates receives regulatory approval and eventually is able to generate revenue depends on a variety of factors,including the quality of our product candidates, early clinical data, investment in our clinical program, competition,manufacturing capability and commercial viability. As a result of these uncertainties, we are unable to determine the durationand completion costs of our research and development projects or if, when and to what extent we will generate revenue fromthe commercialization and sale of any of our product candidates, if approved. We may never succeed in achieving regulatoryapproval for any of our product candidates.We do not allocate personnel‑related research and development costs, including stock‑based compensation or otherindirect costs, to specific programs, as they are deployed across multiple projects under development.General and Administrative ExpensesGeneral and administrative expenses include personnel costs, costs for outside professional services and otherallocated expenses. Personnel costs consist of salaries, bonuses, benefits, travel and stock‑based compensation. Outsideprofessional services consist of legal, accounting and audit services, commercial evaluation and strategy services, and otherconsulting services. We expect to incur additional general and administrative costs as a result of operating as a publiccompany, including expenses related to compliance with the rules and regulations of the SEC and those of any nationalsecurities exchange on which our securities are traded, additional insurance expenses, investor relations activities and otheradministrative and professional services.Other Income (Expense), NetOther income (expense), net, consists of interest income generated from our cash and cash equivalents, gains fromthe revaluation of foreign currency forward contracts, foreign exchange gains and losses and gains and losses oninvestments.Our consolidated financial statements are reported in U.S. dollars, which is also our functional currency.Transactions in foreign currencies are remeasured into our functional currency at the rate of exchange prevailing at the dateof the transaction. Any monetary assets and liabilities arising from these transactions are remeasured into our functionalcurrency at exchange rates prevailing at the balance sheet date or on settlement. Resulting gains and losses are recorded inforeign currency gain (loss) in other income (expense) in our consolidated statements of operations.Historically, our cash and cash equivalents have been held primarily in foreign currencies. However, most of ourexpenses have been U.S. dollar denominated. To reduce our currency exposure, we used a hedging program from the fourthquarter of 2013 through the second quarter of 2015. The foreign currency forward contracts used in our hedging programwere not entered into for speculative purposes and, although we believe they served as effective economic hedges, we did notseek to qualify for hedging accounting. In 2014, our operations continued to shift to the United States, but a large portion ofour cash and cash equivalents were still held in foreign currencies. In the first half of 2015, all of our forward contractsexpired.75 Table of ContentsCritical Accounting Policies and Significant Judgments and EstimatesThis operating and financial review of our financial condition and results of operations is based on our consolidatedfinancial statements, which have been prepared in accordance with U.S. generally accepted accounting principles(U.S. GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions thataffect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of thefinancial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historicalexperience and on various other factors that we believe are reasonable under the circumstances, the results of which form thebasis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements appearingelsewhere in this Annual Report on Form 20-F, we believe the following accounting policies to be the most critical to thejudgments and estimates used in the preparation of our financial statements. Business CombinationsWhen acquiring new enterprises over which we obtain control, the acquisition method is applied. Under thismethod, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date.Allowance is made for the tax effect of the adjustments made.The excess of the consideration transferred, the amount of the non‑controlling interest in the acquiree and theacquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquiredis recorded as goodwill.In‑Process Research and DevelopmentPurchased identifiable intangible assets with indefinite lives, such as our in‑process research and development, areevaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicatethat it is more likely than not that the fair value of these assets has been reduced. To test these assets for impairment, wecompare the fair value of the asset to its carrying value. The method we use to estimate the fair value measurements ofindefinite‑lived intangible assets is based on the income approach. For the impairment analysis for the year endedDecember 31, 2015, significant unobservable inputs used in the income approach valuation method include discount rates,royalty rates and probabilities of product candidate advancement from one clinical trial phase to the next. The probabilitiesof product candidate advancement we used were based on standalone statistical analysis on a phase‑by‑phase basis.During the first half of 2015, as a result of our acquisition of Aspireo Pharmaceuticals Ltd.’s product candidate COR-005, our in‑process research and development increased by $31.3 million.As of December 31, 2015, there were no events or changes in circumstances indicating possible impairment.GoodwillWe test goodwill for impairment on an annual basis or whenever events occur that may indicate possibleimpairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment existsand (2) measure the amount of impairment.Because we have one operating segment, when testing for a potential impairment of goodwill, we are required toestimate the fair value of our business as a whole and determine the carrying value. If the estimated fair value is less than thecarrying value of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in amanner similar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwillimpairment be determined, if any.76 Table of ContentsTo estimate the fair value of the business, a market‑based approach is applied, utilizing our public market value. Wedid not record a charge for impairment for the years ended December 31, 2013, 2014 and 2015.During the first half of 2015, as a result of our acquisition of Aspireo Pharmaceuticals Ltd.’s product candidate COR-005, our goodwill increased by $5.1 million.As of December 31, 2015, there were no events or changes in circumstances indicating possible impairment.Research and Development Costs and ExpensesResearch and development costs are expensed as incurred. We recognize costs for certain development activitiesbased on an evaluation of the progress to completion of specific tasks using information and data provided to us by ourvendors and our clinical sites. We determine accrual estimates through financial models that take into account discussionwith applicable personnel and service providers as to the progress or state of completion of clinical trials. Our preclinicalstudy and clinical trial accrued liabilities and prepaid assets are dependent, in part, upon the receipt of timely and accuratereporting from CROs and other third‑party vendors. Although we do not expect our estimates to differ materially fromamounts we actually incur, our understanding of the status and timing of services performed relative to the actual status andtiming of services performed may vary and may result in our reporting amounts that are too high or too low for any particularperiod. When contracts for outside research products or testing require advance payment, they are recorded on ourconsolidated balance sheets as prepaid items and expensed when the service is provided or reaches a specific milestoneoutlined in the contract.Stock‑Based CompensationWe account for stock based compensation awards in accordance with FASB ASC Topic 718, Compensation—StockCompensation (ASC 718). ASC 718 requires all stock based payments including grants of stock options and restricted stockand modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fairvalues.Our stock based awards are subject to either service based or performance based vesting conditions. Vesting ofcertain awards could also be accelerated upon achievement of defined market based vesting conditions. Certain awards alsocontain a combination of service and market conditions or performance and market conditions.We account for employee stock based awards at grant date fair value. If we issue awards with an exercise pricedenominated in a currency other than our functional currency, trading currency or the currency for which we compensate ouremployee, we account for these as liabilities. We account for non employee and liability-classified stock based awards basedon the then current fair values at each financial reporting date until the performance is complete for non employee awards, oruntil the award is settled (exercised) for liability-classified awards. Changes in the amounts attributed to these awardsbetween the reporting dates are included in stock based compensation expense (credit) in our statements of operations. Weinclude liability-classified stock options in non current liabilities in our balance sheets as their settlement (exercise) does notrequire use of cash, cash equivalents or other current assets.We record compensation expense for service based awards over the vesting period of the award on a straight linebasis. Compensation expense related to awards with performance based vesting conditions is recognized over the requisiteservice period using the accelerated attribution method to the extent achievement of the performance condition is probable. For those awards in which the performance condition was the completion of our initial public offering (IPO), we did notrecognize compensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market based vesting conditions is recognized using theaccelerated attribution method over the shorter of the requisite service period or the implied period associated withachievement of the market based vesting provisions.77 Table of ContentsWe estimate the fair value of our awards with service conditions or a combination of service and market conditionsusing the Black Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expectedstock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due tothe lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on thehistorical volatility of a group of similar companies that are publicly traded. We selected companies with comparablecharacteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share priceinformation sufficient to meet the expected term of the stock based awards. We compute historical volatility data using thedaily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of thestock based awards.We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine theprobability of satisfying the market condition. We make this estimate using the conditions that exist at the grant date. Thederived service period, which may be the requisite service period, is also determined at this time. Compensation cost for ourawards with a market condition is recognized ratably using the accelerated attribution method if the award is subject tograded vesting over the requisite service period. The compensation cost for our awards with a market condition is notreversed if the market condition is not satisfied.We have estimated the expected term of employee service-based stock options using the “simplified” method,whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option,due to our lack of sufficient historical data. We have estimated the expected term of employee awards with service andmarket conditions using a Monte Carlo simulation model. This approach involves generating random stock price pathsthrough a lattice type structure. Each path results in a certain financial outcome, such as accelerated vesting or specificoption payout. We have estimated the expected term of nonemployee service and performance based awards based on theremaining contractual term of such awards.The risk free interest rates for periods within the expected term of the option are based on the Swedish GovernmentBond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associatedaward. We have never paid dividends, and do not expect to pay dividends in the foreseeable future.We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods ifactual forfeitures differ from estimates. We record stock based compensation expense only for those awards that are expectedto vest. To the extent that actual forfeitures differ from our estimates, the differences are recorded as a cumulative adjustmentin the period the estimates were revised. Historical forfeitures have been insignificant.Income TaxesWe use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities aredetermined based on the differences between the financial reporting and tax bases of assets and liabilities, and are measuredusing the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We assess thelikelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likelythan not that some portion or all of a deferred tax asset will not be realized.We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets.Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred taxassets, other than those attributable to BioPancreate, will not be realized. The deferred tax assets primarily comprised ofSwedish and U.S. federal and state tax net operating losses and tax credit carryforwards. Utilization of the net operating lossand tax credit carryforwards may be subject to an annual limitation due to historical or future ownership percentage changerules provided by the Internal Review Code of 1986, as amended, and similar state and Swedish provisions. The annuallimitation may result in the expiration of net operating loss and tax credit carryforwards before their utilization.78 Table of ContentsThe JOBS ActAs an “emerging growth company” under the JOBS Act, we can take advantage of an extended transition period forcomplying with new or revised accounting standards. This allows an “emerging growth company” to delay the adoption ofcertain accounting standards until those standards would otherwise apply to private companies. We have irrevocably electednot to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards onthe relevant dates on which adoption of such standards is required for other public companiesWe are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirementsunder the JOBS Act. Subject to certain conditions, as an “emerging growth company,” we intend to rely on certain of theseexemption including, without limitation, the exemptions from providing an auditor’s attestation report on our system ofinternal controls over financial reporting pursuant to Section 404(b) of the Sarbanes‑Oxley Act of 2002. We will remain an“emerging growth company” until the earliest of: (1) the last day of the fiscal year in which we have total annual grossrevenues of $1 billion or more; (2) the last day of the fiscal year following the fifth anniversary of the date of the completionof this offering; (3) the date on which we have issued more than $1 billion in nonconvertible debt during the previous threeyears; and (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.Results of OperationsComparison of the Years Ended December 31, 2014 and 2015The following table sets forth our results of operations for the years ended December 31, 2014 and 2015. Year Ended December 31, Change 2014 2015 $ (in thousands) Operating expenses: Research and development $5,844 $20,135 $14,291 General and administrative 4,588 22,719 18,131 Total operating expenses 10,432 42,854 32,422 Operating loss (10,432) (42,854) (32,422) Other (expense) income, net 282 (1,229) (1,511) Loss before income taxes (10,150) (44,083) (33,933) Income tax benefit 480 450 (30) Net loss (9,670) (43,633) (33,963) Net loss attributable to non‑controlling interest — 53 53 Net loss attributable to Strongbridge $(9,670) $(43,580) $(33,910) 79 Table of ContentsResearch and Development ExpensesThe following table summarizes our research and development expenses during the years ended December 31, 2014and 2015: Year Ended December 31, Change 2014 2015 $ (in thousands) Clinical development and supporting activities $4,518 $12,697 $8,179 Antisense Therapeutics license fee — 3,899 3,899 Compensation and other personnel costs 164 1,906 1,742 Preclinical development 894 840 (54) Stock-based compensation expense 268 793 525 Total research and development expenses $5,844 $20,135 $14,291 Research and development expenses were $20.1 million for the year ended December 31, 2015, an increase of$14.3 million compared to the year ended December 31, 2014. The $8.2 million increase in clinical development wasprimarily attributed to a $4.8 million increase due to the ongoing clinical trials for COR‑003, and a $3.4 million increase dueto the initiation of the development activity for COR-004 and COR‑005. Research and development expenses for the yearended December 31, 2015 included $3.9 million of the $5.0 million in aggregate cash paid to Antisense Therapeutics uponentering into a license agreement in May 2015, with the remaining $1.1 million of cash paid recorded as the initial carryingvalue of our investment in the equity of Antisense Therapeutics. Compensation and related costs increased by $1.7 million,and non-cash stock-based compensation increased $0.5 million, for the year ended December 31, 2015 as compared to thesame period in 2014 due to increased headcount of research and development personnel during the 2015 period. General and Administrative ExpensesThe following table summarizes our general and administrative expenses during the years ended December 31, 2014and 2015: Year Ended December 31, Change 2014 2015 $ (in thousands) Outside professional services $3,335 $8,054 $4,719 Redomiciliation and IPO preparation costs — 4,007 4,007 Corporate development and licensing transaction costs — 3,390 3,390 Compensation and other personnel costs 1,165 3,783 2,618 Stock-based compensation expense (17) 3,147 3,164 Facility costs 105 338 233 Total general and administrative expenses $4,588 $22,719 $18,131 General and administrative expenses were $22.7 million for the year ended December 31, 2015, an increase of$18.1 million compared to the year ended December 31, 2014. The $4.7 million increase in outside professional andconsulting services was primarily due to increased legal fees in support of general corporate matters, employee recruitingfees, audit fees, market analysis costs, and consulting fees for business development efforts. General and administrativeexpenses for the year ended December 31, 2015 also included $4.0 million of legal and accounting fees related to theredomiciliation of the Company from Sweden to Ireland completed in September 2015 and the indirect activities necessaryto prepare the Company’s financial records for the U.S. initial public offering completed in October 2015. General andadministrative expenses for the year ended December 31, 2015 also included $3.4 million of transaction fees and expensesrelated to the acquisition of COR-005 from Aspireo Pharmaceuticals, the license of COR-004 from Antisense Therapeutics,and other business development activities. Compensation and related personnel costs increased by $2.6 million, and non-cash stock-based compensation by $3.2 million, during the year ended December 31, 2015 due to increased headcount ofadministrative personnel during the 2015 period. Facility costs increased by80 Table of Contents$0.2 million primarily as a result of entering into a lease for our Trevose, Pennsylvania office space in April 2015. Other Income (Expense), NetThe following table summarizes our other income (expense), net, during the years ended December 31, 2014 and2015: Year Ended December 31, Change 2014 2015 $ (in thousands) Foreign exchange loss$(204)$(124)$80Other income (expense), net 486 (1,105) (1,591) Total other income (expense), net$282$(1,229)$(1,511) Other income (expense), net, changed from income of $0.3 million in 2014 to expense of $1.2 million in 2015. Thechange was primarily due to the charges related to the wind down of our previous foreign currency hedging program, and thewrite down of our investment in Antisense equity to market value.Income Tax BenefitWe recorded income tax benefit of $0.5 million for the years ended December 31, 2014 and 2015, due to thegeneration of U.S. state and federal net operating loss carry forwards and federal tax credit carry forwards. The income taxbenefit for U.S. state and federal net operating loss carry forwards and the federal tax credit carry forwards has beenrecognized to the extent it is supported by the deferred tax liabilities recorded in connection with the acquisition ofBioPancreate.Net Loss Attributable to Non-Controlling InterestWe recorded a net loss attributable to non-controlling interest of $53,000 for the year ended December 31, 2015. The non-controlling interest results from the 0.418% of Cortendo AB shares not acquired by Strongbridge Biopharma plcpursuant to the exchange offer that expired September 3, 2015.Comparison of the Years Ended December 31, 2013 and 2014The following table sets forth our results of operations for the years ended December 31, 2013 and 2014. Year Ended December 31, Change 2013 2014 $ (in thousands) Operating expenses: Research and development $2,534 $5,844 $3,310 General and administrative 2,658 4,588 1,930 Total operating expenses 5,192 10,432 5,240 Operating loss (5,192) (10,432) (5,240) Other (expense) income, net (288) 282 570 Loss before income taxes (5,480) (10,150) (4,670) Income tax benefit 93 480 387 Net loss (5,387) (9,670) (4,283) Net loss attributable to non‑controlling interest 92 — (92) Net loss attributable to Strongbridge $(5,295) $(9,670) $(4,375) 81 Table of ContentsResearch and Development ExpensesThe following table summarizes our research and development expenses during the years ended December 31, 2013and 2014: Year Ended December 31, Change 2013 2014 $ (in thousands) Clinical development and supporting activities $975 $4,518 $3,048 Preclinical development 541 894 353 Compensation and other personnel costs 117 164 47 Stock-based compensation expense 901 268 (138) Total research and development expenses $2,534 $5,844 $3,310 Research and development expenses were $5.8 million for the year ended December 31, 2014, an increase of$3.3 million compared to the year ended December 31, 2013. The increase was primarily attributed to a $3.0 million increasein clinical development expenses mainly associated with ongoing clinical trials for COR‑003, and a $0.8 million increase inpreclinical costs. The increase in preclinical development costs was offset in part by a decrease of $0.4 million related to thereduction in activities related to the Crespine and NGCI programs in 2014 and a reduction in the use of consultants in 2014due to the hiring of additional internal research and development personnel.In 2013 and 2014, we recognized $0.2 million and $0, respectively, from U.S. federal government grants to supportour research and development activities of BioPancreate as a reduction to our preclinical development expenses.General and Administrative ExpensesThe following table summarizes our general and administrative expenses during the years ended December 31, 2013and 2014: Year Ended December 31, Change 2013 2014 $ (in thousands) Outside professional services $2,134 $3,335 $988 Compensation and other personnel costs 268 1,165 636 Stock-based compensation expense 310 (17) 45 Facility costs — 105 261 Total general and administrative expenses $2,712 $4,588 $1,930 General and administrative expenses were $4.6 million for the year ended December 31, 2014, an increase of$1.9 million compared to the year ended December 31, 2013. The increase was primarily due to a $1.0 million increase inoutside professional services, which consisted of mostly legal fees, related to the planned listing of our ordinary shares on theOslo exchange, general corporate matters, including market analysis, communications and investor relations efforts, as wellan increase in other legal and accounting costs. We discontinued our planned listing on the Oslo exchange in 2014.Compensation and related personnel costs increased by $0.6 million for the year ended December 31, 2014 as compared tothe year ended December 31, 2013, due to increased hiring of administrative personnel. Travel and other general andadministrative costs increased by $0.3 million for the year ended December 31, 2014 as compared to the year endedDecember 31, 2013 primarily as a result of the hiring of additional personnel.Other Income (Expense), NetThe following table summarizes our other income (expense), net, during the years ended December 31, 2013 and2014:82 Table of Contents Year Ended December 31, Change 2013 2014 $ (in thousands) Foreign exchange loss $(570) $(204) $366 Other income, net 282 486 204 Total other income (expense), net $(288) $282 $570 Other income (expense), net, changed from expense of $0.3 million in 2013 to income of $0.3 million in 2014. Thechange was primarily due to the strength of the U.S. dollar and the positive impact on the revaluation of our U.S. dollar basedcurrency derivative contracts and interest income earned on deposits, partially offset by foreign exchange loss.Income Tax BenefitWe recorded income tax benefit of $0.1 million and $0.5 million for the years ended December 31, 2013 and 2014,respectively, due to the generation of U.S. state and federal net operating loss carry forwards and federal tax credit carryforwards. The income tax benefit for U.S. state and federal net operating loss carry forwards and the federal tax credit carryforwards has been recognized to the extent it is supported by the deferred tax liabilities recorded in connection with theacquisition of BioPancreate.Net Loss Attributable to Non‑Controlling InterestUntil October 2013, we held 49% of the equity interests in BioPancreate Inc., which was developing biologicaltherapeutics, including BP‑2001 for the treatment of diabetes. For 2013, we consolidated BioPancreate’s financial resultswith our own because we controlled BioPancreate, but we attributed a portion of our consolidated net loss in the amount of$92,000 to the other, non‑controlling equity holders of BioPancreate. We acquired the remaining equity interests inBioPancreate in October 2013 and January 2014. Accordingly, in 2014 there was no attribution of any of our net loss to anon‑controlling interest.Liquidity and Capital ResourcesWe do not expect to generate significant revenue from product sales unless and until we obtain regulatory approvalof and commercialize our current or any future product candidates. We anticipate that we will continue to generate losses forthe foreseeable future, and we expect the losses to increase as we continue the development of and seek regulatory approvalsfor our product candidates and begin to commercialize any approved products. We are subject to all of the risks applicable tothe development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays and otherunknown factors that may harm our business. Upon the closing of this offering, we expect to incur additional costs associatedwith operating as a public company and we anticipate that we will need substantial additional funding in connection withour continuing operations.Our operations have been financed primarily by net proceeds from the issuance of ordinary shares. Our primary usesof capital are, and we expect will continue to be, third‑party expenses associated with the planning and conduct of clinicaltrials, costs of process development services and manufacturing of our product candidates, and compensation‑relatedexpenses. We also expect our cash needs to increase to fund potential in‑licenses, acquisitions or similar transactions as wepursue our strategy.Cash used to fund operating expenses is affected by the timing of when we pay expenses, as reflected in the changein our outstanding accounts payable and accrued expenses. We believe that our existing cash and cash equivalents will besufficient to fund planned operations into the fourth quarter of 2017, which is after the expected receipt of data from theCOR-003 SONICS trial.83 Table of ContentsOur future funding requirements will depend on many factors, including the following:·the scope, rate of progress, results and cost of our preclinical studies and clinical trials and other relatedactivities;·the cost of formulation, development, manufacturing of clinical supplies and establishing commercial suppliesof our product candidates and any other product candidates that we may develop, in‑license or acquire;·the cost, timing and outcomes of pursuing regulatory approvals;·the cost and timing of establishing administrative, sales, marketing and distribution capabilities;·the terms and timing of any collaborative, licensing and other arrangements that we may establish, includingany required milestone and royalty payments thereunder; and·the emergence of competing technologies and their achieving commercial success before we do or otheradverse market developments.We expect to continue to incur losses. Our ability to achieve and maintain profitability is dependent upon thesuccessful development, regulatory approval and commercialization of our product candidates and achieving a level ofrevenues adequate to support our cost structure. We may never achieve profitability, and unless and until we do, we willcontinue to need to raise additional capital. If we need to raise additional capital to fund our operations and complete ourongoing and planned clinical trials, funding may not be available to us on acceptable terms, or at all.We plan to continue to fund our operations and capital funding needs through equity or debt financing. The sale ofadditional equity would result in additional dilution to our shareholders. The incurrence of debt financing would result indebt service obligations and the instruments governing such debt could provide for operating and financing covenants thatwould restrict our operations. If we are not able to secure adequate additional funding, we may be forced to make reductionsin spending, extend payment terms with suppliers, liquidate assets where possible or suspend or curtail planned programs. Inaddition, lack of funding would limit any strategic initiatives to in‑license or acquire additional product candidates orprograms.Cash FlowsComparison for the Years Ended December 31, 2013, 2014 and 2015 Year Ended December 31, 2013 2014 2015 (in thousands) Net cash (used in) provided by: Operating activities $(3,475) $(9,504) $(37,360) Investing activities (2) (24) (4,294) Financing activities 14,924 10,193 77,404 11,447 665 35,750 Effect of exchange rate changes on cash and cash equivalents (455) 70 241 Net increase in cash and cash equivalents $10,992 $735 $35,991 Operating ActivitiesNet cash used in operating activities was $9.5 million for the year ended December 31, 2014, compared to$3.5 million for the year ended December 31, 2013. The increase in net cash used was primarily due to increased84 Table of Contentsoperating expenses due to additional headcount, increased clinical trial activities, redomiciliation of the Company fromSweden to Ireland, and transaction fees and expenses related to the acquisition of COR-005 from Aspireo Pharmaceuticals,the license of COR-004 from Antisense Therapeutics, and other business development activities.Net cash used in operating activities was $37.4 million for the year ended December 31, 2015, compared to$9.5 million for the year ended December 31, 2014. The increase in net cash used was primarily due to increased operatingexpenses due to additional headcount, increased clinical trial activities and other research activities.Investing ActivitiesNet cash used in investing activities for 2013 and 2014 was the result of the purchase of office equipment andfurniture.The $4.3 million increase in net cash used in investing activities was due to $3.2 million related to the acquisitionof COR-005 from Aspireo Pharmaceuticals and $1.1 million of the $5.0 million in aggregate cash paid to AntisenseTherapeutics upon entering into a license agreement in May 2015, with the remaining $3.9 million reorded as research anddevelopment expense.Financing ActivitiesNet cash provided by financing activities was $10.2 million for the year ended December 31, 2014, compared to$14.9 million for the year ended December 31, 2013, which in both years was the result of private placement equityfinancings.Net cash provided by financing activities was $77.4 million for the year ended December 31, 2015, compared to$10.2 million for the year ended December 31, 2014, which in both years was the result of private placement equityfinancings and an IPO in October of 2015.Contractual Obligations and Other CommitmentsThe following table summarizes our future minimum commitments at December 31, 2015: Payments due by period Less than More than 1 year 1 to 3 years 3 to 5 years 5 years Total (in thousands) Operating leases $227 $630 $184 $— $1,041 Total contractualobligations $227 $630 $184 $— $1,041 The above table also excludes potential payments due to two individuals who previously served as officers of ourcompany pursuant to consulting agreements. In connection with those agreements, each individual is entitled to a paymentin the event of the sale or license by us prior to December 31, 2016 of BioPancreate or major assets derived from theBioPancreate technology. The payment amounts are based on a percentage of the acquisition price or up‑front license fee, asapplicable. The maximum payment per individual in the event of a sale or license is $1.25 million or $2.5 million in total.Each individual is entitled to such payments even though each is no longer serving in their respective officer roles.We enter into agreements in the normal course of business with CROs for clinical trials and with vendors forpreclinical studies and other services and products for operating purposes, which are cancelable at any time by us, generallyupon 30 days prior written notice. Future payment obligations under these agreements are not included in this table ofcontractual obligations.85 Table of ContentsWe are obligated to make future payments to third parties under in‑license agreements, including sublicense fees,royalties and payments that become due and payable upon the achievement of development and commercializationmilestones. As the amount and timing of sublicense fees and the achievement and timing of these milestones are not probableand estimable, such commitments have not been included on our consolidated balance sheets or in the contractualobligations table above. See footnote 6 of the consolidated financial statements for a description of our license agreements.Off‑Balance Sheet ArrangementsWe do not have variable interests in variable interest entities or any off‑balance sheet arrangements.Quantitative and Qualitative Disclosures About Market RiskAt December 31, 2015, we had cash and cash equivalents of $51.6 million, which consisted primarily of bankdeposits in the United States, Sweden and Norway. Total cash deposits in Sweden and Norway were $3.1 million as ofDecember 31, 2015 and are subject to local banking laws and may bear higher or lower risk than cash deposited in the UnitedStates. As part of our cash and investment management processes, we perform periodic evaluations of the credit standing ofthe financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any creditlosses from instruments held at these financial institutions.Recent Accounting PronouncementsDuring the quarter ended September 30, 2014, the FASB issued ASU No. 2014‑15, Presentation of FinancialStatements—Going Concern (ASU No. 2014‑15). The new guidance addresses management’s responsibility to evaluatewhether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnotedisclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonablyknowable at the date that the financial statements are issued. The standard will be effective for the first interim period withinannual reporting periods beginning after December 15, 2016. Early adoption is permitted, but we have not elected to do so.We do not expect the adoption of ASU 2014‑15 to have an impact on our financial position or results of operations.In September 2015, the FASB issued ASU 2015-15, Business Combinations—Simplifying the Accounting Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement periodadjustments for business combinations. The new guidance requires that the cumulative impact of a measurement periodadjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment isidentified. The guidance is effective for fiscal years beginning on or after December 15, 2015, and interim periods withinthose years and should be applied prospectively to measurement period adjustments that occur after the effective date. Wewill prospectively apply the guidance to applicable transactions. In November 2015, the FASB issued ASU 2015-17, Income Taxes—Balance Sheet Classification of Deferred Taxes thatamends the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets beclassified as noncurrent on the balance sheet. Previous guidance required deferred tax liabilities and assets to be separatedinto current and noncurrent amounts on the balance sheet. The guidance is effective for fiscal years beginning on or afterDecember 15, 2016, and interim periods within those years. We are currently evaluating the impact that the new guidancewill have on our consolidated financial statements.In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and FinancialLiabilities, that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financialinstruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginningafter December 15, 2017, and early adoption is permitted. We are currently assessing the impact that adopting this newaccounting guidance will have on our consolidated financial statements.86 Table of ContentsITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESA.Executive Officers and Board of DirectorsThe following table presents information about our officers and directors as of March 1, 2016.NAME AGE POSITION Executive Officers Matthew Pauls 45 Chief Executive Officer andDirector A. Brian Davis 49 Chief Financial Officer Stephen Long 50 Chief Legal Officer Robert Lutz 47 Chief Business Officer Ruth Thieroff‑Ekerdt, M.D. 58 Chief Medical Officer Non‑Employee Directors John H. Johnson 58 Director, Chairman of the Board Richard S. Kollender 46 Director Garheng Kong, M.D., Ph.D. 40 Director Mårten Steen, M.D., Ph.D. 40 Director Hilde H. Steineger, Ph.D. 49 Director Unless otherwise indicated, the current business addresses for our executive officers and directors is 900 NorthbrookDrive, Suite 200, Trevose, Pennsylvania 19053, United States.Executive OfficersMatthew Pauls has served as our Chief Executive Officer since August 2014 and as a member of our board ofdirectors since September 2015. Prior to joining Strongbridge, Mr. Pauls was Chief Commercial Officer of Insmed, Inc., apublicly traded biopharmaceutical company, from April 2013 to August 2014. Prior to Insmed, Mr. Pauls worked at ShirePharmaceuticals, a publicly traded specialty biopharmaceutical company, beginning in 2007 until March 2013, mostrecently as Senior Vice President, Head of Global Commercial Operations. Mr. Pauls also held positions at Bristol‑MyersSquibb, a publicly traded pharmaceutical company, in Brand Management and Payor Marketing, and at Johnson & Johnson,a publicly traded medical devices, pharmaceutical and consumer packaged goods manufacturer, in various U.S. and globalcommercial roles. He is a volunteer board member of the Pennington School in Pennington, New Jersey, and the Boys & GirlsClubs of Philadelphia. Mr. Pauls holds B.S. and M.B.A. degrees from Central Michigan University and a J.D. from MichiganState University College of Law.A. Brian Davis has served as our Chief Financial Officer since March 2015. Prior to joining Strongbridge, Mr. Davisserved as Senior Vice President and Chief Financial Officer at Tengion, Inc., a publicly traded regenerative medicinecompany, from August 2010 to December 2014. In December 2014, Tengion, Inc. filed a petition for relief under Chapter 7 ofTitle 11 of the United States Bankruptcy Code. From 2009 to July 2010, Mr. Davis served in a consulting capacity as ChiefFinancial Officer of Neose Technologies, Inc., a biopharmaceutical company. Mr. Davis worked at Neose Technologies, Inc.from 1994 to 2009, where he held several positions of increasing responsibility, including Senior Vice President and ChiefFinancial Officer. Mr. Davis is licensed as a certified public accountant, and received a B.S. in accounting from Trenton StateCollege and an M.B.A. from The Wharton School at the University of Pennsylvania.Stephen Long has served as our Chief Legal Officer since March 2015. Prior to joining Strongbridge, Mr. Longserved as Counsel at the law firm of Reed Smith LLP, from April 2013 to February 2015. He previously served at C.R.Bard, Inc., a medical device manufacturing company, from October 2000 to May 2012 in the roles of Vice President, GeneralCounsel, as Vice President, and Secretary, and as Associate General Counsel. Mr. Long also served as Assistant GeneralCounsel, Consumer Healthcare, at Warner‑Lambert Company, and as Counsel for the company’s pharmaceutical divisionfrom February 1998 to September 2000. Mr. Long held positions earlier in his career at the law firm of Willkie Farr &Gallagher and Bankers Trust Company. Mr. Long received his B.S. from the School of Industrial and Labor Relations atCornell University and his J.D. from Albany Law School of Union University.87 Table of ContentsRobert Lutz has served as our Chief Business Officer since October 2014. Prior to joining Strongbridge, he workedas a full‑time consultant at Medgenics, a publicly traded, early‑stage, gene‑therapy and rare disease biotech company, fromMay 2014 to September 2014. Mr. Lutz worked at Shire Pharmaceuticals, a publicly traded specialty biopharmaceuticalcompany, from November 2012 to April 2014, where he most recently served as Vice President and held key leadershippositions in the Neurosciences Business unit. Prior to Shire Pharmaceuticals, Mr. Lutz worked in a variety of roles, includingVice President and Senior Associate, for Cinergy Corp., an electric and gas utility company. Mr. Lutz worked as a SeniorAnalyst at Alan B. Slifka and Co., a hedge fund, after having started his career at Goldman Sachs, where he served as aFinancial Analyst in their principal investment area. He holds a B.A. in economics and computer science from AmherstCollege and an M.B.A. from the Kellogg School of Management.Ruth Thieroff‑Ekerdt, M.D. has served as our Chief Medical Officer since December 2014. Prior to joiningStrongbridge, Dr. Thieroff‑Ekerdt was Chief Medical Officer at Aptalis Pharmaceuticals, a pharmaceutical company, fromFebruary 2011 to February 2014. Aptalis Pharmaceuticals was acquired in February 2014 by Forest Laboratories. AptalisPharmaceuticals was formed in 2011 after the acquisition of Eurand Pharmaceuticals, a specialty pharmaceutical companyfocused on gastrointestinal diseases, where Dr. Thieroff‑Ekerdt served as Chief Medical Officer beginning in 2008 untilJanuary 2011. Prior to that, Dr. Thieroff‑Ekerdt held positions of increasing leadership in clinical and research functions atBayer Consumer Care and Bayer Schering Pharmaceuticals (formerly Berlex Inc. and Schering AG). Dr. Thieroff‑Ekerdtreceived her M.D. as well as a Dr. med degree from the Free University Berlin in Germany. She has additional training inpharmacology and toxicology, including training in clinical pharmacology.Non‑Employee DirectorsJohn H. Johnson has served as Chairman of our board of directors since March 2015. From January 2012 untilAugust 2014, Mr. Johnson served as the President and Chief Executive Officer of Dendreon Corporation and as its Chairmanfrom January 2012 until June 2014. From January 2011 until January 2012, he served as the Chief Executive Officer and amember of the board of Savient Pharmaceuticals, Inc. From November 2008 until January 2011, Mr. Johnson served as SeniorVice President and President of Eli Lilly and Company’s Oncology unit. He was also Chief Executive Officer of ImCloneSystems Incorporated, which develops targeted biologic cancer treatments, from August 2007 until November 2008, andserved on ImClone’s board of directors until it was acquired by Eli Lilly in November 2008. From 2005 to 2007, Mr. Johnsonserved as Company Group Chairman of Johnson & Johnson’s Worldwide Biopharmaceuticals unit, President of its OrthoBiotech Products LP and Ortho Biotech Canada units from 2003 to 2005, and Worldwide Vice President of its CNS,Pharmaceuticals Group Strategic unit from 2001 to 2003. Prior to joining Johnson & Johnson, he also held several executivepositions at Parkstone Medical Information Systems, Inc., Ortho‑McNeil Pharmaceutical Corporation and Pfizer, Inc.Mr. Johnson is the former Chairman of Tranzyme Pharma, Inc. Mr. Johnson currently serves as a member of the board ofdirectors of Cempra Pharmaceuticals, Inc., Histogenics Corporation, Portola Pharmaceuticals, Inc. and SucampoPharmaceuticals, Inc. He previously served as a member of the board of directors for the Pharmaceutical Research andManufacturers of America and the Health Section Governing Board of Biotechnology Industry Organization. Mr. Johnsonholds a B.S. from the East Stroudsburg University of Pennsylvania.Richard S. Kollender has served as a member of our board of directors since March 2015. Since 2005, Mr. Kollenderhas served as a Partner of Quaker Partners Management, LP, a healthcare investment firm, which Mr. Kollender initiallyjoined in 2003. Mr. Kollender currently serves as chairman of Rapid Micro BioSystems and as a member of the board ofdirectors of Celator Pharmaceuticals, PACT (Greater Philadelphia Alliance for Capital and Technologies), and TarsaTherapeutics. Mr. Kollender also serves on the public policy committee for Pennsylvania Bio and is an adjunct facultymember at Lehigh University. Mr. Kollender previously served on the board of directors of Insmed, Transave, Inc., Nupathe,Inc., TargetRx, Inc., Precision Therapeutics, Inc., Transport Pharmaceuticals, Inc. and Corridor Pharmaceuticals.Mr. Kollender has held positions in sales, marketing and worldwide business development at GlaxoSmithKline and served asinvestment manager at S.R. One. Mr. Kollender has practiced as a certified public accountant for six years at publicaccounting firms, including KPMG. Mr. Kollender holds an MBA with honors and Certificate Degree in the GraduateProgram in Health Administration and Policy from University of Chicago, and a B.A. in accounting from Franklin andMarshall College.88 Table of ContentsGarheng Kong, M.D., Ph.D. has served as a member of our board of directors since September 2015. In July 2013, hefounded, and has since served as managing partner of, HealthQuest Capital, a healthcare venture growth fund focused onmedical products, devices, diagnostics, consumer health and healthcare IT. Dr. Kong was a general partner at SofinnovaVentures, a venture firm focused on life sciences, from September 2010 to December 2013. From May 2000 to September2010, he worked at Intersouth Partners, a venture capital firm, serving most recently as a general partner. Dr. Kong currentlyserves as a director of Cempra, Inc., Histogenics Corporation, Alimera Sciences, Inc. and Laboratory Corporation of AmericaHoldings. Dr. Kong holds a B.S. from Stanford University and an M.D., Ph.D. and M.B.A. from Duke University.Mårten Steen, M.D., Ph.D. has served as a member of our board of directors since December 2014. Since April 2010,he has served as a Partner of HealthCap VI LP, a venture capital firm investing in life science companies. Prior to HealthCap,from February 2008 until March 2010, Dr. Steen served as director at Merck Serono SA, a biopharmaceutical company.Currently, he serves as a member of the board of directors of Wilson Therapeutics AB, Vaxin Inc. and BioClinTherapeutics Inc. He previously served on the boards of Ultragenyx Inc. and FerroKin Biosciences. Dr. Steen holds a B.Sc. inBusiness Administration, an M.D., and a Ph.D. in Clinical Chemistry, all from Lund University.Hilde H. Steineger, Ph.D. has served as a member of our board of directors since January 2014. She is currently Headof Strategic Innovation Management in the Nutrition & Health Division of BASF. She previously served as the Head ofGlobal Omega‑3 Innovation Management at Pronova BioPharma ASA, a BASF company, from April 2013 to May 2015.From August 2007 to June 2010, Dr. Steineger was Head of Investor Relations for Pronova BioPharma and Vice PresidentBusiness Development in Pronova BioPharma from November 2009 to April 2013. Dr. Steineger is a board member and Headof the Audit Committee of Nordic Nanovector ASA. Dr. Steineger also serves as a director of PCI Biotech AS and Afiew AS.She previously served as a member of the board of directors of Algeta ASA, Weifa AS, Invent2 AS, Alertis AS, Clavis PharmaASA and Biotech Pharmacon ASA. Dr. Steineger holds a Ph.D. in medical biochemistry from University of Oslo.Board CompositionThe Irish Companies Act provides for a minimum of two directors. Our Articles of Association provide for aminimum of two directors and a maximum of 13 directors. Our shareholders may from time to time increase or reduce themaximum number, or increase or reduce the minimum number, of directors by ordinary resolution. Our board of directorsdetermines the number of directors within the range of two to 13. Our board currently consists of six directors.Our Articles divide our board of directors into three classes, with members of each class being elected to staggeredthree‑year terms. At each annual general meeting, directors will be elected for a full term of three years to succeed thosedirectors of the relevant class whose terms are expiring. A nominee is elected to the board of directors by a plurality of votescast.Holders of our ordinary shares are entitled to one vote for each share at all meetings at which directors are elected.Our Articles provide for a minimum of two directors. In the event that an election results in only one director beingelected, that director shall be elected and shall serve for a three‑year term, and the nominee receiving the next greatestnumber of votes in favor of his or her election shall hold office until his or her successor shall be elected.Any vacancy on our board of directors, including a vacancy resulting from an increase in the number of directors orfrom the death, resignation, retirement, disqualification or removal of a director, shall be deemed a casual vacancy. Subject tothe terms of any one or more classes or series of preferred shares, any casual vacancy shall only be filled by the decision of amajority of our board of directors then in office, provided that a quorum is present and provided that the appointment doesnot cause the number of directors to exceed any number fixed by or in accordance with our Articles as the maximum numberof directors.89 Table of ContentsAny director of a class of directors elected to fill a vacancy resulting from an increase in the number of directors ofsuch class shall hold office for the remaining term of that class. Any director elected to fill a vacancy not resulting from anincrease in the number of directors shall have the same remaining term as that of his predecessor. A director retiring at ameeting shall retain office until the close or adjournment of the meeting.Our Articles provide that our shareholders may, by an ordinary resolution, remove a director from office before theexpiration of his or her term. Additionally, our Articles provide that a director may be removed with or without cause at therequest of not less than 75% of the other directors.We are a foreign private issuer. As a result, in accordance with the NASDAQ stock exchange listing requirements ofThe NASDAQ Global Select Market, or NASDAQ, we may rely on home country governance requirements and certainexemptions thereunder rather than relying on the stock exchange corporate governance requirements. For an overview of ourcorporate governance principles, see “Description of Share Capital and Articles of Association” in the Company’sRegistration Statement on Form F-1 filed October 16, 2015 (file number 333-206654) is incorporated herein by reference. Director IndependenceBased upon information requested from and provided by each director concerning their background, employmentand affiliations, including family relationships, our board of directors has determined that each of Messrs. Johnson andKollender and Drs. Kong, Steen, and Steineger, representing five of our six directors, is independent under the applicablerules and regulations of NASDAQ. In making such determinations, the board of directors considered the relationships thateach such non‑employee director has with our company and all other facts and circumstances the board of directors deemedrelevant in determining their independence.Committees of the Board of DirectorsThe standing committees of our board of directors consist of a governance committee, an audit committee and acompensation committee. Each committee operates under a charter. Copies of each committee’s charter are posted on theInvestors section of our website, which is located at www.strongbridgebio.com.Governance CommitteeThe current members of our governance committee are Mårten Steen and John H. Johnson, with Dr. Steen serving aschairman. Our board of directors has determined that each member of our governance committee is independent under theapplicable listing requirements of NASDAQ.Audit CommitteeThe current members of our audit committee are John H. Johnson, Richard S. Kollender and Hilde H. Steineger, withMr. Kollender serving as chairman. Our board of directors has determined that each member of our audit committee isindependent under Rule 10A‑3 of the Exchange Act and the applicable listing requirements of NASDAQ, and that eachmember of our audit committee satisfies the other listing requirements of NASDAQ for audit committee membership. Ourboard of directors has also determined that each member of our audit committee qualifies as an “audit committee financialexpert,” as such term is defined by the SEC, and that he or she has the requisite level of financial sophistication required bythe continued listing standards of NASDAQ.Compensation CommitteeThe current members of our compensation committee are John H. Johnson and Garheng Kong, with Mr. Johnsonserving as chairman. Our board of directors has determined that each member of our compensation committee is independentunder the applicable listing requirements of NASDAQ.90 Table of ContentsB. COMPENSATIONSummary Compensation TableThe following table sets forth information concerning cash and non-cash compensation paid for 2015 and 2014 tocertain of our executive officers (referred to herein as “our executive officers”). Salary Bonus Name and position Year ($) ($) Total Matthew Pauls 2015 $428,653 $241,250 $669,903 Chief Executive Officer 2014 $131,026 $210,000 $341,026 A. Brian Davis 2015 $248,522 $145,250 $393,772 Chief Financial Officer 2014 $— $— $— Ruth Thieroff‑Ekerdt, M.D. 2015 $350,343 $136,875 $487,218 Chief Medical Officer 2014 $13,958 $— $13,958 (1)The amounts in this column represent the discretionary bonuses paid with respect to 2015 and 2014 performance. Mr. Davis andDr. Thieroff‑Ekerdt were hired in March 2015 and December 2014, respectively, therefore they were not awarded a bonus with respect to2014.Narrative to Summary Compensation TableWe entered into employment agreements with Matthew Pauls, A. Brian Davis and Ruth Thieroff‑Ekerdt inconnection with their hiring. These agreements were amended and restated in 2015. The employment agreements outline theterms of the employment relationship, including any potential severance benefits. We believe that the employmentagreements provide certainty to our management team and help to retain the leadership necessary for our company tosucceed.Employment AgreementsWe entered into an employment agreement with (1) Mr. Pauls effective August 23, 2014, for his service as our ChiefExecutive Officer, (2) Mr. Davis effective March 23, 2015, for his service as our Chief Financial Officer, and(3) Dr. Thieroff‑Ekerdt effective December 15, 2014, for her service as our Chief Medical Officer. The term of the employmentagreement for Mr. Pauls is through August 23, 2016, the term of the employment agreement with Mr. Davis is throughMarch 23, 2018, and the term of the employment agreement for Dr. Thieroff‑Ekerdt is through December 15, 2017. Theemployment agreements will automatically renew for one‑year terms unless either party gives notice of non‑renewal at least90 days prior to the end of the term.Under the terms of the employment agreements, Messrs. Pauls and Davis, and Dr. Thieroff‑Ekerdt were originallyentitled to receive base salaries of $450,000, $325,000, and $365,000, respectively. In 2016, our board of directors approvedincreases to the base salaries for Messrs. Pauls and Davis, and Dr. Thieroff‑Ekerdt to $468,000, $334,750 and $379,600,respectively. The agreements also provide for annual incentive bonus targets for Messrs. Pauls and Davis, andDr. Thieroff‑Ekerdt of 50%, 40% and 40%, respectively.Under their agreements, our executive officers are entitled to participate in benefits offered by us for similarlysituated employees, including the Company’s paid time-off policy.Each employment agreement provides for severance benefits detailed below under “Potential Payments uponTerminations of Employment or Following a Change in Control.” Each employment agreement also contains anon‑competition provision, which applies during the term of employment and for one year following termination, and arestrictive covenant with respect to non‑disclosure of confidential information, which remains in effect during the term ofemployment and at all times thereafter.91 (1)Table of ContentsOther BenefitsOur executive officers are eligible to participate in our employee benefit plans on the same basis as our otheremployees, including our health and welfare plans and our 401(k) plan. Under our 401(k) plan, participants may elect tomake both pre‑ and post‑tax contributions to their accounts in the plan, and we do not match these contributions. Ourexecutive officers are not eligible for retirement benefits other than under our 401(k) plan.Outstanding Equity Awards at March 1, 2016The following table includes certain information with respect to option awards that were outstanding as of March 1,2016 for our executive officers. Option Awards Number of Number of Securities Securities Underlying Underlying Unexercised Unexercised Option Options Options Exercise Option (#) (#) Price Grant Expiration Name Exercisable Unexercisable ($) Date Date Matthew Pauls 72,727 — $8.06 8/23/2014 8/23/2019 — 72,727 $10.74 8/23/2014 8/23/2019 — 81,818 $13.43 8/23/2014 8/23/2019 28,436 426,109 $15.71 5/26/2015 5/26/2025 — 225,000 $3.94 2/26/2016 2/26/2026 A. Brian Davis 3,408 51,137 $15.71 5/26/2015 5/26/2025 — 133,363 $18.80 7/21/2015 7/21/2020 — 65,000 $3.94 2/26/2016 2/26/2026 Ruth Thieroff‑Ekerdt, M.D. 3,408 51,137 $15.71 5/26/2015 5/26/2025 54,394 108,787 $18.80 7/21/2015 7/21/2020 — 75,000 $3.94 2/26/2016 2/26/2026 (1)These options vest in three equal annual tranches. The first tranche of these options vested on August 23, 2015. The second tranche vests onAugust 23, 2016. The third tranche vests on August 23, 2017. These options will fully vest and become exercisable upon a change ofcontrol provided that the executive is employed on the date of such change of control.(2)These stock options vest in three separate tranches. The first tranche vests in 16 equal quarterly installments commencing the first quartersubsequent to the grant date; the second tranche vests in 16 equal quarterly installments commencing on the date on which our shares begintrading on NASDAQ; and the third tranche vests one-half on the date on which the closing price of our shares as reported on NASDAQequals $33.66 for Mr. Pauls, $31.46 for Mr. Davis, and $37.62 for Dr. Thieroff-Ekerdt, for 20 consecutive trading days, so long as thisoccurs prior to May 26, 2019, and one-half on the one year anniversary of such initial vesting date. All of these options will fully vest andbecome exercisable upon a change of control provided that the executive is employed on the date of such change in control.(3)These options vest in 16 equal quarterly installments commencing with the first quarter subsequent to the grant date. These options will fullyvest and become exercisable upon a change of control provided that the executive is employed on the date of such change of control.(4)These options vest in three equal annual tranches. The first tranche of these options vested on March 23, 2015. The second tranche vests onMarch 23, 2016. The third tranche vests on March 23, 2017. These options will fully vest and become exercisable upon a change of controlprovided that the executive is employed on the date of such change of control.Prior to September 3, 2015, we did not have an equity compensation plan. Grants of stock options to the executiveofficers and other individuals were made through individual grant agreements.Restricted Stock Units Grants On February 26, 2016, our board of directors approved grants of restricted stock units, or RSUs, to Messrs. Pauls andDavis, and Dr. Thieroff-Ekerdt in the amounts of 40,000, 20,000 and 22,000, respectively. These RSUs vest, with respect to100% of the grants, on February 26, 2018, provided that the executive is employed by the Company on such vesting date. All RSUs will fully vest upon a change of control of our company. If and when the RSUs vest, the92 (1)(1)(1)(2)(3)(2)(4)(3)(2)(3)(3)Table of ContentsCompany will issue to the executive one ordinary share of the Company for each whole RSU that has vested, subject tosatisfaction of the executive’s tax withholding obligations. The RSUs will cease to be outstanding upon such issuance ofshares.Potential Payments Upon Terminations of Employment or Following a Change of ControlThe employment agreements with Messrs. Pauls and Davis, and Dr. Thieroff‑Ekerdt provide that, upon a terminationof employment by our company without “cause,” or by the executive for “good reason,” subject to the execution of a releaseof claims, he or she will be entitled to (1) an amount equal to the sum of 18 months of base salary for Mr. Pauls, or 12 monthsof base salary for our other executive officers, and the target bonus, paid in installments over the 18‑month period followingtermination for Mr. Pauls or the 12‑month period following termination for our other executive officers, (2) a pro rata portionof the annual bonus that he or she would have been entitled to receive for the calendar year that includes the terminationdate, based on the actual achievement of the applicable performance goals, and (3) medical and dental benefits provided byus that are at least equal to the level of benefits provided to other similarly situated active employees until the earlier of(a) 18 months following the termination date for Mr. Pauls, or 12 months following the termination date for our otherexecutive officers and (b) the date the executive becomes covered under a subsequent employer’s medical and dental plans.If any of our other executive officers is terminated due to our election not to renew the term of the employmentagreement, subject to the execution of a release of claims, he or she will be entitled to (1) an amount equal to the sum of12 months of base salary for Mr. Pauls, or six months of base salary for our other executive officers, and the target bonus forMr. Pauls or one‑half of the target bonus for our other executive officers, paid in installments over the 12‑month periodfollowing termination for Mr. Pauls or the six‑month period following termination for our other executive officers, (2) a prorata portion of the annual bonus that he or she would have been entitled to receive for the calendar year that includes thetermination date, based on the actual achievement of the applicable performance goals, and (3) medical and dental benefitsprovided by us that are at least equal to the level of benefits provided to other similarly situated active employees until theearlier of (a) 12 months following the termination date for Mr. Pauls, or six months following the termination date for ourother executive officers and (b) the date the executive becomes covered under a subsequent employer’s medical and dentalplans.In the event there is a change of control of our company and, during the 24‑month period following the change ofcontrol, any of our executive officers is terminated by us without cause, by the executive for good reason, or due to ourelection not to renew the term of the employment agreement, he or she will be entitled to the severance benefits detailedbelow and all unvested equity or equity‑based awards held by the executive will accelerate and vest. The severance benefitsinclude (1) an amount equal to the sum of 24 months base salary, and the target bonus, for Mr. Pauls and the sum of18 months base salary, and the target bonus, for our other executive officers, paid in installments over the 24‑month periodfollowing termination for Mr. Pauls or the 18‑month period following termination for our other executive officers; and (2) themedical and dental benefits provided by us until the earlier of (a) 18 months following the termination date for Mr. Pauls orone year following the termination date of our other executive officers and (b) the date the executive becomes covered undera subsequent employer’s medical and dental plans.Under the employment agreements, “cause” is defined as (1) the conviction of, or plea of guilty or nolo contendereto, any felony or any crime involving theft, embezzlement, dishonesty or moral turpitude, (2) any act constituting willfulmisconduct, deliberate malfeasance, dishonesty, or gross negligence in the performance of the individual’s duties, (3) thewillful and continued failure to perform any of the individual’s duties, which has not been cured within 30 days followingwritten notice from us, or (4) any material breach by the individual of the employment agreement or any other agreementwith us, which has not been cured within 30 days following written notice from us. “Good reason” is defined as any of thefollowing reasons unless cured by us within a specified period: (1) a material reduction of the individual’s base salary, otherthan a reduction that is applicable to other senior executives in the same manner and proportion, (2) the assignment of dutiesor responsibilities which are materially inconsistent with the individual’s position, (3) a change in the principal location atwhich the individual performs his or her duties to a new location that is more than 50 miles from the prior location or (4) amaterial breach of the employment agreement by us. “Change of control ” is defined as the occurrence of any of thefollowing: (a) any person or group of persons becomes the beneficial owner, directly or indirectly, of securities of theCompany representing more than fifty percent (50%) of93 Table of Contentsthe combined voting power of the Company’s then outstanding securities; provided that if the person or group of persons isalready deemed to own more than 50% of the total fair market value or total voting power, then the acquisition of additionalstock by such person or group of persons shall not constitute an additional change of control; (b) the stockholders of theCompany approve a plan of complete liquidation of the Company; (c) the sale or disposition of all or substantially all of theCompany’s assets; or (d) a merger, consolidation or reorganization of the Company with or involving any other entity, otherthan a merger, consolidation or reorganization that would result in the voting securities of the Company outstandingimmediately prior thereto continuing to represent (either by remaining outstanding or by being converted into votingsecurities of the surviving entity) at least a 50% of the combined voting power of the Company (or such surviving entity)outstanding immediately after such merger, consolidation or reorganization owned in approximately the same proportion ofsuch ownership by each of the prior shareholders as prior to the transaction. The following acquisitions are not considered tobe a change of control of the Company: (A) an acquisition by the Company or entity controlled by the Company, or (B) anacquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company.The employment agreements also provide that, in the event that any of our other executive officers is subject to theexcise tax under Section 4999 of the Code, the payments that would be subject to the excise tax will be reduced to the levelat which the excise tax will not be applied unless such executive would be in a better net after‑tax position by receiving thefull payments and paying the excise tax.Director CompensationOur directors received fees in cash in 2015 and 2014 for their service on the board as summarized below: Fees earned Name Year ($) John H. Johnson 2015 $65,050 2014 $ — Richard S. Kollender 2015 $33,126 2014 $ — Garheng Kong, M.D., Ph.D. 2015 $12,934 2014 $ — Mårten Steen, M.D., Ph.D. 2015 $35,833 2014 $2,266 Hilde H. Steineger, Ph.D. 2015 $35,833 2014 $26,441 H. Joseph Reiser 2015 $18,749 2014 $16,660 Espen Tidemann Jørgensen 2015 $14,348 2014 $26,441 Ernest Eichenberg III 2015 $10,938 2014 $15,390 Joseph M. Mahady 2015 $22,029 2014 $15,390 Eigil Stray Spetalen 2015 $21,349 2014 $19,774 (1)The board fees paid to our directors during 2014 were denominated in Norwegian Kroner (NOK). For the purposes of presentation, wehave converted the board fees into U.S. dollars utilizing the exchange rates as of December 31, 2014.(2)Messrs. Reiser, Eichenberg, Jørgensen, Spetalen and Mahady resigned from the board of directors of Cortendo AB in 2015.94 (1)(2)(2)(2)(2)(2)Table of ContentsThe following table includes certain information with respect to option awards that were outstanding as of March 1,2016 for our current non‑employee directors. Option Awards Number of Number of Securities Securities Underlying Underlying Unexercised Unexercised Option Options Options Exercise Option (#) (#) Price Grant Expiration Name Exercisable Unexercisable ($) Date Date John H. Johnson — 18,181 $10.74 3/17/2015 3/17/2020 — 18,181 $13.43 3/17/2015 3/17/2020 — 18,181 $16.11 3/17/2015 3/17/2020 — 13,224 $17.55 10/16/2015 10/16/2025 Richard S. Kollender — 9,090 $10.74 3/17/2015 3/17/2020 — 9,090 $13.43 3/17/2015 3/17/2020 — 9,090 $16.11 3/17/2015 3/17/2020 — 9,918 $17.55 10/16/2015 10/16/2025 Garheng Kong, M.D., Ph.D. — 25,000 $17.55 10/16/2015 10/16/2025 — 9,385 $17.55 10/16/2015 10/16/2025 Mårten Steen, M.D., Ph.D. — 25,000 $17.55 10/16/2015 10/16/2025 — 9,918 $17.55 10/16/2015 10/16/2025 Hilde H. Steineger, Ph.D. — 25,000 $17.55 10/16/2015 10/16/2025 — 9,918 $17.55 10/16/2015 10/16/2025 (1)These options vest in three equal annual tranches. The first tranche of these options vested on March 17, 2016. The second tranche vests onMarch 17, 2017. The third tranche vests on March 17, 2018. These options will fully vest and become exercisable upon a change of controlprovided that the individual is a member of our board of directors on the date of such change of control.(2)These options vest on April 30, 2016. These options will fully vest and become exercisable upon a change of control provided that theindividual is a member of our board of directors on the date of such change of control.(3)These stock options vest with respect to one-third of the shares on October 16, 2017. The remaining two-thirds of the stock options vest inequal monthly installments over the 24-month period commencing after October 16, 2017. All of these options will fully vest and becomeexercisable upon a change of control provided that the individual is a member of our board of directors on the date of such change ofcontrol.Our board of directors’ compensation program provides for the following:·Annual Cash Retainer—$40,000·Additional Annual Cash Retainers·Non‑Executive Chairman of the Board Retainer—$35,000·Audit Committee Chair Retainer—$15,000·Compensation Committee Chair Retainer—$10,000·Governance Committee Chair Retainer—$7,500·Audit Committee Member (other than Chairman) Retainer—$7,500·Compensation Committee Member (other than Chairman) Retainer—$5,000·Governance Committee Member (other than Chairman) Retainer—$3,75095 (1)(1)(1)(2)(1)(1)(1)(2)(3)(2)(3)(2)(3)(2)Table of Contents·Equity Compensation·Initial Equity Grant—Option to purchase 25,000 shares, with one-third of the shares vesting on the firstanniversary of the date of grant and the remaining two-thirds of the shares vesting in equal monthlyinstallments over the 24‑month period that follows the first anniversary of the date of grant, providedthat the director continues to provide services as a member of our board of directors continuously fromthe date of grant through the applicable vesting date·Annual Equity Grant—Option to purchase 15,000 shares (other than the Non‑Executive Chairman ofthe Board, who will receive 20,000 shares), with such option vesting in full on the first anniversary ofthe date of grant, provided that the director continues to provide services as a member of our board ofdirectors continuously from the date of grant through the vesting dateEquity Compensation PlanOur board of directors has adopted, and our shareholders have approved, the 2015 Equity Compensation Plan (the“2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, within the meaning of Section 422 of theInternal Revenue Code, to our employees and any parent or subsidiary corporations’ employees, and for the grant ofnonstatutory stock options, stock awards, and restricted stock units to our employees, directors and consultants and ourparent or subsidiary corporations’ employees and consultants. The 2015 Plan is effective as of September 3, 2015.Authorized Shares. A total of 1,930,033 shares of our common stock have been reserved for issuance pursuant to the2015 Plan. The shares of our common stock that we have reserved for issuance pursuant to the 2015 Plan (the “Share Pool”),will be increased on the first day of each fiscal year, in an amount equal to four percent (4.0%) of the outstanding shares ofour common stock on the last day of the immediately preceding fiscal year. A maximum of 454,545 shares of our commonstock may be subject to awards made under the 2015 Plan to any individual during a calendar year, subject to adjustment asprovided in the 2015 Plan. The maximum number of shares that may be issued under the 2015 Plan as incentive stockoptions is 1,930,033. The Share Pool will be reduced on the date of grant, by one share of our common stock for each awardunder the 2015 Plan; provided that awards that are valued by reference to shares of our common stock but are required to bepaid in cash pursuant to their terms will not reduce the Share Pool. If and to the extent options terminate, expire, or arecanceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards or awards of restrictedstock units (including restricted stock received upon the exercise of options) are forfeited, the shares of our common stocksubject to such awards will again be available for awards under the Share Pool. Notwithstanding the foregoing, the followingshares of our common stock will not become available for issuance under the 2015 Plan: (i) shares tendered by individualgrantees, or withheld by us, as full or partial payment to us upon the exercise of options granted under the 2015 Plan and(ii) shares withheld by, or otherwise remitted to us to satisfy an individual grantee’s tax withholding obligations upon thelapse of restrictions on stock awards, or the exercise of options granted under the 2015 Plan.Plan Administration. Our compensation committee administers the 2015 Plan. Subject to the provisions of the 2015Plan, our compensation committee has the power to determine the terms of the awards, including the exercise price, thenumber of shares of our common stock subject to each such award, the exercisability of the awards and the form ofconsideration, if any, payable upon exercise. To the maximum extent permitted by law, no member of our board or ourcompensation committee will be liable for any action taken or decision made in good faith relating to the 2015 Plan or anyaward granted thereunder.Stock Options. The exercise price of options granted under the 2015 Plan may be equal to or greater than the fairmarket value of our common stock on the date of grant. The term of an option may not exceed ten years, except that the termof an incentive stock option granted to any employee who owns more than 10% of the voting power of all classes of ouroutstanding stock must not exceed five years and the exercise price must equal to at least 110% of the fair market value ofour common stock on the grant date. After the termination of service of an employee, director or consultant for any reasonother than death, disability or cause (as defined in the 2015 Plan), he or she may exercise the vested portion of his or heroption for 90 days. If termination is due to death (or death occurs within 90 days after the individual’s termination date) ordisability, the vested portion of the option will remain exercisable for one year. However, in no event may an option beexercised later than the expiration of its term. The entire option is forfeited upon96 Table of Contentsa termination for Cause. In addition, if an employee, director or consultant has engaged in conduct that constitutes cause, anyshares acquired upon exercise of an option for which we have not yet delivered the share certificates shall be automaticallyforfeited to us in exchange for payment of the exercise price paid for such shares.Stock Awards. Stock awards may be granted under the 2015 Plan. Stock awards are grants of shares of our commonstock that vest in accordance with terms and conditions established by the compensation committee. The compensationcommittee will determine the number of shares of granted as stock awards to any employee, director, or consultant and theconsideration, if any, to be paid for such shares. The compensation committee may impose whatever conditions to vesting itdetermines to be appropriate (for example, the compensation committee may set restrictions based on the achievement ofspecific performance goals or continued service to us); provided, however, that the compensation committee, in its solediscretion, may accelerate the time at which any restrictions will lapse or be removed. Shares of our common stock subject tostock awards that do not vest are subject to forfeiture.Restricted Stock Units. Restricted stock units may be granted under the 2015 Plan. Restricted stock units arebookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Thecompensation committee determines the terms and conditions of restricted stock units, including the vesting criteria (whichmay include accomplishing specified performance criteria or continued service to us) and the form and timing of payment.The amount payable as a result of the vesting of a restricted stock unit will be distributed as soon as practicable following thevesting date and in no event later than the fifteenth date of the third calendar month of the year following the vesting date ofthe restricted stock unit (or as otherwise permitted under Section 409A of the Internal Revenue Code); provided, however,that an individual grantee may, if and to the extent permitted by our compensation committee, elect to defer payment ofrestricted stock units in a manner permitted by Section 409A of the Internal Revenue Code. Notwithstanding the foregoing,the compensation committee, in its sole discretion, may accelerate the time at which any restrictions will lapse or beremoved.Performance‑Based Awards. Certain stock awards or restricted stock units granted under the 2015 Plan may begranted in a manner that should be deductible by us under Section 162(m) of the Internal Revenue Code. These awards,referred to as performance‑based awards, will be determined based on the attainment of written performance goals approvedby the compensation committee. The performance‑based awards will be based upon one or more of the following objectivecriteria: (i) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation andamortization); (ii) net income; (iii) operating income; (iv) earnings per share; (v) return on shareholders’ equity;(vi) attainment of strategic and operational initiatives; (vii) customer income; (viii) economic value‑added models;(ix) maintenance or improvement of profit margins; (x) stock price (including total shareholder return), including, withoutlimitation, as compared to one or more stock indices; (xi) market share; (xii) revenues, sales or net sales; (xiii) return onassets; (xiv) book value per share; (xv) expense management; (xvi) improvements in capital structure; (xvii) costs; and(xviii) cash flow. The foregoing criteria may relate to the company, one or more of our subsidiaries or one or more of ourdivisions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one ormore peer group companies or indices, or any combination thereof, all as determined by the compensation committee. Inaddition, to the degree consistent with the Internal Revenue Code, the performance criteria may be calculated without regardto extraordinary, unusual and/or non‑recurring items. With respect to performance‑based awards, (i) the compensationcommittee will establish the objective performance goals applicable to a given period of service while the outcome for thatperformance period is substantially uncertain and no later than 90 days after the commencement of that period of service (butin no event after 25% of that period of service has elapsed) and (ii) no awards will be granted to any participant for a givenperiod of service until the compensation committee certifies that the objective performance goals (and any other materialterms) applicable to that period have been satisfied.Non‑Transferability of Awards. Unless our compensation committee provides otherwise, the 2015 Plan generallydoes not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement ofthe benefits or potential benefits available under the 2015 Plan, the compensation committee will adjust the number andclass of shares that may be delivered under the 2015 Plan and/or the number, class and price per share of shares covered byeach outstanding award, and the numerical share limits set forth in the 2015 Plan.97 Table of ContentsChange of Control. The 2015 Plan provides that in the event of a change of control, as defined in the 2015 Plan,where we are not the surviving corporation (or we survive only as a subsidiary of another corporation), unless ourcompensation committee determines otherwise, all outstanding awards will be assumed by, or replaced with comparableawards by, the surviving corporation in such change of control (or a parent or subsidiary of the surviving corporation). In theevent the surviving corporation (or a parent or subsidiary of the surviving corporation) in such change of control does notassume or replace the outstanding awards with comparable awards, (i) we will provide written notice of such change ofcontrol to each individual grantee with outstanding awards; (ii) all outstanding options will automatically accelerate andbecome fully vested and exercisable; (iii) all outstanding stock awards will become vested and deliverable in accordancewith the 2015 Plan; and (iv) all outstanding restricted stock units will become vested and deliverable in accordance with the2015 Plan.Notwithstanding the foregoing, if there is a change of control, our board may require that grantees surrenderoutstanding options in exchange for a payment of cash or stock equal to the amount by which the fair market value of theshares exceeds the exercise price or, after giving grantees an opportunity to exercise options, terminate all unexercisedoptions, with such surrender or termination taking place as of the date of the change of control or such other date that ourboard specifies.Amendment; Termination. Our board has the authority to amend, suspend or terminate the 2015 Plan provided suchaction does not impair the existing rights of any participant. The 2015 Plan automatically terminates in 2025, unless weterminate it sooner. We will obtain shareholder approval of any amendment to the 2015 Plan as required by applicable law orlisting requirements.Non‑Employee Director Equity Compensation PlanOur board of directors has adopted and our shareholders have approved, the Non‑Employee Director EquityCompensation Plan (the Non‑Employee Director Plan). The Non‑Employee Director Plan provides for the grant ofnonstatutory stock options, stock awards, and restricted stock units to our non‑employee directors. The Non‑EmployeeDirector Plan is effective as of September 3, 2015.Authorized Shares. A total of 451,480 shares of our common stock have been reserved for issuance pursuant to theNon‑Employee Director Plan. The shares of our common stock that we have reserved for issuance pursuant to theNon‑Employee Director Plan (the “Share Pool”) will be increased on the first day of each fiscal year, in an amount equal toone‑half percent (0.5%) of the outstanding shares of our common stock on the last day of the immediately preceding fiscalyear. The Share Pool will be reduced on the date of grant, by one share of our common stock for each award under theNon‑Employee Director Plan; provided that awards that are valued by reference to shares of our common stock but arerequired to be paid in cash pursuant to their terms will not reduce the Share Pool. If and to the extent options terminate,expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards or awardsof restricted stock units (including restricted stock received upon the exercise of options) are forfeited, the shares of ourcommon stock subject to such awards will again be available for awards under the Share Pool. Notwithstanding theforegoing, shares tendered by individual grantees, or withheld by us, as full or partial payment to us upon the exercise ofoptions will not become available for issuance again under the Non‑Employee Director Plan.Plan Administration. Our board administers the Non‑Employee Director Plan. Subject to the provisions of theNon‑Employee Director Plan, our board has the power to determine the terms of the awards, including the exercise price, thenumber of shares of our common stock subject to each such award, the exercisability of the awards and the form ofconsideration, if any, payable upon exercise. To the maximum extent permitted by law, no member of our board will be liablefor any action taken or decision made in good faith relating to the Non‑Employee Director Plan or any award grantedthereunder.Stock Options. The exercise price of options granted under the Non‑Employee Director Plan may be equal to orgreater than the fair market value of our common stock on the date of grant. The term of an option may not exceed ten years.After the termination of service of a non‑employee director for any reason other than death, disability or cause (as defined inthe Non‑Employee Director Plan), he or she may exercise the vested portion of his or her option for 90 days. If termination isdue to death (or death occurs within 90 days after the director’s termination date) or disability, the98 Table of Contentsvested portion of the option will remain exercisable for one year. However, in no event may an option be exercised later thanthe expiration of its term. The entire option is forfeited upon a termination for Cause. In addition, if a non‑employee directorhas engaged in conduct that constitutes cause, any shares acquired upon exercise of an option for which we have not yetdelivered the share certificates shall be automatically forfeited to us in exchange for payment of the exercise price paid forsuch shares.Stock Awards. Stock awards may be granted under the Non‑Employee Director Plan. Stock awards are grants ofshares of our common stock that vest in accordance with terms and conditions established by the board. The board willdetermine the number of shares granted as stock awards to a non‑employee director and the consideration, if any, to be paidfor such shares. The board may impose whatever conditions to vesting it determines to be appropriate (for example, the boardmay set restrictions based on the achievement of specific performance goals or continued service to us); provided, however,that the board, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Shares ofcommon stock subject to stock awards that do not vest are subject to forfeiture.Restricted Stock Units. Restricted stock units may be granted under the Non‑Employee Director Plan. Restrictedstock units are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock.The board determines the terms and conditions of restricted stock units, including the vesting criteria (which may includeaccomplishing specified performance criteria or continued service to us) and the form and timing of payment. The amountpayable as a result of the vesting of a restricted stock unit will be distributed as soon as practicable following the vesting dateand in no event later than the fifteenth date of the third calendar month of the year following the vesting date of the restrictedstock unit (or as otherwise permitted under Section 409A of the Internal Revenue Code); provided, however, that anindividual grantee may, if and to the extent permitted by our board, elect to defer payment of restricted stock units in amanner permitted by Section 409A of the Internal Revenue Code. Notwithstanding the foregoing, the board, in its solediscretion, may accelerate the time at which any restrictions will lapse or be removed.Non‑Transferability of Awards. Unless our board provides otherwise, the Non‑Employee Director Plan generallydoes not allow for the transfer of awards and only the recipient of an award may exercise an award during his or her lifetime.Certain Adjustments. In the event of certain changes in our capitalization, to prevent diminution or enlargement ofthe benefits or potential benefits available under the Non‑Employee Director Plan, the board will adjust the number and classof shares that may be delivered under the Non‑Employee Director Plan and/or the number, class and price per share of sharescovered by each outstanding award.Change of Control. The Non‑Employee Director Plan provides that in the event of a change of control, as definedin the Non‑Employee Director Plan, where we are not the surviving corporation (or we survive only as a subsidiary of anothercorporation), unless our board determines otherwise, all outstanding awards will be assumed by, or replaced with comparableawards by, the surviving corporation (or a parent or subsidiary of the surviving corporation). In the event the survivingcorporation in such change of control (or a parent or subsidiary of the surviving corporation) does not assume or replace theoutstanding awards with comparable awards, (i) we will provide written notice of such change of control to each individualgrantee with outstanding awards; (ii) all outstanding options will automatically accelerate and become fully vested andexercisable; (iii) all outstanding stock awards will become vested and deliverable in accordance with the Non‑EmployeeDirector Plan; and (iv) all outstanding restricted stock units will become vested and deliverable in accordance with theNon‑Employee Director Plan.Notwithstanding the foregoing, if there is a change of control, our board may require that grantees surrenderoutstanding options in exchange for a payment of cash or stock equal to the amount by which the fair market value of theshares exceeds the exercise price and/or, after giving grantees an opportunity to exercise options, terminate all unexercisedoptions, with such surrender or termination taking place as of the date of the change of control or such other date that ourboard specifies.Amendment; Termination. Our board has the authority to amend, suspend or terminate the Non‑Employee DirectorPlan provided such action does not impair the existing rights of any participant. The Non‑Employee Director Planautomatically terminates in 2025, unless we terminate it sooner. We will obtain shareholder approval of any amendment tothe Non‑Employee Director Plan as required by applicable law or listing requirements.99 Table of ContentsD. EMPLOYEESAs of December 31, 2015, we had 25 full‑time employees including 24 working in the United States and oneemployee working in Sweden. Of these full‑time employees, 11 were engaged in research and development and 14 wereengaged in general and administrative activities.As of December 31, 2014, we had 6 full‑time employees including 5 working in the United States and one employeeworking in Sweden. Of these full‑time employees, 2 were engaged in research and development and 4 were engaged ingeneral and administrative activities.As of December 31, 2013, we had one full-time employee engaged in general and administrative activities inSweden.E. SHARE OWNERSHIP The following table sets forth certain information as of March 1, 2016 regarding beneficial ownership of our ordinaryshares by all of our current directors and executive officers. The number of ordinary shares beneficially owned by each entity,person, executive officer or director is determined in accordance with the rules of the SEC, and the information is notnecessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes anyordinary shares over which the individual has sole or shared voting power or investment power as well as any ordinary sharesthat the individual has the right to acquire within 60 days of March 1, 2016 through the exercise of any option or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have solevoting and investment power with respect to all ordinary shares held by that person.Executive Officers and Directors No. of Shares % of totalShares Matthew Pauls 95,828 * Ruth Thieroff‑Ekerdt, M.D. 63,616 * A. Brian Davis 48,788 * Stephen Long 48,788 * Robert Lutz 77,109 * John H. Johnson 31,405 * Richard S. Kollender 19,008 * Garheng Kong, M.D., Ph.D. 9,385 * Mårten Steen, M.D., Ph.D. 9,918 * Hilde H. Steineger, Ph.D. 9,918 * All Current Executive Officers and Directors as a Group (10 persons) 413,763 1.9% *Indicates beneficial ownership of less than 1% of the total outstanding ordinary shares. ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSA.PRINCIPAL SHAREHOLDERSThe number of ordinary shares beneficially owned by each entity, person, executive officer or director is determinedin accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for anyother purpose. Under such rules, beneficial ownership includes any ordinary shares over which the individual has sole orshared voting power or investment power as well as any ordinary shares that the individual has the right to acquire within60 days of March 1, 2016 through the exercise of any option or other right. Except as otherwise indicated, and subject toapplicable community property laws, the persons named in the table have sole voting and investment power with respect toall ordinary shares held by that person.100 Table of ContentsOrdinary shares that a person has the right to acquire within 60 days of March 1, 2016 are deemed outstanding forpurposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding forpurposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of allexecutive officers and directors as a group. The percentage of beneficial ownership of our ordinary shares prior to the offeringis based on an aggregate of 21,205,382 shares outstanding as of March 1, 2016. The following table presents information relating to the beneficial ownership of our ordinary shares as of March 1,2016.Name of Beneficial Owner No. ofShares % oftotalShares RA Capital Management, LLC 2,690,702 12.7% HealthCap VI L.P. 2,426,091 11.4 TVM V Life Science Ventures GmbH & Co. KG 2,354,889 11.1 New Enterprise Associates 2,141,308 10.1 Broadfin Capital, LLC 1,656,705 7.8 Eigil Stray Spetalen 1,131,576 5.3 (1)On October 16, 2015, a Schedule 13G was filed in which (i) RA Capital Management, LLC (“RA Capital”) reported beneficial ownership of,and shared voting and dispositive power with respect to, 2,690,702 shares of common stock, (ii) Peter Kolchinsky reported beneficialownership of, and shared voting and dispositive power with respect to, 2,690,702 shares of common stock, and (iii) RA Capital HealthcareFund, L.P. (“RA Fund”) reported beneficial ownership of, and shared voting and dispositive power with respect to, 2,202,140 shares ofcommon stock. RA Capital is the general partner of RA Fund. Mr. Kolchinsky is the manager of RA Capital. Each of Mr. Kolchinsky, RACapital, and RA Fund disclaims beneficial ownership of the shares reported therein except to the extent of its or his pecuniary interesttherein. The address of RA Capital is 20 Park Plaza, Suite 1200, Boston, MA 02116. (2)On January 25, 2016, a Schedule 13G was filed in which HealthCap VI, L.P. (“HealthCap”) and HealthCap VI GP S.A. (“HealthCap GP”)each reported beneficial ownership of, and shared voting and dispositive power with respect to, 2,426,091 shares of common stock.HealthCap GC is the sole general partner of HealthCap. The address of HealthCap is 18, Avenue d’Ouchy, 1006 Lausanne, Switzerland. (3)On February 16, 2016, a Schedule 13G was filed in which (i) Aspireo Pharmaceuticals Ltd. (“Aspireo”) reported beneficial ownership of,and shared voting and dispositive power with respect to, 2,062,677 shares of common stock and (ii) the following entities or individualsreported beneficial ownership of, and shared voting and dispositive power with respect to, 2,354,889 shares of common stock: TVM V LifeScience Ventures GmbH & Co KG (”TVM Ventures”), TVM V Life Science Management GmbH & Co KG (”TVM Management”), HubertBirner, Stefan Fischer, Alexandra Goll, and Helmut Schühsler. TVM Ventures is the parent entity of Aspireo and, therefore, may be deemedto beneficially own shares of common stock owned by Aspireo. TVM Management is the managing limited partner of TVM Ventures, andHubert Birner, Stefan Fischer, Alexandra Goll, and Helmut Schühsler are the members of the investment committee of TVM Management.The address of TVM Ventures is c/o TVM Capital Group, Maximilianstrasse 35C, Munich, 2M, 80539, Germany. The address of Aspireo isPO Box 880, Ra’anana, 43108, Israel.(4)On November 3, 2015, a Schedule 13D was filed in which the following entities and individuals reported beneficial ownership of, andshared voting and dispositive power with respect to, 2,141,308 shares of common stock: Growth Equity Opportunities Fund IV, LLC(“GEO”), New Enterprise Associates 15, L.P. (“NEA 15”), NEA Partners 15, L.P. (“NEA Partners 15”), NEA 15 GP, LLC (“NEA 15 LLC”),Peter J. Barris (“Barris”), Forest Baskett (“Baskett”), Anthony A. Florence, Jr. (“Florence”), Krishna S. Kolluri (“Kolluri”), Joshua Makower(“Makower”), David M. Mott (“Mott”), Jon M. Sakoda (“Sakoda”), Scott D. Sandell (“Sandell”), Peter W. Sonsini (“Sonsini”), RaviViswanathan (“Viswanathan”), and Harry R. Weller (“Weller”). NEA 15 is the sole member of GEO, NEA Partners 15 is the sole generalpartner of NEA 15, and NEA 15 LLC is the general partner of NEA Partners 15. The managers of NEA 15 LLC are Barris, Baskett,Florence, Kolluri, Makower, Mott, Sakoda, Sandell, Sonsini, Viswanathan, and Weller. The address reach of GEO, NEA 15, NEA Partners15, and NEA 15 LLC is New Enterprise Associates, 1954 Greenspring Drive, Suite 600, Timonium, MD 21093. The address for each ofBarris, Florence, Mott, and Weller is New Enterprise Associates, 5425 Wisconsin Avenue, Suite 800, Chevy Chase, MD 20815. The addressfor each of Baskett, Kolluri, Makower, Sakoda, Sandell, Sonsini, and Viswanathan is New Enterprise Associates, 2855 Sand Hill Road,Menlo Park, CA 94025.(5)On January 13, 2016, a Schedule 13G was filed in which each of Broadfin Capital, LLC (“Broadfin Capital”), Broadfin Healthcare MasterFund, Ltd., (“Broadfin Fund”) and Kevin Kotler reported beneficial ownership of, and shared voting and dispositive power with respect to,1,656,705 shares of common stock. Mr. Kotler is the managing member of Broadfin Capital and a director of Broadfin fund. The addressof Broadfin Capital and Mr. Kotler is Broadfin Capital, 300 Park Avenue, 25th floor, New York, N.Y. 10022. The address of BroadfinFund is 20 Genesis Close, Ansbacher House, Second Floor, PO Box 1344, Grand Cayman KY1-1108, Cayman Islands. (6)On February 8, 2016, a Schedule 13G was filed in which by Eigil Stray Spetalen reported beneficial ownership of, and sole voting anddispositive power with respect to, 1,131,576 shares of common stock, which consists of 471,314 shares of common stock held directly byMr. Spetalen and 665,262 shares of common stock held by Kristianro A/S of which Mr. Spetalen is the sole shareholder, chief executiveofficer and director. As a101 (1)(2)(3)(4)(5)(6)Table of Contentsresult, Mr. Spetalen may be deemed to have voting and investment power over the shares held by Kristianro A/S. The address of Mr. Spetalen isChristian Benneches V9, Oslo, Norway 0286.B.RELATED PARTY TRANSACTIONSThe following is a description of transactions since January 1, 2013 to which we have been a party, in which theamount involved exceeded or will exceed $120,000, and in which any of our executive officers, directors or holders of morethan 5% of any class of our voting securities, or an affiliate or immediate family member thereof, had or will have a direct orindirect material interest, other than compensation, termination and change in control arrangements, which are describedunder “Executive Compensation.” We believe the terms obtained or consideration that we paid or received, as applicable, inconnection with the transactions described below were comparable to terms available or the amounts that would be paid orreceived, as applicable, in arm’s‑length transactions with unrelated third parties.Certain of our existing shareholders that beneficially own more than 5% of our ordinary shares and/or their affiliatespurchased our ordinary shares in our initial U.S. public offering of 2,500,000 ordinary shares in October 2015. These 5%shareholders included New Enterprise Associates, RA Capital Management, LLC, Kristianro A/S (wholly owned by EigilStray Spetalen), Broadfin Capital, LLC and HealthCap VI, LP, of which Mr. Steen, one of our directors, is a Partner.On May 14, 2015, we entered into a Share Purchase Agreement to sell $33.2 million of our shares in a privateplacement (2,284,414 shares at a subscription price of $14.54 per share). Certain of our 5% shareholders participated in thistransaction, including New Enterprise Associates, RA Capital Management, LLC and HealthCap VI, LP, of which Mr. Steen,one of our directors, is a Partner. This transaction closed on June 29, 2015 and June 30, 2015 following shareholder approvaland other specified conditions.Policies and Procedures for Related Party Transactions We have adopted a policy that our executive officers, directors, nominees for election as a director, beneficial ownersof more than 5% of any class of our voting securities and any members of the immediate family of any of the foregoingpersons are not permitted to enter into a related person transaction with us without the prior consent of our audit committee.Any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficialowner of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoingpersons, in which the amount involved exceeds $120,000 and such person would have a direct or indirect material interest,must first be presented to our audit committee for review, consideration and approval. In approving or rejecting any suchproposal, our audit committee is to consider the material facts of the transaction, including, but not limited to: the benefits tothe Company; the impact on a director’s independence in the event the transaction involves a director, an immediate familymember of a director or an entity in which a director is a general partner, shareholder or executive officer; the availability ofother sources for comparable products or services; the terms of the transaction; and the terms available to unrelated thirdparties or to employees generally. All of the transactions described above were entered into prior to the adoption of suchpolicy, but after presentation, consideration and approval by our board of directors. C.INTERESTS OF EXPERTS AND COUNSELNot applicable. ITEM 8. FINANCIAL INFORMATIONFinancial Statements Our audited Consolidated Financial Statements are filed as part of this Annual Report pursuant to Item 18-“FinancialStatements” and are found immediately following the text of this Annual Report.102 Table of ContentsLegal ProceedingsWe are not currently a party to any material legal proceedings.Dividends We have not paid cash dividends on our ordinary shares and do not intend to pay cash dividends on our ordinaryshares in the foreseeable future. ITEM 9. THE OFFER AND LISTINGA. Offering and Listing Details Not applicable.B. Plan of Distribution Not applicable.C. MarketOur shares were quoted on the Norwegian Over‑The‑Counter Market until October 20, 2015 whentrading ceased. On October 15, 2015, a registration statement was declared effective by the U.S. Securitiesand Exchange Commission and on October 16, 2015 our initial U.S. public offering of 2,500,000 ordinaryshares at a price to the public became effective commencing our listing and trading on The NASDAQGlobal Select Market under the symbol "SBBP". The following table sets forth the monthly high and low sale prices of our ordinary shares as quoted on The NASDAQGlobal Select Market since our shares began trading on October 16, 2015: High Low October 16, 2015 through October 31 2015 $14.30 $6.90 November 2015 $8.80 $6.32 December 2015 $7.83 $5.00 January 2016 $7.99 $3.84 February 2016 $4.57 $3.51 D. Selling Shareholders Not applicable.E. Dilution Not applicable.F. Expenses of the issue Not applicable.103 Table of Contents ITEM 10. ADDITIONAL INFORMATIONA. Share CapitalNot applicable.B. Memorandum and articles of associationThe information contained under the caption of “Description of Share Capital and Articles of Association” in theCompany’s Registration Statement on Form F-1 filed October 16, 2015 (file number 333-206654) is incorporated herein byreference.C. Material ContractsSee Part I, Item 6B “Directors, Senior Management and Employees—Compensation—Employment Agreements” fora description of employment agreements with our executive officers.On June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd., an Israeli company, its product candidate,DG3173. We refer to this product candidate as COR 005. Under the terms of the acquisition agreement, we issued to AspireoPharmaceuticals 2,062,677 common shares, which had a value of $33.2 million on June 30, 2015. In connection with thisacquisition, we made a payment to OCS in the amount of $3.0 million, which represents the repayment of amountspreviously granted by OCS to Aspireo Pharmaceuticals, plus interest, that were used in support of research and developmentconducted by Aspireo Pharmaceuticals for the development of DG3173. The approval by OCS of the transfer of the assetsrelating to DG3173 by Aspireo to the Company was subject to the repayment of the original grant plus interest.In May 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, with AntisenseTherapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ product candidate,ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and the treatment ofany complications of diabetes). We refer to this product candidate as COR 004. Under the terms of the Antisense LicenseAgreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash, and we also invested $2.0million in Antisense Therapeutics equity. The terms of the Antisense License Agreement provide that we could terminate theAntisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believe the furtherdevelopment and commercialization of COR 004 was no longer feasible due to a material change that was beyond ourcontrol. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would berequired to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to AntisenseTherapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because, based on receipt offeedback from regulatory authorities, we believe the further development and commercialization of COR 004 is no longerfeasible due to material changes that were beyond our control. We have received a reply from Antisense Therapeuticsobjecting to our termination notice and to our assertion that the further development and commercialization of COR-004 wasno longer feasible due to material changes that were beyond our control. The reply also requests that the parties appoint anindependent expert to resolve this dispute in accordance with the terms of the Antisense License Agreement. On March 30, 2011, a license agreement was executed between BioPancreate and the Cornell Center for TechnologyEnterprise and Commercialization (CCTEC). Under the terms of the license agreement, BioPancreate obtained certain rightsfrom the CCTEC for commercial development, use and sale of products that use the technology associated with thelicense. License issue fees payable to the CCTEC include $15,000 paid within 30 days after the execution of the agreement(Effective Date) and $235,000 to be paid in five equal installments of $47,000 payable annually within 30 day of theEffective Date’s respective anniversary. As of December 31, 2015, there was one remaining installments to be paid. We areobligated to make milestone payments upon the achievement of certain regulatory and clinical milestones up to $2.6 millionin the aggregate. For years in which licensed products are sold, we104 Table of Contentsare required to pay a royalty based on a low single digit percentage of net sales. The minimum annual royalty in such years is$100,000. In the event the product is sublicensed, up to $3.5 million of certain fees we receive that are not earned royaltiesor reimbursements for direct costs are due to the CCTEC upon achievement of certain regulatory and clinical milestones.D. Exchange ControlsNot applicable.E. TaxationThe following summary contains a description of the material Irish and U.S. federal income tax consequences of theacquisition, ownership and disposition of our ordinary shares, but it does not purport to be a comprehensive description ofall the tax considerations that may be relevant. The summary is based upon the tax laws of Ireland and regulationsthereunder and on the tax laws of the United States and regulations thereunder as of the date hereof, which are subject tochange.Irish Tax ConsiderationsScope of DiscussionThe following is a summary of the material Irish tax considerations applicable to certain investors who are thebeneficial owners of our ordinary shares. This summary is based on existing Irish tax law and our understanding of thepractices of the Irish Revenue Commissioners as of the date of this prospectus. Legislative, administrative or judicial changesmay modify the tax consequences described in this summary, possibly with retroactive effect. Furthermore, we can provideno assurances that the tax consequences contained in this summary will not be challenged by the Irish RevenueCommissioners or will be sustained by an Irish court if they were to be challenged.This summary does not constitute tax advice and is intended only as a general guide. This summary is notexhaustive and shareholders should consult their own tax advisers about the Irish tax consequences (and the taxconsequences under the laws of other relevant jurisdictions), which may arise as a result of being a shareholder in ourcompany including the acquisition, ownership and disposition of our ordinary shares. Furthermore, this summary appliesonly to shareholders who will hold our ordinary shares as capital assets and does not apply to all categories of shareholders,such as dealers in securities, trustees, insurance companies, collective investment schemes, pension funds or shareholderswho have, or who are deemed to have, acquired their shares by virtue of an office or employment performed or carried on inIreland.Irish Tax on Chargeable GainsNon–Resident ShareholdersShareholders who are not resident or ordinarily resident in Ireland for Irish tax purposes should not be liable to Irishtax on chargeable gains realized on a disposal of our ordinary shares unless such shares are used, held or acquired for thepurpose of a trade or business carried on by such a shareholder in Ireland through a branch or an agency.A shareholder who is an individual and who is temporarily a non‑resident in Ireland may, under Irish anti‑avoidancelegislation, still be liable to Irish tax on any chargeable gain realized on a disposal of our ordinary shares during the period inwhich the individual is non‑resident.Irish Dividend Withholding TaxOur company does not anticipate paying dividends for the foreseeable future. However, if in the future we were topay a dividend or make a distribution to our shareholders, that distribution may be subject to dividend withholding tax, orDWT, at the standard rate of Irish income tax (currently 20%) unless one of the exemptions described below applies.105 Table of ContentsFor DWT purposes, a dividend includes any distribution made to shareholders, including cash dividends, non‑cashdividends and any additional shares taken in lieu of a cash dividend. We are responsible for withholding DWT at source inrespect of the distributions made and remitting the tax withheld to the Irish Revenue Commissioners.General ExemptionsCertain shareholders, both individual and corporate, are entitled to an exemption from DWT. In particular,dividends paid to a non‑Irish resident shareholder will not be subject to DWT where the shareholder is beneficially entitledto the dividend and is:•an individual shareholder resident for tax purposes in a “relevant territory” and the individual is neither residentnor ordinarily resident in Ireland;•a corporate shareholder that is resident for tax purposes in a “relevant territory,” but is not under the control,whether directly or indirectly, of a person or persons who is or are resident in Ireland;•a corporate shareholder that is not resident for tax purposes in Ireland and that is ultimately controlled, directlyor indirectly, by persons resident in a “relevant territory;”•a corporate shareholder that is not resident for tax purposes in Ireland and whose principal class of shares, orthose of its 75% parent, is substantially and regularly traded on a recognized share exchange in a “relevantterritory” or on such other share exchange as may be approved by the Irish Minister for Finance; or•a corporate shareholder that is not resident for tax purposes in Ireland and is wholly‑owned, directly orindirectly, by two or more companies where the principal class of shares of each of such companies issubstantially and regularly traded on a recognized share exchange in a “relevant territory” or on such othershare exchange as may be approved by the Irish Minister for Finance;and provided, in all cases noted above (but subject to “Shares Held by U.S. Resident Shareholders” below), StrongbridgeBiopharma plc or, in respect of Strongbridge Biopharma plc shares held through DTC, any qualifying intermediaryappointed by Strongbridge Biopharma plc, has received from the shareholder, where required, the relevant DWT Forms priorto the payment of the dividend. In practice, in order to ensure sufficient time to process the receipt of relevant DWT Forms,the Strongbridge Biopharma plc shareholder where required should furnish the relevant DWT Form to:•its broker (and the relevant information is further transmitted to any qualifying intermediary appointed byStrongbridge Biopharma plc) before the record date for the dividend (or such later date before the dividendpayment date as may be notified to the shareholder by the broker) if its shares are held through DTC; or•Strongbridge Biopharma plc’s transfer agent at least seven business days before the record date for the dividendif its shares are held outside of DTC.A list of “relevant territories” for the purposes of DWT, as of the date of this prospectus, is set forth below and thislist is subject to change:AlbaniaCzech RepublicItalyNetherlandsSloveniaArmeniaDenmarkJapanNew ZealandSouth AfricaAustraliaEgyptRepublic of KoreaNorwaySpainAustriaEstoniaKuwaitPakistanSwedenBahrainEthiopiaLatviaPanamaSwitzerlandBelarusFinlandLithuaniaPolandThailandBelgiumFranceLuxembourgPortugalTurkey106 Table of ContentsBosnia andHerzegovinaGeorgiaMacedoniaQatarUkraineBotswanaGermanyMalaysiaRomaniaUnited Arab EmiratesBulgariaGreeceMaltaRussiaUnited KingdomCanadaHong KongMexicoSaudi ArabiaUnited States of AmericaChileHungaryMoldovaSerbiaUzbekistanChinaIcelandMontenegroSingaporeVietnamCroatiaIndiaMoroccoSlovak RepublicZambiaCyprusIsrael It is the responsibility of each individual shareholder to determine whether or not they are a “resident” for taxpurposes in a “relevant territory.”Prior to paying any future dividend, our company will enter into an agreement with an institution which isrecognized by the Irish Revenue Commissioners as a “qualifying intermediary” and which satisfies the requirements fordividends to be paid to certain shareholders free from DWT where such shareholders hold their shares through DTC, asdescribed below. The agreement will generally provide for certain arrangements relating to distributions in respect of thoseshares that are held through DTC. The agreement will provide that the “qualifying intermediary” shall distribute or otherwisemake available to Cede & Co., as nominee for DTC, any cash dividend or other cash distribution to be made to holders of thedeposited securities, after we deliver or cause to be delivered to the “qualifying intermediary” the cash to be distributed.We will rely on the information received directly or indirectly from brokers and their transfer agent in determiningwhere shareholders reside and whether they have furnished the required U.S. tax information, as described below.Shareholders who are required to furnish Irish DWT declaration forms in order to receive their dividends without DWTshould note that those declarations forms are only valid for five years and new DWT declarations forms must be completedand filed before the expiration of that five year period to enable the shareholder continue to receive dividends without DWT.Shares Held by U.S. Resident ShareholdersDividends paid on our ordinary shares that are owned by residents of the United States should not be subject toDWT, subject to the completion and delivery of the relevant forms to us.Residents of the United States who hold their shares through DTC should be entitled to receive dividends withoutDWT provided that the address of the beneficial owner of the shares in the records of the broker holding such shares is in theUnited States. We would strongly recommend that such shareholders ensure that their information has been properly recordedby their brokers so that such brokers can further transmit the relevant information to a qualifying intermediary appointed byus.Residents of the United States who hold their shares outside of DTC will be entitled to receive dividends withoutDWT provided that the shareholder has completed the relevant Irish DWT declaration form and this declaration form remainsvalid. Such shareholders must provide the relevant Irish DWT declaration form to our transfer agent at least seven businessdays before the record date of the dividend payment to which they are entitled. We would strongly recommend that suchshareholders complete the relevant Irish DWT declaration form and provide them to our transfer agent as soon as possibleafter acquiring shares in our company.If a U.S. resident shareholder is entitled to an exemption from DWT, but receives a dividend subject to DWT, thatshareholder may be entitled to claim a refund of DWT from the Irish Revenue Commissioners, subject to certain time limitsand provided the shareholder is beneficially entitled to the dividend.107 Table of ContentsShares Held by Residents of “Relevant Territories” Other Than the United StatesShareholders who are residents of “relevant territories” other than the United States, and who are entitled to anexemption from DWT, must complete the relevant Irish DWT declaration form in order to receive dividends without DWT.Shareholders must provide the relevant Irish DWT declaration form to their brokers so that such brokers can furthertransmit the relevant information to a qualifying intermediary appointed by us before the record date of the dividend towhich they are entitled, in the case of shares held through DTC, or to our transfer agent at least seven business days beforesuch record date, in the case of shares held outside of DTC. We would strongly recommend that such shareholders completethe relevant Irish DWT declaration form and provide that form to their brokers or our transfer agent as soon as possible afteracquiring shares in our company.If a shareholder who is resident in a “relevant territory” and is entitled to an exemption from DWT receives adividend subject to DWT, that shareholder may be entitled to claim a refund of DWT from the Irish Revenue Commissioners,subject to certain time limits and provided the shareholder is beneficially entitled to the dividend.Notwithstanding the foregoing, the General Exemptions from DWT referred to above do not apply to an individualshareholder that is resident or ordinarily resident in Ireland or to a corporate entity that is under the control, whether directlyor indirectly, of a person or persons who is or who are resident in Ireland. However, other exemptions from DWT may still beavailable to that shareholder. In addition, it may also be possible for certain shareholders to rely on a double tax treaty tolimit the applicable DWT.Shares Held by Other PersonsA shareholder that does not fall within one of the categories specifically mentioned above may nonetheless fallwithin other exemptions from DWT provided that the shareholder has completed the relevant Irish DWT declaration form andthis declaration form remains valid.If any such shareholder is exempt from DWT but receives a dividend subject to DWT, that shareholder may beentitled to claim a refund of DWT from the Irish Revenue Commissioners, subject to certain time limits.Income Tax on Dividends PaidIrish income tax may arise for certain shareholders in respect of any dividends received from us.Non‑Irish Resident ShareholdersA shareholder that is not resident or ordinarily resident in Ireland for Irish tax purposes and who is entitled to anexemption from DWT generally has no liability to Irish income tax or other similar charges with respect to any dividendsreceived from us. An exception to this position may apply where a shareholder holds our ordinary shares through a branch oragency in Ireland through which a trade is carried on.A shareholder that is not resident or ordinarily resident in Ireland for Irish tax purposes and who is not entitled to anexemption from DWT generally has no additional liability to Irish income tax or other similar charges on any dividendsreceived from us. An exception to this position may apply where a shareholder holds our ordinary shares through a branch oran agency in Ireland through which a trade is carried on. In these circumstances, the shareholder’s liability to Irish tax iseffectively limited to the amount of DWT withheld by us.Capital Acquisitions TaxCapital acquisitions tax, or CAT, consists principally of gift tax and inheritance tax. A gift or inheritance of ourordinary shares, including where such shares are held in DTC, may attract a charge to CAT irrespective of the place ofresidence, ordinary residence or domicile of the transferor or the transferee of the shares. This is because a charge to108 Table of ContentsCAT may arise on a gift or inheritance which comprises of property situated in Ireland. Our ordinary shares are regarded asproperty situated in Ireland for CAT purposes because our share register must be retained in Ireland. The person who receivesthe gift or inheritance is primarily liable for any CAT that may arise.CAT is levied at a rate of 33% above certain tax‑free thresholds. The appropriate tax‑free threshold is dependentupon (1) the relationship between the donor and the donee and (2) the aggregation of the values of previous gifts andinheritances received by the donee from persons within the same group threshold. Gifts and inheritances passing betweenspouses are exempt from CAT. Shareholders should consult their own tax advisers as to whether CAT is creditable ordeductible in computing any domestic tax liabilities.Irish Stamp DutyThe rate of stamp duty, where applicable, on the transfer of shares in an Irish incorporated company is 1% of theprice paid or the market value of the shares acquired, whichever is greater. Where a charge to Irish stamp duty applies it isgenerally a liability for the transferee. Irish stamp duty may, depending on the manner in which our ordinary shares are held,be payable in respect of the transfer of our ordinary shares.Irish Stamp Duty—DTC ArrangementsOn the basis that most of our shares are expected to be held through DTC, or through brokers who hold shares onbehalf of their customers through DTC, the transfer of such shares should be exempt from Irish stamp duty based onestablished practice of Irish Revenue Commissioners. We received written confirmation from the Irish RevenueCommissioners on June 22, 2015 that a transfer of our shares held through DTC and transferred by means of a book‑entryinterest would be exempt from Irish stamp duty.Shares Held Through DTCA transfer of our ordinary shares effected by means of the transfer of book‑entry interests in DTC should not besubject to Irish stamp duty.Shares Held Outside of DTC or Transferred Into or Out of DTCA transfer of our ordinary shares where any of the parties to the transfer hold the shares outside of DTC may besubject to Irish stamp duty. A shareholder should be entitled to transfer our ordinary shares into, or out of, DTC withoutgiving rise to Irish stamp duty provided (1) there is no change in beneficial ownership of the shares and (2) at the time of thetransfer into, or out of, DTC, there is no agreement in place for the sale of the shares by the beneficial owner to a third party.To avoid Irish stamp duty on transfers of our ordinary shares any directly registered shareholder may wish toconsider opening a broker account, and any person who wishes to acquire our ordinary shares may wish to consider holdingsuch shares through DTC.DTC RequirementIn order for DTC, Cede & Co. and National Securities Clearing Corporation, or NSCC, which provides clearingservices for securities that are eligible for the depository and book‑entry transfer services provided by DTC and registered inthe name of Cede & Co., which entities are referred to collectively as the DTC Parties, to agree to provide services withrespect to our ordinary shares, we have entered into a composition agreement with the Irish Revenue Commissioners underwhich we have agreed to pay or procure the payment of any obligation for any Irish stamp duty or similar Irish transfer ordocumentary tax with respect to our ordinary shares, on (1) transfers to which any of the DTC Parties is a party or (2) whichmay be processed through the services of any of the DTC Parties and the DTC Parties have received confirmation from theIrish Revenue Commissioners that during the period that such composition agreement remains in force, the DTC Parties shallnot be liable for any Irish stamp duty with respect to our ordinary shares.109 Table of ContentsIn addition, to assure the DTC Parties that they will not be liable for any Irish stamp duty or similar Irish transfer ordocumentary tax with respect to our ordinary shares under any circumstances, including as a result of a change in applicablelaw, and to make other provisions with respect to our ordinary shares required by the DTC Parties, we and our transfer agenthave entered into a Special Eligibility Agreement for Securities with DTC, Cede & Co. and NSCC, or the DTC EligibilityAgreement.The DTC Eligibility Agreement provides for certain indemnities of the DTC Parties by us and Computershare, Inc.(as to which we indemnify Computershare, Inc.) and provides that DTC may impose a global lock on our ordinary shares orotherwise limit transactions in the shares, or cause the shares to be withdrawn, and NSCC may, in its sole discretion, excludeour ordinary shares from its continuous net settlement service or any other service, and any of the DTC Parties may take otherrestrictive measures with respect to our ordinary shares as it may deem necessary and appropriate, without any liability on thepart of any of the DTC Parties, (1) at any time that it may appear to any of the DTC Parties, in any such party’s sole discretion,that to continue to hold or process transactions in our ordinary shares will give rise to any Irish stamp duty or similar Irishtransfer or documentary tax liability with respect to our ordinary shares on the part of any of the DTC Parties or (2) otherwiseas DTC’s rules or NSCC’s rules provide.Notwithstanding our entry into a composition agreement with the Irish Revenue Commissioners and the indemnitiesgiven pursuant to the DTC Eligibility Agreement, any stamp duty liability resulting from a transfer of our shares will be forthe “accountable person” under Irish law (generally the transferee) and, to the extent we or a subsidiary of our companydischarges such liability, on behalf of any transferee’s behalf, we will seek payment or reimbursement of such liability. Forfurther details on this point, shareholders should read the discussion under “Transfer and Registration of Shares” above.THE IRISH TAX CONSIDERATIONS SUMMARIZED ABOVE ARE FOR GENERAL INFORMATION ONLY. EACHSHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR TAXCONSEQUENCES THAT MAY APPLY TO SUCH SHAREHOLDER.Material U.S. Federal Income Tax Considerations for U.S. HoldersThe following is a description of the material U.S. federal income tax consequences to the U.S. Holders describedbelow of owning and disposing of our ordinary shares, but it does not purport to be a comprehensive description of all taxconsiderations that may be relevant to a particular person’s decision to acquire the ordinary shares. This discussion appliesonly to a U.S. Holder that holds ordinary shares as capital assets for tax purposes. In addition, it does not describe all of thetax consequences that may be relevant in light of the U.S. Holder’s particular circumstances, including alternative minimumtax consequences, any state or local tax considerations, any U.S. federal gift, estate or generation‑skipping transfer taxconsequences and tax consequences applicable to U.S. Holders subject to special rules, such as:•certain financial institutions;•brokers;•dealers or traders in securities who use a mark‑to‑market method of tax accounting;•real estate investment trusts;•insurance companies;•persons holding ordinary shares as part of a hedging transaction, straddle, wash sale, conversion transaction orintegrated transaction or persons entering into a constructive sale with respect to the ordinary shares;•regulated investment companies;•persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;•entities classified as partnerships or other pass‑through entities for U.S. federal income tax purposes, includingpersons that will hold our ordinary shares through such an entity;110 Table of Contents•tax‑exempt entities, including an “individual retirement account” or “Roth IRA;”•persons that own or are deemed to own ten percent or more of our voting stock;•persons that are U.S. expatriates;•persons who acquired our ordinary shares pursuant to the exercise of an employee stock option or otherwise ascompensation; or•persons holding shares in connection with a trade or business conducted outside of the United States.If an entity that is classified as a partnership for U.S. federal income tax purposes holds ordinary shares, the U.S.federal income tax treatment of a partner will generally depend on the status of the partner and the activities of thepartnership. Partnerships holding ordinary shares and partners in such partnerships should consult their tax advisers as totheir particular U.S. federal income tax consequences of holding and disposing of the ordinary shares.This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, administrativepronouncements, judicial decisions, and final, temporary and proposed Treasury regulations, all as of the date hereof, any ofwhich is subject to change, possibly with retroactive effect.A “U.S. Holder” is a holder who, for U.S. federal income tax purposes, is a beneficial owner of ordinary shares whois:•an individual who is a citizen or resident of the United States;•a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the UnitedStates, any state therein or the District of Columbia;•an estate whose income is includible in gross income for U.S. federal income tax purposes regardless of itssource; or•a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one ormore U.S. persons have authority to control all substantial decisions of the trust or (2) the trust has a validelection in effect under applicable Treasury Regulations to be treated as a U.S. person.U.S. Holders should consult their tax advisers concerning the U.S. federal, state, local and foreign tax consequencesof owning and disposing of ordinary shares in their particular circumstances.Passive Foreign Investment Company RulesWe expect to be a passive foreign investment company, or PFIC, for our current taxable year and for the foreseeablefuture. In addition, we may, directly or indirectly, hold equity interests in other PFICs, or Lower‑tier PFICs. In general, anon‑U.S. corporation will be considered a PFIC for any taxable year in which (1) 75% or more of its gross income consists ofpassive income or (2) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held forthe production of, passive income. For purposes of the above calculations, a non‑U.S. corporation that directly or indirectlyowns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets ofthe other corporation and received directly its proportionate share of the income of the other corporation. Passive incomegenerally includes dividends, interest, rents, royalties and capital gains.We must determine our PFIC status annually based on tests which are factual in nature, and our status will dependon our income, assets and activities each year.Under attribution rules, if we are a PFIC, U.S. Holders will be deemed to own their proportionate shares of Lower‑tierPFICs and will be subject to U.S. federal income tax according to the rules described in the following paragraphs on(1) certain distributions by a Lower‑tier PFIC and (2) a disposition of shares of a Lower‑tier PFIC, in each case as if the U.S.Holder held such shares directly, even though holders have not received the proceeds of those distributions or dispositionsdirectly.111 Table of ContentsIf we are a PFIC for any taxable year during which a U.S. Holder holds our shares, the U.S. Holder may be subject tocertain adverse tax consequences. Unless a holder makes a timely “mark‑to‑market” election or “qualified electing fund”election each as discussed below, gain recognized on a disposition (including, under certain circumstances, a pledge) ofordinary shares by the U.S. Holder, or on an indirect disposition of shares of a Lower‑tier PFIC, will be allocated ratably overthe U.S. Holder’s holding period for the shares. The amounts allocated to the taxable year of disposition and to years beforewe became a PFIC will be taxed as ordinary income. The amounts allocated to each other taxable year will be subject to taxat the highest rate in effect for that taxable year for individuals or corporations, as appropriate, and an interest charge will beimposed on the tax attributable to the allocated amounts. Further, to the extent that any distribution received by a U.S.Holder on our ordinary shares (or a distribution by a Lower‑tier PFIC to its shareholder that is deemed to be received by a U.S.Holder) exceeds 125% of the average of the annual distributions on the shares received during the preceding three years orthe U.S. Holder’s holding period, whichever is shorter, the distribution will be subject to taxation in the same manner as gain,described immediately above and lower rates of taxation applicable to long‑term capital gains with respect to dividends paidto certain non‑corporate U.S. Holders would not apply.If we are a PFIC for any year during which a U.S. Holder holds ordinary shares, we generally will continue to betreated as a PFIC with respect to the holder for all succeeding years during which the U.S. Holder holds ordinary shares, evenif we cease to meet the threshold requirements for PFIC status. U.S. Holders should consult their tax advisers regarding thepotential availability of a “deemed sale” election that would allow them to eliminate this continuing PFIC status undercertain circumstances.If the ordinary shares are “regularly traded” on a “qualified exchange,” a U.S. Holder may make a mark‑to‑marketelection that would result in tax treatment different from the general tax treatment for PFICs described above. The ordinaryshares will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of the ordinaryshares is traded on a qualified exchange on at least 15 days during each calendar quarter. The NASDAQ Global SelectMarket, to which we intend to apply for the listing of our ordinary shares, is a qualified exchange for this purpose. U.S.Holders should consult their tax advisers regarding the availability and advisability of making a mark‑to‑market election intheir particular circumstances. In particular, U.S. Holders should consider carefully the impact of a mark‑to‑market electionwith respect to their ordinary shares given that we may have Lower‑tier PFICs for which a mark‑to‑market election may not beavailable.If a U.S. Holder makes the mark‑to‑market election, the holder generally will recognize as ordinary income anyexcess of the fair market value of the ordinary shares at the end of each taxable year over their adjusted tax basis, and willrecognize an ordinary loss in respect of any excess of the adjusted tax basis of the ordinary shares over their fair market valueat the end of the taxable year (but only to the extent of the net amount of income previously included as a result of themark‑to‑market election). If a U.S. Holder makes the election, the holder’s tax basis in the ordinary shares will be adjusted toreflect the income or loss amounts recognized. Any gain recognized on the sale or other disposition of ordinary shares in ayear when we are a PFIC will be treated as ordinary income and any loss will be treated as an ordinary loss (but only to theextent of the net amount of income previously included as a result of the mark‑to‑market election). Distributions paid onordinary shares will be treated as discussed below under “—Taxation of Distributions.”Alternatively, a U.S. Holder can make an election, if we provide the necessary information, to treat us and eachLower‑tier PFIC as a qualified electing fund, or a QEF Election, in the first taxable year that we are treated as a PFIC withrespect to the holder. A U.S. Holder must make the QEF Election for each PFIC by attaching a separate properly completedIRS Form 8621 for each PFIC to the holder’s timely filed U.S. federal income tax return. U.S. Holders should be aware thatthere can be no assurances that we will satisfy the record keeping requirements that apply to a QEF, or that we will supplyU.S. Holders with information that such U.S. Holders are required to report under the QEF rules, in the event that we are aPFIC. Thus, U.S. Holders may not be able to make a QEF Election with respect to their ordinary shares. Further, no assurancecan be given that such QEF information will be available for any Lower‑tier PFIC. Each U.S. Holder should consult its owntax advisers regarding the availability of, and procedure for making, a QEF Election.If a U.S. Holder makes a QEF Election with respect to a PFIC, the holder will be taxed on a current basis on its prorata share of the PFIC’s ordinary earnings and net capital gain (at ordinary income and capital gain rates, respectively) foreach taxable year that the entity is classified as a PFIC and for which the QEF election is in place and112 Table of Contentsproperly maintained. If a U.S. Holder makes a QEF Election with respect to us, any distributions paid by us out of ourearnings and profits that were previously included in the holder’s income under the QEF Election would not be taxable to theholder. A U.S. Holder will increase its tax basis in its ordinary shares by an amount equal to any income included under theQEF Election and will decrease its tax basis by any amount distributed on the ordinary shares that is not included in theholder’s income. In addition, a U.S. Holder will recognize capital gain or loss on the disposition of ordinary shares in anamount equal to the difference between the amount realized and the holder’s adjusted tax basis in the ordinary shares. U.S.Holders should note that if they make QEF Elections with respect to us and Lower‑tier PFICs, they may be required to payU.S. federal income tax with respect to their ordinary shares for any taxable year significantly in excess of any cashdistributions received on the shares for such taxable year. U.S. Holders should consult their tax advisers regarding makingQEF Elections in their particular circumstances.Furthermore, as discussed below, if we were a PFIC or, with respect to a particular U.S. Holder, were treated as a PFICfor the taxable year in which we paid a dividend or the prior taxable year, the 20% preferential tax rate with respect todividends paid to certain non‑corporate U.S. Holders would not apply.If we were a PFIC for any taxable year during which a U.S. Holder held ordinary shares, such U.S. Holder would berequired to file an annual information report with such U.S. Holder’s U.S. Federal income tax return on IRS Form 8621.U.S. Holders should consult their tax advisers concerning our PFIC status and the tax considerations relevant to aninvestment in a PFIC.Taxation of DistributionsSubject to the passive foreign investment company rules described above, distributions paid on ordinary shares,other than certain pro rata distributions of ordinary shares, will be treated as dividends to the extent paid out of our current oraccumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintaincalculations of our earnings and profits under U.S. federal income tax principles, it is expected that distributions generallywill be reported to U.S. Holders as dividends. The amount of a dividend will include any amounts withheld by us in respectof Irish taxes. The amount of the dividend will be treated as foreign‑source dividend income to U.S. Holders and will not beeligible for the dividends‑received deduction generally available to U.S. corporations under the Code. Dividends will beincluded in a U.S. Holder’s income on the date of the U.S. Holder’s receipt of the dividend. The amount of any dividendincome paid in Euros will be the U.S. dollar amount calculated by reference to the exchange rate in effect on the date ofreceipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollarson the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of thedividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after thedate of receipt, which will be “U.S. source” ordinary income or loss.Dividends paid by us may be taxable to a non‑corporate U.S. Holder at the special reduced rate normally applicableto long‑term capital gains, provided we are not a PFIC in the taxable year in which the dividends are received or in thepreceding taxable year, so long as certain holding period requirements are met. As discussed above under “Passive ForeignInvestment Company Rules,” we expect to be a PFIC and, as a result, the special reduced rate is unlikely to be available withrespect to dividends paid by us.Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s circumstances, Irish incometaxes withheld from dividends on ordinary shares may be creditable against the U.S. Holder’s U.S. federal income taxliability. The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisers regardingthe creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may, attheir election, deduct foreign taxes, including the Irish tax, in computing their taxable income, subject to generallyapplicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies toall foreign taxes paid or accrued in the taxable year.113 Table of ContentsSale or Other Disposition of Ordinary SharesSubject to the passive foreign investment company rules described above, for U.S. federal income tax purposes, gainor loss realized on the sale or other disposition of ordinary shares will be capital gain or loss, and will be long‑term capitalgain or loss if the U.S. Holder held the ordinary shares for more than one year The amount of the gain or loss will equal thedifference between the U.S. Holder’s tax basis in the ordinary shares disposed of and the amount realized on the disposition,in each case as determined in U.S. dollars. This gain or loss will generally be U.S.‑source gain or loss for foreign tax creditpurposes.Net Investment Income TaxU.S. Holders that are individuals or estates or trusts that do not fall into a special class of trusts that is exempt fromsuch tax, will be required to pay an additional 3.8% tax on the lesser of (1) the U.S. Holder’s “net investment income” for therelevant taxable year and (2) the excess of the U.S. Holder’s modified adjusted gross income for the taxable year over acertain threshold (which in the case of individuals will be between US $125,000 and US $250,000, depending on theindividual’s circumstances). A U.S. Holder’s “net investment income” will generally include, among other things, dividendsand capital gains. Such tax will apply to dividends and to capital gains from the sale or other disposition of the ordinaryshares, unless derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consistsof certain passive or trading activities). Special rules apply and certain elections are available for certain U.S. Holders that aresubject to the 3.8% tax on net investment income and hold shares in a PFIC. Potential investors should consult with theirown tax advisers regarding the application of the net investment income tax to them as a result of their investment in ourordinary shares.Information Reporting and Backup WithholdingPayments of dividends and sales proceeds that are made within the United States or through certain U.S.‑relatedfinancial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless(1) the U.S. Holder is a corporation or other exempt recipient or (2) in the case of backup withholding, the U.S. Holderprovides a correct taxpayer identification number and certifies that it is not subject to backup withholding.Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited againstsuch holder’s U.S. federal income tax liability, and such holder may obtain a refund of any excess amounts withheld underthe backup withholding rules by filing an appropriate claim for refund with the IRS and furnishing any required informationin a timely manner. U.S. Holders of ordinary shares should consult their tax advisers regarding the application of the U.S.information reporting and backup withholding rules.Information With Respect to Foreign Financial AssetsCertain U.S. Holders who are individuals (and, under proposed regulations, certain entities) may be required toreport information relating to an interest in our ordinary shares, subject to certain exceptions (including an exception forordinary shares held in accounts maintained by certain U.S. financial institutions). U.S. Holders should consult their taxadvisers regarding the effect, if any, of this requirement on their ownership and disposition of the ordinary shares.114 Table of ContentsF. DividendsNot applicable.G. Statement by expertsNot applicable.H. Documents on displayWe are subject to the informational requirements of the Exchange Act and are required to file reports and otherinformation with the SEC. Shareholders may read and copy any of our reports and other information at, and obtain copiesupon payment of prescribed fees from, the Public Reference Room maintained by the SEC at 100 F Street N.E., Washington,D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the U.S. Securitiesand Exchange Commission at 1-800-SEC-0330. We are a "foreign private issuer" as such term is defined in Rule 405 under the Securities Act, and are not subject tothe same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject toreporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reportingcompanies. As a result, we do not file the same reports that a U.S. domestic issuer would file with the SEC, although we arerequired to file or furnish to the SEC the continuous disclosure documents that we are required to file in Ireland under Irishsecurities laws.We will provide without charge to each person, including any beneficial owner, on the written or oral request ofsuch person, a copy of any or all documents referred to above which have been or may be incorporated by reference in thisAnnual Report (not including exhibits to such incorporated information that are not specifically incorporated by referenceinto such information). Requests for such copies should be directed to us at the following address: 900 Northbrook Drive,Suite 200, Trevose, PA 19053, Attention: Chief Legal Officer, phone number: (610) 254-9225.I. Subsidiary informationAs of March 1, 2016, the Company had the following subsidiaries: Name Nature of Business GroupShare % Registered Office andCountry of IncorporationBioPancreate Inc. Operating 100% 900 Northbrook Drive Suite 200 Trevose Pennsylvania19053Cortendo AB (publ) Operating 99.582% Box 47 433 21 Partille Gothenburg SwedenCortendo Cayman Ltd Operating 100% Maples Corporate Services PO Box 309 Ugland House GrandCayman KY1-1104Cortendo Invest AB Holding 100% Box 47 433 21 Partille Gothenburg SwedenStrongbridge U.S. Inc. Operating 100% Corporate Trust Center Lmt 1209 Orange Street Wilmington,Delaware 19801 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKAt December 31, 2015, we had cash and cash equivalents of $51.6 million, which consisted primarily of bankdeposits in the United States, Sweden and Norway. Cash deposits in Sweden and Norway were $3.1 million as of December31, 2015 and are subject to local banking laws and may bear higher or lower risk than cash deposited in the United States. Aspart of our cash and investment management processes, we perform periodic evaluations of the credit standing of thefinancial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any creditlosses from instruments held at these financial institutions.115 Table of ContentsITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Not applicable. PART II ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNone. ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSThe effective date of the registration statement (File no. 333-206654) for our initial public offering of ordinaryshares was October 15, 2015. The offering closed on October 21, 2015. Stifel acted as the sole book-running manager for theoffering. JMP Securities acted as lead manager, and Roth Capital Partners and Artic Securities acted as co-managers for theoffering. We registered 2,500,000 ordinary shares in the offering. The net offering proceeds to us from the offering wereapproximately $19.5 million. There has been no material change in the planned use of proceeds from our initial publicoffering from that described in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on October16, 2015.None of the net proceeds of the offering was paid directly or indirectly to any director, officer, general partner ofours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates. ITEM 15. CONTROLS AND PROCEDURESDisclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to bedisclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the rules andregulations thereunder, is recorded, processed, summarized and reported within the time periods specified in the SEC's rulesand forms and that such information is accumulated and communicated to our management, including our principalexecutive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. Indesigning and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures,no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controlobjectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controlsand procedures.As required by Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with theparticipation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the designand operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under theExchange Act) as of December 31, 2015. Based on such evaluation, our principal executive officer and principal financialofficer have concluded that, as of December 31, 2015, our disclosure controls and procedures were effective at the reasonableassurance level.Management’s Annual Report on Internal Control over Financial ReportingThis annual report does not include a report of management’s assessment regarding internal control over financialreporting due to a transition period established by rules of the SEC for newly public companies.116 Table of ContentsChanges in Internal Control over Financial ReportingWe hired additional personnel with public company US GAAP financial reporting expertise to establish ourfinancial management and reporting infrastructure, and further develop and document our accounting policies and financialreporting procedures. These personnel were in place throughout the preparation of our financial statements included in thisForm 20-F. ITEM 16. [RESERVED] ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERTOur Board has determined that each of the members of the audit committee qualifies as an “audit committeefinancial expert” as defined in Item 16A of Form 20-F under the Exchange Act and that each member is “independent” inaccordance with The NASDAQ Global Select Market corporate governance requirements and Rule 10A-3 of the ExchangeAct. For information relating to qualifications and experience of each audit committee member, see “Item 6. Directors, SeniorManagement and Employees.” ITEM 16B. CODE OF ETHICSWe have adopted a Code of Business Conduct and Ethics applicable to all of our directors and employees,including our President and Chief Executive Officer, Chief Financial Officer, controller or principal accounting officer orother persons performing similar functions, which is a “code of ethics” as defined in Item 16B of Annual Report on Form 20-F promulgated by the SEC and as required by The NASDAQ Global Select Market Listing Rules, which refers to Section406(c) of the Sarbanes-Oxley Act. Section 406(c) of the Sarbanes-Oxley Act provides that a “code of ethics” means suchstandards as are reasonably necessary to promote (i) honest and ethical conduct, including the ethical handling of actual orapparent conflicts of interest between personal and professional relationships; (ii) full, fair, accurate, timely andunderstandable disclosure in the periodic reports required to be filed by the issuer; and (iii) compliance with applicablegovernmental rules and regulation.The full text of the Code of Business Conduct and Ethics is posted on our website at www.strongbridgebio.com.Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report onForm 20-F and is not incorporated by reference herein. We will provide a copy of such code of ethics without charge uponrequest by mail or by telephone. If we make any amendment to the Code of Business Conduct and Ethics or grant anywaivers, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics, we will disclose thenature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC. We havenot made any amendments to our Code of Business Conduct and Ethics or granted any waivers, including any implicitwaivers, from a provision of the Code of Business Conduct and Ethics. ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICESPrincipal Accountant Fees and ServicesThe following table sets forth the aggregate fees billed by Ernst & Young our independent registered publicaccounting firm as described below: 2014 2015 Fee Category: (in thousands) Audit Fees $179 $1,309 Audit-Related Fees 24 70 Tax Fees 7 71 All Other Fees 14 365 Total Fees $224 $1,815 117 (1)(2)(3)(4)Table of Contents(1)Audit fees consist of fees for the audit of our financial statements, the review of our interim financial statements,statutory audits, audit of Aspireo in 2015 and services associated with our registration statement on Form F-1.(2)Audit-related fees incurred consist of other services not audited related.(3)Tax fees consists of fees incurred for tax compliance, tax advice and tax planning and includes fees for tax returnpreparation and tax consulting.(4)Other fees consist of fees incurred for the Irish redomicile and other services.The aggregate fees included in the Audit Fees are billed for the fiscal year. The aggregate fees included in the Audit-related fees and Tax Fees are fees billed in the fiscal year.All such accountant services and fees were pre-approved by our audit committee in accordance with the “Pre-Approval Policies and Procedures” described below.All of the above services were approved by the Audit Committee.Pre-approval policies and proceduresThe audit committee of our board of directors has adopted policies and procedures for the pre-approval of audit andnon-audit services for the purpose of maintaining the independence of our independent auditor. We may not engage ourindependent auditor to render any audit or non-audit service unless either the service is approved in advance by the auditcommittee, or the engagement to render the service is entered into pursuant to the audit committee’s pre-approval policiesand procedures. ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNot applicable. ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSNone. ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTOn December 14, 2015, our Audit Committee (the “Audit Committee”) approved the appointment of Ernst & YoungLLP (“EY LLP”) as our principal accountants. Ernst & Young, AB was previously our principal accountants. Following theAudit Committee’s approval of EY LLP, Ernst & Young, AB was dismissed.The audit reports of Ernst & Young, AB on the consolidated financial statements of the Company as of and for theyears ended December 31, 2013 and 2014 did not contain any adverse opinion or disclaimer of opinion, nor was the opinionqualified or modified as to uncertainty, audit scope, or accounting principles. During the two fiscal years ended December 31, 2014, and the subsequent period through December 14, 2015, therewere: (1) no disagreements with Ernst & Young, AB on any matter of accounting principles or practices, financial statementdisclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused themto make reference in connection with their opinions to the subject matter of the disagreement, or (2) no reportable events asdefined under Item 16F(a)(1)(v), other than as of December 31, 2014, there was a material weakness identified inManagement’s report on internal controls over financial reporting, primarily related to the lack of sufficient and skilledresources with knowledge of U.S. GAAP and SEC reporting requirements to ensure that accurate financial statements couldhave been prepared and reviewed on a timely basis for annual reporting purposes. We determined that we had insufficientfinancial statement close processes and procedures, including with respect to account reconciliations118 Table of Contentsand the resolution of complex accounting issues involving significant judgment and estimates. This material weakness wassubject to discussion between the Audit Committee and Ernst & Young AB and the Company has authorized Ernst & YoungAB to respond fully to the inquiries of EY LLP concerning this matter.The Company has requested that Ernst & Young AB furnish it with a letter addressed to the SEC stating whether ornot it agrees with the above statements. A copy of such letter, dated March 24, 2016, is filed as Exhibit 99.1 to this Form 20-F. ITEM 16G. CORPORATE GOVERNANCEWe are a foreign private issuer. As a result, in accordance with NASDAQ Listing Rule 5615(a)(3), we comply withhome country governance requirements and certain exemptions thereunder rather than complying with certain of thecorporate governance requirements of NASDAQ.Irish law does not require that a majority of our board of directors consist of independent directors. Our board ofdirectors therefore may include fewer independent directors than would be required if we were subject to NASDAQ ListingRule 5605(b)(1). In addition, we are not subject to NASDAQ Listing Rule 5605(b)(2), which requires that independentdirectors must regularly have scheduled meetings at which only independent directors are present.Our articles of association provide that at any meeting of shareholders, a shareholder may designate another personto attend, speak and vote at the meeting on their behalf by proxy, but no such proxy shall be voted or acted upon at anysubsequent meeting, unless the proxy expressly provides for this. Irish law does not require shareholder approval for theissuance of securities in connection with the establishment of or amendments to equity‑based compensation plans foremployees. To this extent, our practice varies from the requirements of NASDAQ Listing Rule 5635, which generally requiresan issuer to obtain shareholder approval for the issuance of securities in connection with such events. ITEM 16H. MINE SAFETY DISCLOSURENot applicable. PART III ITEM 17. Financial Statements.See Item 18-“Financial Statements”. ITEM 18. Financial Statements.Please refer to the financial statements beginning on page F-1. The financial statements and related notes are filed aspart of this Annual Report on Form 20-F, together with the reports of our independent registered public accounting firms. 119 Table of ContentsITEM 19. EXHIBITSEXHIBIT INDEX3.1* Constitution of Strongbridge Biopharma plc, filed as Exhibit 3.1 to the Company’s September 9, 2015 Form F-1/A, is incorporated herein by reference3.2* Articles of Association of Strongbridge Biopharma plc, filed as Exhibit 3.2 to the Company’s September 9,2015 Form F-1/A, is incorporated herein by reference10.1* Sublease Agreement, dated March 30, 2015, by and between Insight Pharmaceuticals LLC and Cortendo AB,filed as Exhibit 10.1 to the Company’s August 28, 2015 Form F-1/A, is incorporated herein by reference10.2* License Agreement, dated March 30, 2011, by and between BioPancreate, Inc. and Cornell University, filed asExhibit 10.2 to the Company’s August 28, 2015 Form F-1/A, is incorporated herein by reference10.3* Asset Purchase Agreement, dated as of May 14, 2015, by and among Cortendo AB, and AspireoPharmaceuticals, Ltd. and TVM V Life Science Ventures GmbH & Co. KG, filed as Exhibit 10.3 to theCompany’s August 28, 2015 Form F-1/A, is incorporated herein by reference10.4†* Technology License Agreement, dated May 13, 2015, by and between Antisense Therapeutics Ltd. andCortendo Cayman Ltd., filed as Exhibit 10.4 to the Company’s September 25, 2015 Form F-1/A, isincorporated herein by reference10.5* Guarantee and indemnity deed, dated May 13, 2015, by and between Cortendo AB and AntisenseTherapeutics Ltd., filed as Exhibit 10.5 to the Company’s August 28, 2015 Form F-1/A, is incorporated hereinby reference10.6** Amended and Restated Employment Agreement, effective August 23, 2014, by and between Cortendo AB andMatthew Pauls10.7** Amended and Restated Employment Agreement, effective March 23, 2015, by and between Cortendo AB andA. Brian Davis10.9** Amended and Restated Employment Agreement, effective December 15, 2014, by and between Cortendo ABand Ruth Thieroff‑Ekerdt, M.D.10.10* Share Purchase Agreement, dated as of January 12, 2015, by and among Cortendo AB, BioPancreate Inc.,Cortendo Invest AB and the Investors listed therein, filed as Exhibit 10.10 to the Company’s August 28, 2015Form F-1/A, is incorporated herein by reference10.11* Investors’ Rights Agreement, dated as of February 10, 2015, by and among Cortendo AB and the Investorslisted therein, filed as Exhibit 10.11 to the Company’s August 28, 2015 Form F-1/A, is incorporated herein byreference10.12* Share Purchase Agreement, dated as of May 14, 2015, by and among Cortendo AB, BioPancreate Inc.,Cortendo Invest AB and the Investors named therein, filed as Exhibit 10.12 to the Company’s August 28, 2015Form F-1/A, is incorporated herein by reference10.13* Form of Indemnification Agreement, filed as Exhibit 10.13 to the Company’s September 25, 2015 Form F-1/A,is incorporated herein by reference10.14** Strongbridge Biopharma Plc 2015 Equity Compensation Plan10.15** Strongbridge Biopharma Plc Non-Employee Director Equity Compensation Plan10.16** Form of Stock Option Agreement under the Strongbridge Biopharma Plc Non-Employee Director EquityCompensation Plan10.17** Form of Nonqualified Stock Option Agreement under the Strongbridge Biopharma Plc 2015 EquityCompensation Plan10.18** Form of Restricted Stock Unit Award Agreement under the Strongbridge Biopharma Plc 2015 EquityCompensation Plan 12.1** Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2** Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002120 Table of Contents13.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rules 13a-14(b)and 15d-14(b) and 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of200299.1** Change in Registrant’s Certifying Accountant101.INS** XBRL Instance Document101.SCH** XBRL Taxonomy Extension Schema Document101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document101.LAB** XBRL Taxonomy Extension Label Linkbase Document101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document101.DEF** XBRL Taxonomy Extension Definitions Linkbase Document * Previously filed.** Filed herewith.† Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately withthe Securities and Exchange Commission. 121 Table of ContentsSIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Annual Report on Form 20-F and that ithas duly caused and authorized the undersigned to sign this annual report on its behalf. STRONGBRIDGE BIOPHARMA PLC By: /s/ A. BRIAN DAVIS Name: A. Brian Davis Title: Chief Financial Officer Date: March 24, 2016 122 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS 9 PageConsolidated Financial Statements Reports of Independent Registered Public Accounting Firm F‑2Consolidated Balance Sheets F‑4Consolidated Statements of Operations and Comprehensive Loss F‑5Consolidated Statements of Shareholders’ Equity F‑6Consolidated Statements of Cash Flows F‑7Notes to Consolidated Financial Statements F‑8 F-1 Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Strongbridge Biopharma plcWe have audited the accompanying consolidated balance sheets of Strongbridge Biopharma plc as of December 31,2014 and 2013, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the twoyears in the period ended December 31, 2014. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internalcontrol over financial reporting. Our audits included consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, and evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidatedfinancial position of Strongbridge Biopharma plc at December 31, 2014 and 2013, and the consolidated results of itsoperations and its cash flows for each of the two years in the period ended December 31, 2014, in conformity with U.S.generally accepted accounting principles./s/ Ernst & Young ABGothenburg, SwedenAugust 17, 2015 except for Note 1, as to which the date is September 9, 2015 F-2 Table of ContentsReport of Independent Registered Public Accounting FirmThe Board of Directors and Shareholders of Strongbridge Biopharma plcWe have audited the accompanying consolidated balance sheet of Strongbridge Biopharma plc (the Company) as ofDecember 31, 2015, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity andcash flows for the year ended December 31, 2015. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these 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 that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internalcontrol over financial reporting. Our audit included consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An auditalso includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made by management, and evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Strongbridge Biopharma plc at December 31, 2015, and the consolidated results of itsoperations and its cash flows for the year ended December 31, 2015, in conformity with U.S. generally accepted accountingprinciples./s/ Ernst & Young LLPPhiladelphia, PAMarch 24, 2016 F-3 Table of Contents STRONGBRIDGE BIOPHARMA plcConsolidated Balance Sheets(In thousands, except share and per share data) December 31, December 31, 2014 2015 ASSETS Current assets: Cash and cash equivalents $15,632 $51,623 Prepaid expenses and other current assets 598 1,253 Total current assets 16,230 52,876 Property and equipment, net 21 35 In-process research and development 5,228 36,551 Goodwill 2,200 7,256 Other assets 10 612 Total assets $23,689 $97,330 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $887 $2,792 Accrued liabilities 1,422 2,685 Total current liabilities 2,309 5,477 Stock-based liability awards 1,183 — Deferred tax liabilities 1,376 926 Total liabilities 4,868 6,403 Commitments and contingencies (Note 6) Stockholders’ equity: Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding — 44 Ordinary shares, $0.01 par value, 175,000,000 and 600,000,000 shares authorized atDecember 31, 2014 and 2015; 9,700,789 and 21,205,382 shares issued andoutstanding at December 31, 2014 and 2015 97 212 Additional paid-in capital 55,947 170,910 Accumulated deficit (37,223) (80,803) Non-controlling interest — 564 Total stockholders’ equity 18,821 90,927 Total liabilities and stockholders’ equity $23,689 $97,330 The accompanying notes are an integral part of these consolidated financial statements.F-4 Table of ContentsSTRONGBRIDGE BIOPHARMA plcConsolidated Statements of Operations and Comprehensive Loss(In thousands, except share and per share data) Year Ended December 31, 2013 2014 2015 Operating expenses: Research and development $2,534 $5,844 $20,135 General and administrative 2,658 4,588 22,719 Total operating expenses 5,192 10,432 42,854 Operating loss (5,192) (10,432) (42,854) Other income (expense), net: Foreign exchange loss (570) (204) (124) Other income (expense), net 282 486 (1,105) Total other income (expense), net (288) 282 (1,229) Loss before income taxes (5,480) (10,150) (44,083) Income tax benefit 93 480 450 Net loss (5,387) (9,670) (43,633) Net loss attributable to non-controlling interest 92 — 53 Net loss attributable to Strongbridge Biopharma $(5,295) $(9,670) $(43,580) Other comprehensive loss — — — Comprehensive loss $(5,295) $(9,670) $(43,580) Net loss attributable to ordinary shareholders: Basic and diluted $(5,295) $(9,670) $(43,580) Net loss per share attributable to ordinary shareholders: Basic and diluted $(0.88) $(1.20) $(2.62) Weighted-average shares used in computing net loss per share attributable toordinary shareholders: Basic and diluted 6,017,895 8,043,175 16,606,669 The accompanying notes are an integral part of these consolidated financial statements.F-5 Table of ContentsSTRONGBRIDGE BIOPHARMA plcConsolidated Statements of Shareholders’ Equity(In thousands except share amounts) Strongbridge Biopharma plc Shareholders Additional Non- Total Ordinary Shares Deferred Shares Paid-In Accumulated Controlling Shareholders’ Shares Amount Shares Amount Capital Deficit Interest Equity Balance—January 1, 2013 5,076,789 $51 — — $28,465 $(22,258) $1,725 $7,983 Net loss — — — — — (5,295) (92) (5,387) Shares exchanged forBioPancreate non-controllinginterest 336,136 3 — — 1,563 — (1,609) (43) Stock-based compensation — — — — 346 — — 346 Issuance of shares 2,526,683 25 — — 14,899 — — 14,924 Balance—December 31, 2013 7,939,608 79 — — 45,273 (27,553) 24 17,823 Net loss — — — — — (9,670) — (9,670) Shares exchanged forBioPancreate non-controllinginterest 5,272 — — — 19 — (24) (5) Stock-based compensation — — — — 480 — — 480 Issuance of shares 1,755,909 18 — — 10,175 — — 10,193 Balance—December 31, 2014 9,700,789 97 — — 55,947 (37,223) — 18,821 Net loss — — — — — (43,580) (53) (43,633) Stock-based compensation — — — — 3,581 — — 3,581 Reclass of stock-basedliability award to equity — — — — 1,542 — — 1,542 Issuance of shares 9,108,169 91 — — 91,418 — — 91,509 U.S. non-accredited sharesrepurchased (24,955) — — — (412) — — (412) Issuance of shares in initialpublic offering, net 2,500,000 25 — 19,450 — — 19,475 Non-controlling interestresulting from exchangeoffer (78,621) (1) — — (616) — 617 — Beneficial shares issued — — 40,000 $44 — — — 44 Balance—December 31, 2015 21,205,382 $212 40,000 $44 $170,910 $(80,803) $564 $90,927 The accompanying notes are an integral part of these consolidated financial statements.F-6 Table of ContentsSTRONGBRIDGE BIOPHARMA plcConsolidated Statements of Cash Flow(In thousands) Year Ended December 31, 2013 2014 2015 Cash flows from operating activities: Net loss $(5,387) $(9,670) $(43,633) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 3 9 11 Stock-based compensation 748 251 3,940 Deferred income tax benefit (93) (480) (450) Impairment on investment in Antisense Therapeutics — — 551 Change in fair value of foreign currency forward contracts (159) (279) 438 Changes in operating assets and liabilities, net of effect of acquisition: Accounts payable 519 236 1,737 Accrued liabilities 994 736 1,263 Other assets — 2 (52) Prepaid expenses and other current assets (100) (309) (1,165) Net cash used in operating activities (3,475) (9,504) (37,360) Cash flows from investing activities: Payments for acquisitions — — (3,168) Investment in Antisense Therapeutics — — (1,101) Purchase of equipment (2) (24) (25) Net cash used in investing activities (2) (24) (4,294) Cash flows from financing activities: Proceeds from initial public offering, net — — 19,475 Proceeds from issuance of ordinary shares 14,924 10,193 58,341 U.S. non-accredited shares repurchased — — (412) Net cash provided by financing activities 14,924 10,193 77,404 Effect of exchange rate changes on cash and cash equivalents (455) 70 241 Net increase in cash and cash equivalents 10,992 735 35,991 Cash and cash equivalents—beginning of period 3,905 14,897 15,632 Cash and cash equivalents—end of period $14,897 $15,632 $51,623 Supplemental non-cash investing and financing activities: Ordinary shares issued for acquisition of COR-005 — — $33,211 Ordinary shares exchanged for BioPancreate $2,915 $43 $ — The accompanying notes are an integral part of these consolidated financial statements.F-7 Table of ContentsSTRONGBRIDGE BIOPHARMA plcNotes to Consolidated Financial Statements1. OrganizationStrongbridge Biopharma plc (formerly known as Cortendo AB) is a biopharmaceutical company incorporated inIreland and based in the United States. We are focused on the development, in‑licensing, acquisition and eventualcommercialization of multiple complementary products and product candidates within the franchises that target rare diseases.Our primary focus to date has been to build our rare endocrine franchise, which includes product candidates for the treatmentof Cushing’s syndrome and acromegaly, two rare diseases with a high unmet need for innovative treatment options. We alsointend to identify and in‑license or acquire products or product candidates that will be complementary to our existing rareendocrine franchise or that would form the basis for new rare disease franchises.On October 15, 2015, a registration statement was declared effective by the U.S. Securities and ExchangeCommission and on October 16, 2015 we initiated our initial U.S. public offering (IPO) of 2,500,000 ordinary shares at aprice of $10.00 per share. The aggregate net proceeds received by us from the IPO were $19.5 million. Our shares begantrading on The NASDAQ Global Select Market under the symbol "SBBP". On October 20, 2015, trading ceased on theNorwegian Over‑The‑Counter Market, or NOTC.Exchange offerOn May 26, 2015, Strongbridge Biopharma plc (then named Cortendo plc), was incorporated under the laws ofIreland.On August 7, 2015, Strongbridge Biopharma plc initiated an exchange offer for the outstanding shares of CortendoAB. The exchange offer was structured as a one‑for‑one exchange offer in which shareholders of Cortendo AB exchangedtheir common shares, with a par value of $0.15, for beneficial interests in ordinary shares of Strongbridge Biopharma plc,with a par value of $0.01, in the form of Norwegian depositary receipts and, as the case may be, Swedish depositary receipts(except for non‑accredited investors who hold Cortendo AB shares located in the United States, who were offered cash in anamount equivalent to the value of the Strongbridge Biopharma plc shares such investors would otherwise receive for theirCortendo AB shares exchanged).The exchange offer was settled on September 8, 2015, and Cortendo AB became a subsidiary with 99.582% of itsshares being owned by Strongbridge Biopharma plc. Accordingly, Strongbridge Biopharma plc is a continuation of CortendoAB, the predecessor, and the consolidated financial statements represent the assets, liabilities and results of operations ofCortendo AB, for all periods presented.On September 8, 2015, Strongbridge Biopharma plc effected a 1‑for‑11 reverse stock split of its ordinary shares.Accordingly, the consolidated financial statements and notes retroactively reflect the capital structure of StrongbridgeBiopharma plc after giving effect to the exchange offer and the reverse stock split. With affect from September 8, 2015, the0.418% of Cortendo AB not owned by Strongbridge Biopharma plc, is accounted for as a non‑controlling interest.LiquidityWe believe that our cash resources of $51.6 million at December 31, 2015 will be sufficient to allow us to fundplanned operations into the fourth quarter of 2017, which is after the expected receipt of data from the COR-003 SONICStrial. As we continue to incur losses, our transition to profitability is dependent upon the successful development, approvaland commercialization of our product candidates and achieving a level of revenues adequate to support our cost structure.We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. Ourmanagement intends to fund future operations through additional equity offerings, and may seek additional capital througharrangements with strategic partners or from other sources. There can be no assurances, however, that additional funding willbe available on terms acceptable to us.F-8 Table of Contents2. Summary of significant accounting policies and basis of presentationBasis of presentation and principles of consolidationThe accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries,BioPancreate Inc. (Trevose, Pennsylvania, United States), Cortendo AB (Gothenburg, Sweden), Cortendo Invest AB(Gothenburg, Sweden) and Cortendo Caymans (Georgetown, Cayman Islands). All intercompany balances and transactionshave been eliminated in consolidation. These audited consolidated financial statements have been prepared in conformitywith generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicableguidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) andAccounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB).Foreign currency translationThe consolidated financial statements are reported in United States dollars, which is the functional currency of oursubsidiaries and Cortendo AB. Transactions in foreign currencies are remeasured into our functional currency at the rate ofexchange prevailing at the date of the transaction. Any monetary assets and liabilities arising from these transactions areremeasured into our functional currency at exchange rates prevailing at the balance sheet date or on settlement. Resultinggains and losses are recorded in foreign exchange loss in our consolidated statements of operations.Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires us to make estimates andassumptions that affect the reported amounts in the financial statements and accompanying notes. We must apply significantjudgment in this process. Actual results could materially differ from those estimates.ReclassificationsThe prior year consolidated financial statements contain certain reclassifications to our consolidated statements ofcash flow for the year ended December 31, 2013 and 2014 to conform to the presentation for the year ended December 31,2015.Segment informationOperating segments are identified as components of an enterprise about which separate discrete financialinformation is available for evaluation by the chief operating decision maker, or decision making group, in making decisionson how to allocate resources and assess performance. We view our operations and manage our business in one operatingsegment. Our material long‑lived assets, which primarily consists of in‑process research and development, reside in theUnited States, Sweden and Cayman Islands.Cash and cash equivalentsWe consider all short‑term highly liquid investments with an original maturity at the date of purchase of threemonths or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money marketaccounts, respectively.Concentration of credit risk and other risks and uncertaintiesCash deposits in Ireland, Norway and Sweden for the years ended December 31, 2014 and 2015 of $15.4 million and$3.1 million, respectively, are subject to local banking laws and may bear higher or lower risk than cash deposited in theUnited States. As part of our cash and investment management processes, we perform periodic evaluations of the creditstanding of the financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustainedany credit losses from instruments held at these financial institutions.F-9 Table of ContentsFair value of financial instrumentsFair value accounting is applied for all financial assets and liabilities and non‑financial assets and liabilities that arerecognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).We are required to disclose information on all assets and liabilities reported at fair value that enables an assessmentof the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures(ASC 820), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs andminimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputsare inputs that market participants would use in pricing the asset or liability based on market data obtained from sourcesindependent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participantswould use in pricing the asset or liability, and are developed based on the best information available in the circumstances.The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investmentsand is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described as follows:Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that wehave the ability to access at the measurement date.Level 2—Valuations based on quoted prices for similar assets or liabilities, or quoted prices in markets that are notactive, and for which all significant inputs are observable, either directly or indirectly.Level 3—Valuations that require inputs that reflect our own assumptions that are both significant to the fair valuemeasurement and unobservable. To the extent that valuation is based on models or inputs that are less observable orunobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree ofjudgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A financialinstrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to thefair value measurement.Through June 30, 2015, we entered into foreign currency forward contracts to offset some of the foreign exchangerisks we bear on operating expenses that were not denominated in U.S. dollars. These instruments were not entered into forspeculative purposes and, although we believe they served as effective economic hedges, we did not seek to qualify forhedge accounting. The forward contracts settled on June 30, 2015, and we have not entered into new forward contracts.These forward contracts were recorded at fair value on the accompanying consolidated balance sheets as prepaidexpenses and other current assets. These forward contracts were measured using observable quoted prices for similarinstruments. The outstanding notional amount of our unsettled foreign currency forward contracts as of December 31, 2014and 2015 was $2.3 million and $0 million, respectively, and the fair values of those assets were $0.4 million and $0,respectively. The gain and loss recognized in other income, net, for these forward contracts was a gain of $0.3 million and aloss of $0.4 million for the years ended December 31, 2014 and 2015, respectively. These amounts represent the net gain orloss on the forward contracts and do not include changes in the related exposures, which generally offset a portion of the gainor loss on the forward contracts. We considered our foreign currency forward contracts under Level 2 of the fair valuehierarchy.On May 13, 2015, as part of our agreement to acquire an exclusive license agreement from Antisense TherapeuticsLimited (ATL), we purchased 15,025,075 shares of ATL’s common stock that had a fair value of $0.095 per share, which wasthe quoted market price of the ATL common stock on the Australian Securities Exchange (ASX). As we may notcontractually sell ATL’s common shares for 24 months from the date of purchase, we estimated a discount for the lack ofmarketability of $0.022 per share using an option pricing model that estimated the value of a protective put option usinginputs that included quoted market prices and observable inputs other than quoted market prices. We initially recorded thenet fair value amount of $1.1 million as a non-current other asset in our consolidated balance sheet. As of December 31,2015, the non-current other asset was valued using the ASX closing market price of $0.051 per share and an updated discountfor the lack of marketability of $0.014 per share using an option pricing model,F-10 Table of Contentsresulting in an impairment charge recorded as a valuation allowance against the non-current other asset of $550,000. Weconsidered both the initial valuation as well as our year-end valuation under Level 2 of the fair value hierarchy.Property and equipment, netProperty and equipment, net, consists of office equipment such as furniture, fixtures and computers. Depreciationexpense for the years ended December 31, 2014 and 2015 was not significant. The following useful lives were used for thevarious classifications of property and equipment, net: Amortization Periods Computer hardware 3-5years Computer software 2-5years Furniture and fixtures 2-5years Business combinationsWhen acquiring new enterprises over which we obtain control, the acquisition method is applied. Under thismethod, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date.Allowance is made for the tax effect of the adjustments made.The excess of the consideration transferred, the amount of the non‑controlling interest in the acquiree and theacquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquiredis recorded as goodwill.In‑process research and developmentPurchased identifiable intangible assets with indefinite lives, such as our in‑process research and development, areevaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicatethat it is more likely than not that the fair value of these assets may not be recovered.To test these assets for impairment, we compare the fair value of the asset to its carrying value. Themethod we use to estimate the fair value measurements of indefinite‑lived intangible assets is based on theincome approach. For the impairment analysis for the year ended December 31, 2015, significantunobservable inputs used in the income approach valuation method including a discount rates, royalty ratesand probabilities of product candidate advancement from one clinical trial phase to the next. Thedetermination of fair value of indefinite lived assets is considered Level 3 for fair value measurement. GoodwillWe test goodwill for impairment on an annual basis or whenever events occur that may indicate possibleimpairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment existsand (2) measure the amount of impairment.Because we have one operating segment, when testing for a potential impairment of goodwill, we are required toestimate the fair value of our business and determine the carrying value. If the estimated fair value is less than the carryingvalue of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in a mannersimilar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwillimpairment be determined, if any.To estimate the fair value of the business, primarily a market‑based approach is applied, utilizing our public marketvalue. We did not record a charge for impairment for the years ended December 31, 2013, 2014 and 2015.F-11 Table of ContentsResearch and development expensesResearch and development costs are expensed as incurred. Research and development expenses consist of internaland external expenses. Internal expenses include compensation and related expenses. External expenses includedevelopment, clinical trials, report writing and regulatory compliance costs incurred with clinical research organizations andother third‑party vendors. At the end of the reporting period, we compare payments made to third‑party service providers tothe estimated progress toward completion of the research or development objectives. Such estimates are subject to change asadditional information becomes available. Depending on the timing of payments to the service providers and the progressthat we estimate has been made as a result of the service provided, we may record net prepaid or accrued expense relating tothese costs. Upfront and milestone payments made to third parties who perform research and development services on ourbehalf are expensed as services are rendered.Stock‑based compensationWe account for stock‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—StockCompensation (ASC 718). ASC 718 requires all stock‑based payments including grants of stock options and restricted stockand modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fairvalues.Our stock‑based awards are subject to either service‑based or performance‑based vesting conditions. Vesting ofcertain awards could also be accelerated upon achievement of defined market‑based vesting conditions. Certain awards alsocontain a combination of service and market conditions or performance and market conditions.We account for employee stock‑based awards at grant‑date fair value. If we issue awards with an exercise pricedenominated in a currency other than our functional currency, trading currency or the currency for which we compensate ouremployee, we account for these as liabilities. We account for non‑employee and liability‑classified stock‑based awards basedon the then‑current fair values at each financial reporting date until the performance is complete for non‑employee awards, oruntil the award is settled (exercised) for liability‑classified awards. Changes in the amounts attributed to these awardsbetween the reporting dates are included in stock‑based compensation expense (credit) in our statements of operations. Weinclude liability‑classified stock options in non‑current liabilities in our balance sheets as their settlement (exercise) does notrequire use of cash, cash equivalents or other current assets.We record compensation expense for service‑based awards over the vesting period of the award on a straight‑linebasis. Compensation expense related to awards with performance‑based vesting conditions is recognized over the requisiteservice period using the accelerated attribution method to the extent achievement of the performance condition isprobable. For those awards in which the performance condition was the completion of our IPO, we did not recognizecompensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market‑based vesting conditions is recognized using theaccelerated attribution method over the shorter of the requisite service period or the implied period associated withachievement of the market‑based vesting provisions.We estimate the fair value of our awards with service conditions or a combination of service and market conditionsusing the Black‑Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expectedstock price volatility, (ii) the expected term of the award, (iii) the risk‑free interest rate and (iv) expected dividends. Due tothe lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on thehistorical volatility of a group of similar companies that are publicly traded. We selected companies with comparablecharacteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share priceinformation sufficient to meet the expected term of the stock‑based awards. We compute historical volatility data using thedaily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of thestock‑based awards.We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine theprobability of satisfying the market condition. We make this estimate using the conditions that exist at the grant date. Thederived service period, which may be the requisite service period, is also determined at this time. Compensation cost for ourawards with a market condition is recognized ratably using the accelerated attribution method if the award isF-12 Table of Contentssubject to graded vesting over the requisite service period. The compensation cost for our awards with a market condition isnot reversed if the market condition is not satisfied.We have estimated the expected term of employee service‑based stock options using the “simplified” method,whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option,due to our lack of sufficient historical data. We have estimated the expected term of employee awards with service andmarket conditions using a Monte‑Carlo simulation model. This approach involves generating random stock‑price pathsthrough a lattice‑type structure. Each path results in a certain financial outcome, such as accelerated vesting or specificoption payout. We have estimated the expected term of nonemployee service‑ and performance‑based awards based on theremaining contractual term of such awards.The risk‑free interest rates for periods within the expected term of the option are based on the Swedish GovernmentBond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associatedaward. We have never paid dividends, and do not expect to pay dividends in the foreseeable future.We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods ifactual forfeitures differ from estimates. We record stock‑based compensation expense only for those awards that are expectedto vest. To the extent that actual forfeitures differ from our estimates, the differences are recorded as a cumulative adjustmentin the period the estimates were revised. Historical forfeitures have been insignificant.Income taxesWe use the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740,Income Taxes (ASC 740). Under this method, income tax expense is recognized for the amount of (1) taxes payable orrefundable for the current year and (2) deferred tax consequences of temporary differences resulting from matters that havebeen recognized in an entity’s financial statements or tax returns.Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets andliabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. Avaluation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positiveand negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statementsand prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement ofa tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de‑recognition,classification, interest and penalties, accounting in interim periods, disclosure and transition. We have no material uncertaintax positions for any of the reporting periods presented.We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31,2014 and 2015, we had no accrued interest or penalties related to uncertain tax positions and no amounts have beenrecognized in our statements of operations.Net loss per shareBasic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weightedaverage number of shares of common stock outstanding during the period. Diluted net loss per share is calculated bydividing the net loss attributable to common stockholders by the weighted‑average number of shares of common stockoutstanding for the period, including any dilutive effect from outstanding stock options or other equity-based awards. Sharesused in the diluted net loss per share calculations exclude anti‑dilutive common equivalent shares, which currently consist ofstock options. Due to the Company operating at a net loss these anti‑dilutive shares of common stock totaled 465,540 shares,925,077 shares and 2,591,520 shares for the years ended December 31, 2013, 2014 and 2015, respectively. While thesecommon equivalent shares are currently anti‑dilutive, they could be dilutive in the future.F-13 Table of ContentsRecently adopted accounting pronouncementsDuring the quarter ended September 30, 2014, the FASB issued ASU No. 2014‑15, Presentation of FinancialStatements—Going Concern (ASU No. 2014‑15). The new guidance addresses management’s responsibility to evaluatewhether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnotedisclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonablyknowable at the date that the financial statements are issued. The standard will be effective for the first interim period withinannual reporting periods beginning after December 15, 2016. Early adoption is permitted, but we have not elected to do so.We do not expect the adoption of ASU 2014‑15 to have an impact on our financial position or results of operations.In September 2015, the FASB issued ASU 2015-15, Business Combinations—Simplifying the AccountingMeasurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurementperiod adjustments for business combinations. The new guidance requires that the cumulative impact of a measurementperiod adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment isidentified. The guidance is effective for fiscal years beginning on or after December 15, 2015, and interim periods withinthose years and should be applied prospectively to measurement period adjustments that occur after the effective date. Wewill prospectively apply the guidance to applicable transactions. In November 2015, the FASB issued ASU 2015-17, Income Taxes—Balance Sheet Classification of DeferredTaxes that amends the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilitiesand assets be classified as noncurrent on the balance sheet. Previous guidance required deferred tax liabilities and assets to beseparated into current and noncurrent amounts on the balance sheet. The guidance is effective for fiscal years beginning onor after December 15, 2016, and interim periods within those years. We are currently evaluating the impact that the newguidance will have on our consolidated financial statements.In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets andFinancial Liabilities, that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financialinstruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginningafter December 15, 2017, and early adoption is permitted. We are currently assessing the impact that adopting this newaccounting guidance will have on our consolidated financial statements.3. Fair value measurementThe following table sets forth the fair value of our financial assets by level within the fair value hierarchy. Ourforeign currency forward contracts are classified within Level II because of the use of observable inputs for similar derivativeinstruments in active markets, or quoted prices for identical or similar instruments in markets that are not active, and aredirectly or indirectly observable, and are classified as prepaid expenses and other current assets. The noncurrent assetcomprising of our investment in ATL common stock is classified as Level II as we discounted the active market quoted priceof the security to reflect our contractual restriction on selling the investment.Because of their short term nature, the amounts reported in the balance sheet for cash and cash equivalents, andaccounts payable approximate fair value.Our financial assets are as follows (in thousands): As of December 31, 2014 Level I Level II Level III Total Financial assets: Foreign currency forwardcontracts $— $438 $— $438 Total financial assets $— $438 $— $438 F-14 Table of Contents As of December 31, 2015 Level I Level II Level III Total Financial assets: Cash equivalents $45,296 $ — $ — $45,296 Noncurrent asset — 550 — 550 Total financial assets $45,296 $550 $ — $45,846 4. In‑process research and development and goodwillThe gross carrying amount of in‑process research and development and goodwill is as follows (in thousands): As of December 31, 2014 Cost Additions Disposals Total In-process research anddevelopment $5,228 $— $— $5,228 Goodwill 2,200 — — 2,200 Total $7,428 $— $— $7,428 As of December 31, 2015 Cost Additions Disposals Total In-process research anddevelopment $5,228 $31,323 $— $36,551 Goodwill 2,200 5,056 — 7,256 Total $7,428 $36,379 $— $43,807 Goodwill and in‑process research and development as of December 31, 2014 and 2015 resulted from our acquisitionof BioPancreate and our 2015 acquisition of product candidate COR-005 from Aspireo Pharmaceuticals, Ltd. (see Note 7). In‑process research and development is initially measured at its fair value and is not amortized until commercialization. Oncecommercialization occurs, in‑process research and development will be amortized over its estimated useful life. We did notidentify any indicators of impairment of our in‑process research and development as of December 31, 2015.5. Accrued liabilitiesAccrued liabilities consist of the following (in thousands): As of December 31, 2014 2015 Consulting and professional fees $516 $1,288 Employee compensation 804 1,172 Other 102 225 Total accrued liabilities $1,422 $2,685 6. Commitments and contingencies(a) LeaseOn April 22, 2014, we entered into a 48‑month building lease for approximately 3,000 square feet of space inRadnor, Pennsylvania. The lease has annual rent escalations. We obtained access to the newly leased space on August 1,2014, and this was considered the lease commencement date for accounting purposes. Thus, rent expense began on this dateand is recognized on a straight‑line basis over the term of the lease.In March 2015, the Company entered into a 52‑month building sublease agreement for 14,743 square feet of officespace in Trevose, Pennsylvania. The lease has annual rent escalations and is recognized on a straight‑line basisF-15 Table of Contentsover the term of the lease. As a result of this lease, we vacated the previously leased Radnor, Pennsylvania facility as ofApril 13, 2015 and determined that the Radnor, Pennsylvania facility was not likely to be utilized during the remaining leaseterm and as such we commenced efforts to sublease the facility. The Company recorded a liability as of the April 13, 2015cease‑use date of $0.1 million for the estimated fair value of its obligations under the lease. The most significant assumptionsused in determining the amount of the estimated liability are the potential sublease revenues and the credit‑adjusted risk‑freerate utilized to discount the estimated future cash flows.As of December 31, 2015, future minimum commitments under facility operating leases were as follows (inthousands): Operating leases 2016 $227 2017 311 2018 319 2019 184 Total minimum lease payments $1,041 Rent expense recognized under our operating lease, including additional rent charges for utilities, parking,maintenance and real estate taxes, was $83,000 and $254,000 for the years ended December 31, 2014 and 2015, respectively.(b) License AgreementsCornell Center for Technology Enterprise and CommercializationIn 2011, a license agreement was executed between BioPancreate and the Cornell Center for Technology Enterpriseand Commercialization (CCTEC). Under the terms of the license agreement, BioPancreate obtained certain rights from theCCTEC for commercial development, use and sale of products that use the technology associated with the license. We areobligated to make milestone payments upon the achievement of certain regulatory and clinical milestones up to $2.6 millionin the aggregate. For years in which licensed products are sold, we are required to pay a royalty based on a low single‑digitpercentage of net sales. The minimum annual royalty in such years is $100,000. In the event the product is sublicensed, upto $3.5 million of certain fees we receive that are not earned royalties or reimbursements for direct costs are due to CCTECupon achievement of certain regulatory and clinical milestones.Antisense TherapeuticsIn May 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, with AntisenseTherapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ product candidate,ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and the treatment ofany complications of diabetes). We refer to this product candidate as COR‑004. Under the terms of the Antisense LicenseAgreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash which was recorded asresearch and development expenses. We also invested $2.0 million in Antisense Therapeutics equity which was initiallyrecorded as a non-current other asset for $1.1 million with the difference constituting the cost of the license which wasrecorded as research and development expense. The terms of the Antisense License Agreement provided that we couldterminate the Antisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believed thefurther development and commercialization of COR‑004 was no longer feasible due to a material change that was beyond ourcontrol. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would berequired to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to AntisenseTherapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because we believe thefurther development and commercialization of COR‑004 is no longer feasible due to material changes that were beyond ourcontrol. We have received a reply from Antisense Therapeutics objecting to our termination notice and to our assertion thatthe further development and commercialization of COR-004 was no longer feasible due to material changes that were beyondour control. The reply also requests thatF-16 Table of Contentsthe parties appoint an independent expert to resolve this dispute in accordance with the terms of the Antisense LicenseAgreement. (c) Other CommitmentsIn 2012, we entered into consulting agreements with two individuals to serve as Chief Executive Officer and ChiefOperating Officer, respectively. In connection with those agreements, each individual is entitled to a payment in the event ofthe sale or license by us prior to December 31, 2016 of BioPancreate or major assets derived from the BioPancreatetechnology. The payment amounts are based on a percentage of the acquisition price or up‑front license fee, as applicable.The maximum amount payable per individual in the event of a sale or license is $1.25 million or $2.5 million in total. Eachindividual is entitled to such payments even though each is no longer serving in their respective officer roles.7. Business combinationsBioPancreateOn October 29, 2013, we exercised our option to acquire the remaining interest in BioPancreate. As considerationfor this acquisition of shares, we issued 336,136 shares of our ordinary shares in October 2013 and an additional5,272 ordinary shares in January 2014. The transaction was recorded as an equity transaction and the previously heldnon‑controlling interest in BioPancreate was reclassified to equity.Aspireo Pharmaceuticals Ltd. AcquisitionOn June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd. (Aspireo), an Israeli company, its productcandidate, DG3173, and the rights and obligations to the on‑going research and development contracts, the combination ofwhich represented “substantially all” of the Aspireo business. We refer to this product candidate as COR‑005. Under theterms of the acquisition agreement, we issued to Aspireo 2,062,677 common shares, which had a value of $33.2 million onJune 30, 2015. In connection with this acquisition, we also made a payment to the Office of the Chief Scientist of the IsraeliMinistry of Economy, or OCS, in the amount of $3.0 million, which represents the repayment of amounts granted by the OCSto Aspireo, plus interest, that were used in support of research and development conducted by Aspireo for the development ofDG3173.The acquisition was accounted for using the acquisition method of accounting for business combinations. The totalconsideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values.The fair value of $16.10 per ordinary share of the 2,062,677 ordinary shares issued was determined based on the closingmarket price on the NOTC of our ordinary shares on the acquisition date. To determine the fair value of the acquiredin‑process research and development intangible asset, we applied the income approach using the multi‑period excessearnings method. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (inthousands):In process research and development $31,323 Liabilities assumed: Other liabilities (net) (195) OCS liability (2,973) Total fair values of assets and liabilities 28,155 Fair value of total consideration transferred (33,211) Goodwill $(5,056) The excess of the consideration transferred over net assets acquired was assigned to goodwill in an amount of$5.1 million and is primarily related to expected synergies. A deferred tax liability was not recorded for the differencebetween the book and cost basis of the in‑process research and development intangible asset because the asset isF-17 Table of Contentsdomiciled in the Cayman Islands and therefore we do not expect to pay income tax. The goodwill is not deductible forincome tax purposes.We incurred $2.2 million in acquisition‑related transaction costs for the period ended December 31, 2015, which isincluded as general and administration expense in the accompanying consolidated statements of operations.8. Income taxes For the years ended December 31, 2013, 2014 and 2015, the components of loss before income taxes were as follows(in thousands): Year Ended December 31, 2013 2014 2015 Sweden $(5,267) $(9,165) $(33,960) Ireland — — (191) Cayman Islands — — (8,722) U.S.(213)(985)(1,210)Total $(5,480) $(10,150) $(44,083) The components of income tax (benefit) for the years ended December 31, 2013, 2014 and 2015 were as follows (inthousands): Year Ended December 31, 2013 2014 2015 Current tax expense (benefit): Sweden $— $— $— Ireland — — — U.S. Federal — — — State — — — Total $— $— $— Deferred tax expense (benefit): Sweden $(761) $(648) $212 Ireland — — (24) U.S. Federal (903) (2,433) (17,543) State (225) (720) (1,233) Change in valuation allowance 1,796 3,321 18,138 Total $(93) $(480) $(450) We recorded tax benefits for the federal and state net operating loss carry forwards and federal tax creditcarryforwards attributable to BioPancreate. These deferred benefits are realizable as they offset the non‑current deferred taxliability recorded in connection with the acquisition of BioPancreate.We have incurred net operating losses since inception. We have not reflected any benefit of net operating losscarryforwards (NOLs), other than those attributable to BioPancreate, in the accompanying financial statements. We haveestablished a valuation allowance against the remaining deferred tax assets due to the uncertainty surrounding the realizationof such assets.F-18 Table of ContentsDeferred taxes are recognized for temporary differences between the bases of assets and liabilities for financialstatement and income tax purposes. The tax effect of temporary differences that give rise to significant portions of thedeferred tax assets are as follows (in thousands): Year Ended December 31, 2014 2015 Deferred tax assets: Net operating loss carryforwards $8,775 $22,039 Tax credits 3,811 9,135 Capitalized research and development costs 161 161 Total deferred tax assets 12,747 31,335 Valuation allowance (12,012) (30,150) Deferred tax assets recognized 735 1,185 Deferred tax liabilities: Acquired intangible assets (2,111) (2,111) Total deferred tax liabilities (2,111) (2,111) Net deferred tax liabilities $(1,376) $(926) We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets.Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred taxassets, other than those attributable to BioPancreate, will not be realized. Accordingly, we have provided a full valuationallowance for the remaining deferred tax assets as of December 31, 2014 and 2015. The valuation allowance increased byapproximately $3.3 million and $18.1 million during the year ended December 31, 2014 and 2015, respectively, dueprimarily to net operating losses. The Company’s effective income tax rate differs from the ultimate parent company, Strongbridge Biopharma plc’s,Irish domestic statutory rate of 12.5% for the year ended December 31, 2015. With respect to the prior periods, theeffective income tax rate differs from previous ultimate parent company, Cortendo AB’s, Swedish domestic tax rate of 22% asfollows: Year Ended December 31, 2013 2014 2015 Ireland statutory income tax rate — — 12.5%Swedish statutory income tax rate 22.0% 22.0% — Foreign tax differential between Sweden, U.S., Cayman Islandand Ireland (3.4) (4.6) 15.7 Federal tax credits 15.2 20.9 12.1 Change in valuation allowance (32.8) (32.7) (41.2) Other 0.7 (0.9) 1.9 Effective income tax rate 1.7% 4.7% 1.0%At December 31, 2015, we had approximately $66.6 million of Swedish NOLs and approximately $0.2 million ofIreland NOLs, which have an indefinite life, and approximately $37.1 million of U.S. federal and $37.0 million of state NOLs,which begin to expire in 2031. We operate through a permanent establishment in the United States. Income from thepermanent establishment is taxed in both Sweden and the United States. Relief is granted by way of crediting the U.S. taxagainst the Swedish tax. This tax credit can never exceed the Swedish tax on the income. Since the tax rate is higher in theUnited States than in Sweden, the Swedish taxable carryforward losses of $66.6 million can only generate a tax benefit ifincome is derived from sources other than the permanent establishment in the United States.At December 31, 2015, we had $8.9 million of U.S. federal orphan drug tax credit carryforwards, which begin toexpire in 2032, and $167,000 of U.S. federal research and development tax credit carryforwards, which begin to expire in2031.F-19 Table of ContentsUtilization of the NOLs may be subject to limitations under Swedish tax regulations or U.S. Internal Revenue CodeSection 382 if there is a greater than 50% ownership change as determined under applicable regulations.9. Ordinary sharesVoting rights and privilegesAs of December 31, 2015, there are 600,000,000 authorized shares and 21,205,382 outstanding shares, respectively.The holders of shares of our ordinary shares are entitled to one vote for each ordinary share held at all meetings ofshareholders without limitation and written actions in lieu of meetings. The holders are entitled to receive dividends if andwhen declared by our Board of Directors. No dividends have been declared or paid since our inception. The holders areentitled to share ratably in our assets available for distribution to stockholders, in the event of any voluntary or involuntaryliquidation. In addition, on May 26, 2015 the Company issued 40,000 deferred shares with a €1.00 euro par value per share(US$1.098). The deferred shares are issued in order to satisfy an Irish legislative requirement to maintain a minimum level ofissued share capital denominated in euro. The deferred shares carry no voting rights and are not entitled to any dividend ordistribution.Equity financingsIn December 2014, we issued 1,755,909 shares of common stock for $10.2 million, net of transaction costs. Thesubscription price was $6.17 per share.On February 10, 2015, we issued 4,761,078 shares of our common stock for $25.8 million, net of transaction costs. The subscription price was $5.54 per share.On June 29 and 30, 2015, following shareholder approval of the share purchase agreement which we entered into onMay 14, 2015, we issued 2,284,414 new shares to the investors. The subscription price was $14.54 per share and proceeds netof transaction costs were $32.6 million.On October 22, 2015, we closed on our initial U.S. public offering of 2,500,000 ordinary shares at a price to thepublic of $10.00 per ordinary share for aggregate gross proceeds of $25 million, before deducting the underwritingcommission and estimated offering expenses of $5.5 million.We are listed on The NASDAQ Global Select Market under the symbol "SBBP". A registration statement relating tothese securities was declared effective by the U.S. Securities and Exchange Commission on October 15, 2015. Shares reserved for issuanceThere were 925,077 and 2,591,520 shares of common stock reserved for future issuance upon exercise of stockoptions as of December 31, 2014 and 2015, respectively.10. Stock‑based compensationThe Board of Directors approve the granting of awards to our officers, directors, employees and thirdparty‑consultants. Under these grants, the beneficiaries are given the right to acquire new shares of common stock at apre‑determined option price. The purpose of the grants is to assist us in attracting, retaining and motivating officers,employees, directors and consultants. In addition, these awards provide us with the ability to provide incentives that aredirectly linked to the performance of our business and the related increase in shareholder value.F-20 Table of ContentsOur awards have terms that range from five to ten years. As determined by our Board of Directors, our awards vestover service periods ranging up to four years or upon achievement of defined performance or market criteria such as thevesting of certain awards upon our IPO or awards that are accelerated when the fair value of our stock price reaches definedtargets.The exercise price for each stock option is determined by the Board of Directors based upon considerations such asthe fair value of the underlying ordinary shares and certain market conditions. For options granted prior to our October 22,2015, IPO, the determination of the fair value of our common stock takes into account the price at which our shares werebeing quoted on the NOTC, recent equity financings and our valuations calculated with the assistance of third‑parties.On July 21, 2015, we cancelled 465,262 of our options for certain employees that were not vested and for whichservice was expected to be rendered and concurrently replaced these with 586,710 options. We accounted for thecancellation and replacement as a modification whereby we determined value of the original options based on currentassumptions, without regard to the assumptions made on the grant date. We then compared the fair value of the modifiedaward to the fair value of the original options immediately before the terms were modified, measured based on the share priceand other pertinent factors on the date of the modification The incremental value of $468,000 was recorded over theremaining requisite service periods as these awards are expected to vest. On September 8, 2015, we effected a 1-for-11 reverse stock split of our ordinary shares. In conjunction with thereverse stock split, we adjusted our outstanding stock options by the same ratio.On October 22, 2015, we converted all of our Cortendo AB awards which were previously denominated in SwedishKrona (SEK) and Norwegian Kroner (NOK), into awards to acquire shares in Strongbridge Biopharma plc which weredenominated in U.S. dollars. For the stock options denominated in NOK, the calculation was based on 8.1935 NOK per U.S.dollars. Due to the effects of foreign exchange related to the exercise price, we accounted for the conversion as a modificationwhereby we determined value of the original options based on current assumptions, without regard to the assumptions madeon the grant date. We then compared the fair value of the modified award to the fair value of the original options immediatelybefore the terms were modified, measured based on the share price and other pertinent factors on the date of the modification.Because the effected options were vested, the incremental value of $325,000 was recorded as expense during the periodended December 31, 2015.For the awards denominated in SEK which were classified as liability awards, we accounted for the conversion as amodification whereby we determined the value of the original options based on current assumptions, without regard to theassumptions made on the grant date. We then compared the fair value of the modified award to the fair value of the originaloptions immediately before the terms were modified, measured based on the share price and other pertinent factors on thedate of the modification. The incremental value was recorded as expense in the statement of operations. The liability awardswere fully vested as of October 22, 2015 and therefore the resulting liability after modification of $1.5 million, wasreclassified from liability to additional paid-in capital on the October 22, 2015. As these stock options are now equity-classified and fully vested, we will not remeasure these stock options in the future.F-21 Table of ContentsA summary of the outstanding stock options as of December 31, 2015 is as follows: Options Outstanding Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Term Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding—January 1, 2013 272,727 $2.81 4.33 $584 Granted 192,813 $7.21 Exercised — Outstanding—December 31, 2013 465,540 $4.63 3.76 $1,182 Granted 504,990 $11.18 Forfeited (45,453) $8.64 Exercised — Outstanding—December 31, 2014 925,077 $8.01 3.72 $1,011 Granted 1,710,530 $16.87 Forfeited and cancelled (44,087) $7.60 Exercised — Outstanding—December 31, 2015 2,591,520 $13.59 5.97 $1,844 Vested and exercisable—December 31, 2015 727,280 $6.53 3.12 $1,844 Vested and expected to vest—December 31, 2015 2,591,520 $13.59 5.97 $1,844 Included in the stock options outstanding at December 31, 2015, are unvested stock options to purchase 143,302shares at a weighted average exercise $18.80 per share for which the vesting of certain tranches will accelerate if the fairvalue per share of our stock reaches $16.11, $31.46 or $37.62 for the respective grantee. In addition, the optionsoutstanding include 106,738 shares that vest upon a market appreciation event so long as it occurs prior to May 26, 2019 ofwhich all were unvested as of December 31, 2015 and 106,738 shares that will vest upon the one year anniversary of themarket appreciation event of which all were unvested as of December 31, 2015. The market appreciation event is defined asthe last trading day in the period in which the closing stock price on each of 20 consecutive trading days reported onNASDAQ has been at least $30.14 or $33.66 for the respective grantee.The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest werecalculated as the difference between the exercise price of the options and the estimated fair value of our common stock as ofDecember 31, 2013, 2014 and 2015, respectively.Stock‑based compensation expenseWe recognized stock‑based compensation expense for employees and non‑employees in the accompanyingconsolidated statements of operations as follows (in thousands): Year Ended December 31, 2013 2014 2015 Research and development $438 $268 $793 General and administrative 310 (17) 3,147 Total stock-based compensation $748 $251 $3,940 Included in these amounts was stock compensation expense (credit) attributed to liability‑classified awards of$402,000, $(229,000) and $359,000, for the years ended December 31, 2013, 2014 and 2015, respectively.F-22 Table of ContentsAs of December 31, 2015, the total unrecognized compensation expense related to unvested options, net ofestimated forfeitures, was $9.9 million, which we expect to recognize over an estimated weighted‑average period of1.73 years.In determining the estimated fair value of the stock‑based awards, we use the Black‑Scholes option‑pricing modeland assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.The fair value of stock option awards was estimated with the following assumptions: Year Ended December 31, 2013 2014 2015 Expected term (in years) 4.42 3.23 3.23 Risk-free interest rate 0.0% - 1.7% 0.0% - 0.6% 0.0% - 0.6% Expected volatility 70.8% - 84.4% 68.3% - 80.7% 79.0% - 83.1% Dividend rate —% —% —% F-23Exhibit 10.14 STRONGBRIDGE BIOPHARMA PLC2015 EQUITY COMPENSATION PLAN The purpose of the Strongbridge Biopharma plc 2015 Equity Compensation Plan (the “Plan”) is to provide (i)designated employees of Strongbridge Biopharma plc (the “Company”) and its parents and subsidiaries; (ii) certainconsultants and advisors who perform services for the Company or its parents or subsidiaries; and (iii) non-employeemembers of the Board of Directors of the Company (the “Board”) with the opportunity to receive grants of incentive stockoptions, nonqualified stock options and stock awards. The Company believes that the Plan will encourage the participantsto contribute materially to the growth of the Company, thereby benefitting the Company’s shareholders, and will align theeconomic interests of the participants with those of the shareholders. 1.Administration (a)Committee. The Plan shall be administered and interpreted by the Board or by a committee consisting ofmembers of the Board, which shall be appointed by the Board. After an initial public offering of the Company’s stock asdescribed in Section 19(b) (a “Public Offering”), the Plan shall be administered by a committee of Board members, whichmay consist of “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the“Code”), and related Treasury regulations, and “non-employee directors” as defined under Rule 16b-3 under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”). The Board, however, may ratify or approve any grants as itdeems appropriate, and the Board shall approve and administer all grants made to non-employee directors. The committeemay delegate authority to one or more subcommittees as it deems appropriate. To the extent that a committee orsubcommittee administers the Plan, references in the Plan to the “Board” shall be deemed to refer to the committee orsubcommittee. (b)Board Authority. The Board shall have the sole authority to (i) determine the individuals to whom grantsshall be made under the Plan; (ii) determine the type, size, and terms of the grants to be made to each such individual; (iii)determine the time when the grants will be made and the duration of any applicable exercise or restriction period,including the criteria for exercisability and the acceleration of exercisability; (iv) amend the terms of any previously issuedgrant; (v) accelerate the vesting, exercisability, or lapse of any forfeiture condition with respect to an Award; and (vi) dealwith any other matters arising under the Plan. (c)Board Determinations. The Board shall have full power and authority to administer, construe and interpretthe Plan, correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award or AwardAgreement, make factual determinations and adopt or amend such rules, regulations, agreements, and instruments forimplementing the Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion. TheBoard’s interpretations of the Plan and all determinations made by the Board pursuant to the powers vested in it hereundershall be conclusive and binding on all persons having any interest in the Plan or in any awards granted hereunder. Allpowers of the Board shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and inkeeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. (d)Limitation of Liability. To the maximum extent permitted by law, no member of the Board shall be liablefor any action taken or decision made in good faith relating to the Plan or any Award thereunder. The Board may employcounsel, consultants, accountants, appraisers, brokers or other persons. The Board, the Company, and the officers anddirectors of the Company shall be entitled to rely upon the advice, opinions or valuations of any such persons. 2.Awards Awards under the Plan may consist of grants of incentive stock options as described in Section 5 (“Incentive StockOptions”), nonqualified stock options as described in Section 5 (“Nonqualified Stock Options”) (Incentive Stock Optionsand Nonqualified Stock Options are collectively referred to as “Options”), as stock awards as described in Section 6(“Stock Awards”), and restricted stock units as described in Section 6 (“RSUs”) (hereinafter collectively referred to as“Awards”). All Awards shall be subject to the terms and conditions set forth herein and to such other terms and conditionsconsistent with the Plan as the Board deems appropriate and as are specified in writing by the Board to the individual in agrant instrument or an amendment to the grant instrument (the “Award Agreement”). The Board shall approve the formand provisions of each Award Agreement. Awards under a particular Section of the Plan need not be uniform as amongthe grantees. 3.Shares Subject to the Plan (a)Shares Authorized. Subject to adjustment as described below, the aggregate number of ordinary shares ofpar value US$0.01 each of the Company (“Company Stock”) that may be issued or transferred under the Plan is1,081,818 (the “Share Pool”) and the maximum aggregate number of shares that may be issued under the Plan underIncentive Stock Options is 1,081,818. After a Public Offering, the maximum aggregate number of shares of CompanyStock that shall be subject to Awards made under the Plan to any individual during any calendar year shall be 454,545shares, subject to adjustment as described below. The shares may be authorized but unissued shares of Company Stock orreacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of thePlan. (b)Automatic Share Pool Increase. The Share Pool shall be increased on the first day of each Fiscal Yearbeginning with the 2016 fiscal year, in an amount equal to four percent (4.0%) of the outstanding shares of CompanyStock on the last day of the immediately preceding fiscal year. (c)Adjustments to Share Pool. The Share Pool shall be reduced, on the date of grant, by one share for eachAward granted under the Plan; provided that Awards that are valued by reference to shares of Company Stock but arerequired to be paid in cash pursuant to their terms shall not reduce the Share Pool. If and to the extent Options terminate,expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any Stock Awards orRSUs (including restricted stock received upon the exercise of Options) are forfeited, the shares of Company Stocksubject to such Awards shall again be available for Awards under the Share Pool. Notwithstanding the foregoing, thefollowing shares of Company Stock shall not become available for issuance under the Plan: (A) shares tendered byGrantees, or withheld by the Company, as full or partial payment to the Company upon the exercise of stock optionsgranted under the Plan; and (B) shares withheld by, or otherwise remitted to, the Company to-2- satisfy a Grantee’s tax withholding obligations upon the lapse of restrictions on Stock Awards or the exercise of Optionsgranted under the Plan. (d)Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i) byreason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares; (ii) by reason of amerger, reorganization, or consolidation; (iii) by reason of a reclassification or change in par value; or (iv) by reason of anyother extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt ofconsideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or theCompany’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stockavailable for Awards, the maximum number of shares of Company Stock that any individual participating in the Plan maybe granted in any year, the number of shares covered by outstanding Awards, the kind of shares issued under the Plan, andthe price per share of such Awards shall be adjusted by the Board to reflect any increase or decrease in the number of, orchange in the kind or value of, issued shares of Company Stock to preclude the enlargement or dilution of rights andbenefits under such Awards; provided, however, that any fractional shares resulting from such adjustment shall beeliminated. Any adjustments determined by the Board shall be final, binding, and conclusive. 4.Eligibility for Participation (a)Eligible Persons. All employees of the Company and its parents or subsidiaries (“Employees”), includingEmployees who are officers or members of the Board, and members of the Board who are not Employees (“Non-Employee Directors”) shall be eligible to participate in the Plan. Consultants and advisors who perform services for theCompany or any of its parents or subsidiaries (“Key Advisors”) shall be eligible to participate in the Plan if the KeyAdvisors render bona fide services to the Company or its parents or subsidiaries, the services are not in connection with theoffer and sale of securities in a capital-raising transaction, and the Key Advisors do not directly or indirectly promote ormaintain a market for the Company’s securities. (b)Selection of Grantees. The Board shall select the Employees, Non-Employee Directors, and Key Advisorsto receive Awards and shall determine the number of shares of Company Stock subject to a particular Award in suchmanner as the Board determines. Employees, Key Advisors, and Non-Employee Directors who receive Awards under thePlan shall hereinafter be referred to as “Grantees.” 5.Granting of Options The Company may grant Options to purchase shares of Company Stock to Employees, Non-Employee Directors,and Key Advisors. The following provisions are applicable to Options. (a)Number of Shares. The Board shall determine the number of shares of Company Stock that shall besubject to each Award of Options.-3- (b)Type of Option and Price. (i)The Board may grant Incentive Stock Options that are intended to qualify as “incentive stockoptions” within the meaning of section 422 of the Code or Nonqualified Stock Options that do not qualify as IncentiveStock Options. Incentive Stock Options may be granted only to employees of the Company or its parents or subsidiaries, asdefined in section 424 of the Code. (ii)The purchase price (the “Exercise Price”) of Company Stock subject to an Option shall bedetermined by the Board and may be equal to or greater than the Fair Market Value (as defined below) of a share ofCompany Stock on the date the Option is granted. An Incentive Stock Option may not be granted to an Employee who, atthe time of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock ofthe Company or any parent or subsidiary of the Company, unless the Exercise Price per share is not less than 110% of theFair Market Value of Company Stock on the date of grant. (iii)If the Company Stock is publicly traded, the Fair Market Value per share shall be determined asfollows: (x) if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq NationalMarket, the last reported sale price thereof on the relevant date or (if there were no trades on that date) the latest precedingdate upon which a sale was reported, or (y) if the Company Stock is not principally traded on such exchange or market, themean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or,if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financialreporting service, as applicable and as the Board determines. (iv)If the Company Stock is not publicly traded or, if publicly traded, is not subject to reportedtransactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined bythe Board. The Board shall determine the Fair Market Value based upon the application of a reasonable valuation methodthat considers all material information available to the Board. The Board may engage outside advisors, valuation expertsand counsel to assist the Board in making a determination of Fair Market Value for purpose of the Plan. (c)Option Term. The Board shall determine the term of each Option. The term of any Option shall notexceed ten years from the date of grant. An Incentive Stock Option that is granted to an Employee who, at the time ofgrant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of theCompany, or any parent or subsidiary of the Company, however, may not have a term that exceeds five years from the dateof grant. (d)Exercisability of Options. Options shall become exercisable in accordance with such terms and conditions,consistent with the Plan, as may be determined by the Board and specified in the Award Agreement. The Board mayaccelerate the exercisability of any or all outstanding Options at any time for any reason. The Board may provide in anAward Agreement that the Grantee may elect to exercise part or all of an Option before it otherwise has becomeexercisable. Any shares so purchased shall be restricted shares and shall be subject to a-4- repurchase right in favor of the Company during a specified restriction period, with the repurchase price equal to the lesserof (A) the Exercise Price or (B) the Fair Market Value of such shares at the time of repurchase, and (C) any otherrestrictions determined by the Company. (e)Termination of Employment, Disability, or Death. (i)Except as provided below, an Option may only be exercised while the Grantee is employed by, orproviding service to, the Employer (as defined below) as an Employee, Key Advisor, or member of the Board. In theevent that a Grantee ceases to be employed by, or provide service to, the Employer for any reason other than Disability,death, or termination for Cause, any Option which is otherwise exercisable by the Grantee shall terminate unless exercisedwithin 90 days after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (orwithin such other period of time as may be specified by the Board), but in any event no later than the date of expiration ofthe Option term. Except as otherwise provided by the Board or in the Award Agreement, any of the Grantee’s Optionsthat are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, theEmployer shall terminate as of such date. (ii)In the event the Grantee ceases to be employed by, or provide service to, the Employer on accountof a termination for Cause by the Employer, any Option held by the Grantee shall terminate as of the date the Granteeceases to be employed by, or provide service to, the Employer. In addition, notwithstanding any other provisions of thisSection 5, if the Board determines that the Grantee has engaged in conduct that constitutes Cause at any time while theGrantee is employed by, or providing service to, the Employer or after the Grantee’s termination of employment or service,any Option held by the Grantee shall immediately terminate, and the Grantee shall automatically forfeit all sharesunderlying any exercised portion of an Option for which the Company has not yet delivered the share certificates, uponrefund by the Company of the Exercise Price paid by the Grantee for such shares. Upon any exercise of an Option, theCompany may withhold delivery of share certificates pending resolution of an inquiry that could lead to a finding resultingin a forfeiture. (iii)In the event the Grantee ceases to be employed by, or provide service to, the Employer because theGrantee is Disabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within oneyear after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within suchother period of time as may be specified by the Board), but in any event no later than the date of expiration of the Optionterm. Except as otherwise provided by the Board, any of the Grantee’s Options which are not otherwise exercisable as ofthe date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of suchdate. (iv)If the Grantee dies while employed by, or providing service to, the Employer or within 90 daysafter the date on which the Grantee ceases to be employed or provide service on account of a termination specified inSection 5(f)(i) above (or within such other period of time as may be specified by the Board), any Option that is otherwiseexercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to beemployed by, or provide service to, the Employer (or within such other period of time as may be specified by the Board),but in any event no later than the date of-5- expiration of the Option term. Except as otherwise provided by the Board, any of the Grantee’s Options that are nototherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employershall terminate as of such date. (v)For purposes of this Plan: (A)The term “Employer” shall mean the Company and its parent and subsidiary corporations orother entities, as determined by the Board. (B)“Employed by, or provide service to, the Employer” shall mean employment or service as anEmployee, Key Advisor, or member of the Board (so that, for purposes of exercising Options and satisfyingconditions with respect to Stock Awards or RSUs, a Grantee shall not be considered to have terminatedemployment or service until the Grantee ceases to be an Employee, Key Advisor, or member of the Board),unless the Board determines otherwise. (C)“Disability” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) ofthe Code, within the meaning of the Employer’s long-term disability plan applicable to the Grantee, or asotherwise determined by the Board. (D)“Cause” shall mean, except to the extent specified otherwise by the Board or as defined in anyother agreement between the Grantee and the Company, a finding by the Board that the Grantee has (i) beenconvicted of a felony or crime involving moral turpitude; (ii) disclosed trade secrets or confidential informationof the Employer to persons not entitled to receive such information; (iii) breached any written noncompetition ornonsolicitation agreement between the Grantee and the Employer; or (iv) engaged in willful and continuednegligence in the performance of the duties assigned to the Grantee by the Employer, after the Grantee hasreceived notice of and failed to cure such negligence. (f)Exercise of Options. A Grantee may exercise an Option that has become vested and exercisable, in wholeor in part, by delivering a notice of exercise to the Company. The Grantee shall pay the Exercise Price for an Option bythe Board (i) in cash; (ii) by delivering shares of Company Stock owned by the Grantee (including Company Stockacquired in connection with the exercise of an Option, subject to such restrictions as the Board deems appropriate) andhaving a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by theBoard) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the ExercisePrice; (iii) after a Public Offering, payment through a broker in accordance with procedures permitted by Regulation T ofthe Federal Reserve Board; or (iv) by such other method as the Board may approve. In addition, the Grantee may elect tosettle the Option on a “net basis” by taking delivery of the number of Company Stock equal to Fair Market Value of theshares subject to any Option less the exercise price, any tax (or other governmental obligation) or other administration feesdue. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisite period oftime to avoid adverse accounting consequences to-6- the Company with respect to the Option. The Grantee shall pay the Exercise Price and the amount of any withholding taxdue (pursuant to Section 7) as specified by the Board. (g)Limits on Incentive Stock Options. Each Incentive Stock Option shall provide that, if the aggregate FairMarket Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for thefirst time by a Grantee during any calendar year, under the Plan or any other stock option plan of the Company or a parentor subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option. AnIncentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent orsubsidiary (within the meaning of section 424(f) of the Code) of the Company. 6.Stock Awards and RSUs The Company may issue or transfer shares of Company Stock to an Employee, Non-Employee Director, or KeyAdvisor under a Stock Award or RSU, upon such terms as the Board deems appropriate. The following provisions areapplicable to Stock Awards and RSUs: (a)General Requirements. Shares of Company Stock issued or transferred pursuant to Stock Awards may beissued or transferred for consideration or for no consideration, and subject to restrictions or no restrictions, as determined bythe Board. The Board shall determine the number of shares of Company Stock subject to a Stock Award and the numberof RSUs to be granted to a Grantee, the duration of the period during which, and the conditions, if any, under which, theStock Award and RSUs may vest or may be forfeited to the Company and the other terms and conditions of suchAwards. The Board may require different periods of service or different performance goals and objectives with respect todifferent Grantees holding different Stock Awards or RSUs or to separate, designated portions of shares constituting StockAwards. (b)Transfer Restrictions and Legend on Stock Certificate. Stock Awards and RSUs may not be sold,assigned, transferred, pledged or otherwise encumbered except as provided in the Plan or as may be provided in theapplicable Award Agreement; provided, however, that the Board may determine that Stock Awards and RSUs may betransferred by the Grantee. Each certificate for Stock Awards shall contain a legend giving appropriate notice of therestrictions in the Award. The Grantee shall be entitled to have the legend removed from the stock certificate covering theshares subject to restrictions when all restrictions on such shares have lapsed. The Board may determine that the Companyshall not issue certificates for Stock Awards until all restrictions on such shares have lapsed, or that the Company shallretain possession of certificates for Stock Awards until all restrictions on such shares have lapsed. Upon the lapse of therestrictions applicable to a Stock Award, the Company or other custodian, as applicable, shall deliver such certificates tothe Grantee or the Grantee’s legal representative. (c)Payment/Lapse of Restrictions. Each RSU shall be granted with respect to one share of Company Stock orshall have a value equal to the Fair Market Value of one share of Company Stock. RSUs shall be paid in cash, shares ofCompany Stock, other securities, other Awards or other property, as determined in the sole discretion of the Board, uponthe lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. The amountpayable as a result of the vesting of an RSU shall be distributed as soon-7- as practicable following the vesting date and in no event later than the fifteenth date of the third calendar month of the yearfollowing the vesting date of the RSU (or as otherwise permitted under Section 409A of the Code); provided, however,that a Grantee may, if and to the extent permitted by the Board, elect to defer payment of RSUs in a manner permitted bySection 409A of the Code. (d)Termination of Employment or Service. Except as otherwise set forth in the Award Agreement, if theGrantee ceases to be employed by, or provide service to, the Employer (as defined in Section 5(e)), any Stock Award orRSUs held by the Grantee that are subject to the transfer restrictions set forth in Section 6(b) above at such time shall beforfeited. The Board may, however, provide for complete or partial exceptions to this requirement as it deems appropriate. (e)No Right to Vote and to Receive Dividends. Prior to the lapse of the transfer restrictions set forth inSection 6(b) above, the Grantee shall not have the right to vote shares subject to Stock Awards or to receive any dividendsor other distributions paid on such shares, subject to any restrictions deemed appropriate by the Board. 7.Performance-Based Awards Notwithstanding anything to the contrary herein, certain Stock Awards or RSUs granted under the Plan may begranted in a manner which is deductible by the Company under Section 162(m) of the Code (or any successor sectionthereto). Such Stock Awards or RSUs shall be designated “Performance-Based Awards”. The following provisions areapplicable to Performance-Based Awards: (a)Performance Goals. A Grantee’s Performance-Based Awards shall be determined based on the attainmentof written performance goals approved by the Board for a performance period established by the Board (i) while theoutcome for that performance period is substantially uncertain and (ii) no more than 90 days after the commencement of theperformance period to which the performance goal relates or, if less, the number of days which is equal to 25 percent of therelevant performance period, or as otherwise permitted pursuant to Section 162(m) of the Code (or any successor sectionthereto). The performance goals, which must be objective, shall be based upon one or more of the following criteria: (i)consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (ii) netincome; (iii) operating income; (iv) earnings per share; (v) return on shareholders’ equity; (vi) attainment of strategic andoperational initiatives; (vii) customer income; (viii) economic value-added models; (ix) maintenance or improvement ofprofit margins; (x) stock price (including total shareholder return), including, without limitation, as compared to one ormore stock indices; (xi) market share; (xii) revenues, sales or net sales; (xiii) return on assets; (xiv) book value per share;(xv) expense management; (xvi) improvements in capital structure; (xvii) costs and (xviii) cash flow. The foregoing criteriamay relate to the Company, one or more of its subsidiaries or one or more of its divisions or units, or any combination ofthe foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices,or any combination thereof, all as the Board shall determine. In addition, to the degree consistent with the Code, theperformance goals may be calculated without regard to extraordinary, unusual and/or non-recurring items.-8- (b)Determination of Satisfaction of Performance Goals. The Board shall determine whether, with respect to aperformance period, the applicable performance goals have been met with respect to a given Grantee and, if they have, socertify and ascertain the amount of the applicable Performance-Based Award. No Performance-Based Awards will be paidfor such performance period until such certification is made by the Board. The amount of the Performance-Based Awardactually paid to a given Grantee may be less than the amount determined by the applicable performance goal formula, at thediscretion of the Board. The amount of the Performance-Based Award determined by the Board for a performance periodshall be paid to the Grantee at such time as determined by the Board in its sole discretion after the end of such performanceperiod; provided, however, that a Grantee may, if and to the extent permitted by the Board and consistent with theprovisions of Section 162(m) of the Code, elect to defer payment of a Performance-Based Award in a manner permitted bySection 409A of the Code. To the extent Section 162(m) of the Code (or any successor section thereto) provides termsdifferent from the requirements of this Section 7, this Section 7 shall be deemed amended thereby 8.Withholding of Taxes (a)Required Withholding. All Awards under the Plan shall be subject to applicable federal (including FICA),state, and local tax (or other governmental obligation) withholding requirements or other administration fees due. TheEmployer may require that the Grantee or other person receiving or exercising Awards pay to the Employer the amount ofany federal, state, or local taxes (or other governmental obligations) that the Employer is required to withhold or anyadministration fees due with respect to such Awards, or the Employer may deduct from other wages paid by the Employerthe amount of any withholding taxes, governmental obligations or administration fees due with respect to such Awards. (b)Election to Withhold Shares. If the Board so permits, a Grantee may elect to satisfy the Employer’sincome tax (or other governmental obligation) withholding requirement and any administration fees due with respect to anAward by having shares withheld up to an amount that does not exceed the Grantee’s minimum applicable withholdingrate for federal (including FICA), state, and local tax (and other governmental obligation) liabilities plus any otheradministration fees due. The election must be in a form and manner prescribed by the Board and may be subject to theprior approval of the Board. 9.Transferability of Awards (a)Nontransferability of Awards. Except as provided below, only the Grantee may exercise rights under anAward during the Grantee’s lifetime. A Grantee may not transfer those rights except (i) by will or by the laws of descentand distribution or (ii) with respect to Awards other than Incentive Stock Options, if permitted in any specific case by theBoard, pursuant to a domestic relations order or otherwise as permitted by the Board. When a Grantee dies, the personalrepresentative or other person entitled to succeed to the rights of the Grantee may exercise such rights. Any such successormust furnish proof satisfactory to the Company of his or her right to receive the Award under the Grantee’s will or underthe applicable laws of descent and distribution.-9- (b)Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the Board may provide, in anAward Agreement, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts orother entities for the benefit of or owned by family members, consistent with applicable securities laws, according to suchterms as the Board may determine; provided that the Grantee receives no consideration for the transfer of an Option and thetransferred Option shall continue to be subject to the same terms and conditions as were applicable to the Optionimmediately before the transfer. 10.Right of First Refusal; Repurchase Right (a)Offer. Prior to a Public Offering, if at any time an individual desires to sell, encumber, or otherwisedispose of shares of Company Stock that were distributed to him or her under the Plan and that are transferable, theindividual may do so only pursuant to a bona fide written offer, and the individual shall first offer the shares to theCompany by giving the Company written notice disclosing: (i) the name of the proposed transferee of the Company Stock;(ii) the certificate number and number of shares of Company Stock proposed to be transferred or encumbered; (iii) theproposed price; (iv) all other terms of the proposed transfer; and (v) a written copy of the proposed offer. Within 60 daysafter receipt of such notice, the Company shall have the option to purchase all or part of such Company Stock at the priceand on the terms described in the written notice; provided that the Company may pay such price in installments over aperiod not to exceed four years, at the discretion of the Board. (b)Sale. In the event the Company (or a shareholder, as described below) does not exercise the option topurchase Company Stock, as provided above, the individual shall have the right to sell, encumber, or otherwise dispose ofthe shares of Company Stock described in subsection (a) at the price and on the terms of the transfer set forth in the writtennotice to the Company, provided such transfer is effected within 15 days after the expiration of the option period. If thetransfer is not effected within such period, the Company must again be given an option to purchase, as provided above. (c)Assignment of Rights. The Board, in its sole discretion, may waive the Company’s right of first refusaland repurchase right under this Section 10. If the Company’s right of first refusal or repurchase right is so waived, theBoard may, in its sole discretion, assign such right to the remaining shareholders of the Company in the same proportionthat each shareholder’s stock ownership bears to the stock ownership of all the shareholders of the Company, asdetermined by the Board. To the extent that a shareholder has been given such right and does not purchase his or herallotment, the other shareholders shall have the right to purchase such allotment on the same basis. (d)Purchase by the Company. Prior to a Public Offering, if a Grantee ceases to be employed by, or provideservice to, the Employer, the Company shall have the right to purchase, within 60 days of the date that Grantee ceases to beemployed by, or provide services to, the Employer, all or part of any Company Stock distributed to Grantee under the Planat the Fair Market Value (as defined in Section 5(b)) on the date that Grantee ceases to be employed by, or provide servicesto, the Employer (or at such other price as may be established in the Award Agreement); provided, however, that suchrepurchase shall be made in accordance with applicable accounting rules to avoid adverse accounting treatment.-10- (e)Public Offering. On and after a Public Offering, the Company shall have no further right to purchaseshares of Company Stock under this Section 10. (f)Shareholder’s Agreement. Notwithstanding the provisions of this Section 10, if the Board requires that aGrantee execute a shareholder’s agreement with respect to any Company Stock distributed pursuant to the Plan, whichcontains a right of first refusal or repurchase right, the provisions of this Section 10 shall not apply to such CompanyStock. 11.Change of Control of the Company As used herein, a “Change of Control” shall be deemed to have occurred if: (a)Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) (other than personswho are shareholders on the effective date of the Plan) becomes a “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of thethen outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of achange of ownership resulting from the death of a shareholder, and a Change of Control shall not be deemed to occur as aresult of a transaction in which the Company becomes a subsidiary of another corporation and in which the shareholders ofthe Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitlingsuch shareholders to more than 50% of all votes to which all shareholders of the parent corporation would be entitled in theelection of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); or (b)The consummation of (i) a merger or consolidation of the Company with another corporation where theshareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediatelyafter the merger or consolidation, shares entitling such shareholders to more than 50% of all votes to which all shareholdersof the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class ofstock to elect directors by a separate class vote); (ii) a sale or other disposition of all or substantially all of the assets of theCompany; or (iii) a liquidation or dissolution of the Company. (c)Notwithstanding the foregoing, the following acquisitions shall not constitute a Change of Control: (A) anacquisition by the Company or entity controlled by the Company, or (B) an acquisition by an employee benefit plan (orrelated trust) sponsored or maintained by the Company 12.Consequences of a Change of Control (a)Assumption of Awards. Upon a Change of Control where the Company is not the surviving corporation(or survives only as a subsidiary of another corporation), unless the Board determines otherwise, all outstanding Awardsshall be assumed by, or replaced with comparable Awards by, the surviving corporation (or a parent or subsidiary of thesurviving corporation).-11- (b)Termination of Awards. Upon a Change of Control where the Company is not the surviving corporation(or survives only as a subsidiary of another corporation), in the event the surviving corporation (or a parent or subsidiary ofthe surviving corporation) does not assume or replace the Awards with comparable Awards, (i) the Company shall provideeach Grantee with outstanding Awards written notice of such Change of Control; (ii) all outstanding Options shallautomatically accelerate and become fully vested and exercisable; (iii) all outstanding Stock Awards shall become vestedand deliverable in accordance with Section 6(b); and (iv) all outstanding RSUs shall become vested and deliverable inaccordance with Section 6(c). (c)Other Alternatives. Notwithstanding the foregoing, in the event of a Change of Control, the Board maytake one or both of the following actions: the Board may (i) require that Grantees surrender their outstanding Options inexchange for a payment by the Company, in cash or Company Stock as determined by the Board, in an amount equal tothe amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s unexercisedOptions exceeds the Exercise Price of the Options; or (ii) after giving Grantees an opportunity to exercise their outstandingOptions, terminate any or all unexercised Options at such time as the Board deems appropriate. Such surrender ortermination shall take place as of the date of the Change of Control or such other date as the Board may specify. 13.Requirements for Issuance or Transfer of Shares (a)Shareholder’s Agreement. The Board may require that a Grantee execute a shareholder’s agreement, withsuch terms as the Board deems appropriate, with respect to any Company Stock issued or distributed pursuant to the Plan. (b)Limitations on Issuance or Transfer of Shares. No Company Stock shall be issued or transferred inconnection with any Award hereunder unless and until all legal requirements applicable to the issuance or transfer of suchCompany Stock have been complied with to the satisfaction of the Board. The Board shall have the right to condition anyAward made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with such restrictions on his orher subsequent disposition of such shares of Company Stock as the Board shall deem necessary or advisable, andcertificates representing such shares may be legended to reflect any such restrictions. Certificates representing shares ofCompany Stock issued or transferred under the Plan shall be subject to such stop-transfer orders and other restrictions asmay be required by applicable laws, regulations, and interpretations, including any requirement that a legend be placedthereon. (c)Lock-Up Period. If so requested by the Company or any representative of the underwriters (the“Managing Underwriter”) in connection with any underwritten offering of securities of the Company under the SecuritiesAct of 1933, as amended (the “Securities Act”), a Grantee (including any successor or assigns) shall not sell or otherwisetransfer any shares or other securities of the Company during the 30-day period preceding and the 180-day periodfollowing the effective date of a registration statement of the Company filed under the Securities Act for such underwriting(or such shorter period as may be requested by the Managing Underwriter and agreed to by the Company) (the “MarketStandoff Period”). The-12- Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the endof such Market Standoff Period. 14.Amendment and Termination of the Plan (a)Amendment. The Board may amend or terminate the Plan at any time; provided, however, that the Boardshall not amend the Plan without shareholder approval if such approval is required in order to comply with the Code orother applicable laws or, after an Initial Public Offering, to comply with applicable stock exchange requirements. (b)Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversary ofits effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval of theshareholders. (c)Termination and Amendment of Outstanding Awards. A termination or amendment of the Plan that occursafter an Award is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Boardacts under Section 20(b). The termination of the Plan shall not impair the power and authority of the Board with respect toan outstanding Award. Whether or not the Plan has terminated, an outstanding Award may be terminated or amendedunder Section 20(b) or may be amended by agreement of the Company and the Grantee consistent with the Plan. (d)Governing Document. The Plan shall be the controlling document. No other statements, representations,explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shall be binding uponand enforceable against the Company and its successors and assigns. 15.Funding of the Plan The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or tomake any other segregation of assets to assure the payment of any Awards under the Plan. In no event shall interest bepaid or accrued on any Award, including unpaid installments of Awards. 16.Rights of Participants Nothing in the Plan shall entitle any Employee, Key Advisor, Non-Employee Director, or other person to any claimor right to be granted an Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed asgiving any individual any rights to be retained by or in the employ of the Employer or any other employment rights. 17.No Fractional Shares No fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Award. The Boardshall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares orwhether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.-13- 18.Headings Section headings are for reference only. In the event of a conflict between a title and the content of a Section, thecontent of the Section shall control. 19.Effective Date of the Plan (a)Effective Date. The Plan shall be effective on September 3, 2015. (b)Public Offering. The provisions of the Plan that refer to a Public Offering, or that refer to, or are applicableto persons subject to, section 16 of the Exchange Act or section 162(m) of the Code, shall be effective, if at all, upon theinitial registration of the Company Stock under section 12(g) of the Exchange Act, and shall remain effective thereafter forso long as such stock is so registered. 20.Miscellaneous (a)Awards in Connection with Corporate Transactions and Otherwise. Nothing contained in the Plan shall beconstrued to (i) limit the right of the Board to make Awards under the Plan in connection with the acquisition, by purchase,lease, merger, consolidation, or otherwise, of the business or assets of any corporation, firm or association, includingAwards to employees thereof who become Employees, or for other proper corporate purposes; or (ii) limit the right of theCompany to grant stock options or make other awards outside of the Plan. Without limiting the foregoing, the Board maymake an Award to an employee of another corporation who becomes an Employee by reason of a corporate merger,consolidation, acquisition of stock or property, reorganization, or liquidation involving the Company, the Parent, or any oftheir subsidiaries in substitution for a stock option, stock award or other type of applicable equity grants made by suchcorporation. The terms and conditions of the substitute grants may vary from the terms and conditions required by the Planand from those of the substituted stock incentives. The Board shall prescribe the provisions of the substitute grants. (b)Compliance with Law. The Plan, exercise of Options, restrictions of Stock Awards and obligations of theCompany to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and toapprovals by any governmental or regulatory agency as may be required. With respect to persons subject to section 16 ofthe Exchange Act, after a Public Offering, it is the intent of the Company that the Plan and all transactions under the Plancomply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, it is the intentof the Company that the Plan and applicable Awards under the Plan comply with the applicable provisions of sections162(m), 409A and 422 of the Code. To the extent that any legal requirement of section 16 of the Exchange Act or sections162(m), 409A or 422 of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act orsections 162(m), 409A or 422 of the Code, that Plan provision shall cease to apply. The Board may revoke any Award ifit is contrary to law or modify an Award to bring it into compliance with any valid and mandatory governmentregulation. The Board may also adopt rules regarding the withholding of taxes on payments to Grantees. The Board may,in its sole discretion, agree to limit its authority under this Section.-14- (c)Employees Subject to Taxation Outside the United States. With respect to Grantees who are subject totaxation in countries other than the United States, the Board may make Awards on such terms and conditions as the Boarddeems appropriate to comply with the laws of the applicable countries, and the Board may create such procedures,addenda, and subplans and make such modifications as may be necessary or advisable to comply with such laws. (d)Governing Law. The validity, construction, interpretation, and effect of the Plan and Award Agreementsissued under the Plan shall be governed and construed by and determined in accordance with the laws of the State ofDelaware, without giving effect to the conflict of laws provisions thereof.-15-Exhibit 10.15 STRONGBRIDGE BIOPHARMA PLCNON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLANThe purpose of the Strongbridge Biopharma plc Non-Employee Director Equity Compensation Plan (the“Plan”) is to provide non-employee members of the Board of Directors (the “Board”) of Strongbridge Biopharma plc(the “Company”) with the opportunity to receive grants of nonqualified stock options and stock awards. TheCompany believes that the Plan will encourage the participants to contribute materially to the growth of the Company,thereby benefitting the Company’s shareholders, and will align the economic interests of the participants with those ofthe shareholders.1.Administration(a)Administrator. The Plan shall be administered and interpreted by the Board and all grants madehereunder shall be approved by the Board.(b)Board Authority. The Board shall have the sole authority to (i) determine the individuals to whomgrants shall be made under the Plan; (ii) determine the type, size, and terms of the grants to be made to each suchindividual; (iii) determine the time when the grants will be made and the duration of any applicable exercise orrestriction period, including the criteria for exercisability and the acceleration of exercisability; (iv) amend the terms ofany previously issued grant; (v) accelerate the vesting, exercisability, or lapse of any forfeiture condition with respectto an Award; and (vi) deal with any other matters arising under the Plan.(c)Board Determinations. The Board shall have full power and authority to administer, construe andinterpret the Plan, correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award orAward Agreement, make factual determinations and adopt or amend such rules, regulations, agreements, andinstruments for implementing the Plan and for the conduct of its business as it deems necessary or advisable, in its solediscretion. The Board’s interpretations of the Plan and all determinations made by the Board pursuant to the powersvested in it hereunder shall be conclusive and binding on all persons having any interest in the Plan or in any awardsgranted hereunder. All powers of the Board shall be executed in its sole discretion, in the best interest of theCompany, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarlysituated individuals.(d)Limitation of Liability. To the maximum extent permitted by law, no member of the Board shall beliable for any action taken or decision made in good faith relating to the Plan or any Award thereunder. The Boardmay employ counsel, consultants, accountants, appraisers, brokers or other persons. The Board, the Company, and theofficers and directors of the Company shall be entitled to rely upon the advice, opinions or valuations of any suchpersons.2.AwardsAwards under the Plan may consist of grants of nonqualified stock options as described in Section 5 (“Options”), as stock awards as described in Section 6 (“Stock Awards”), and restricted stock units as described inSection 6 (“RSUs”) (hereinafter collectively referred to as “Awards”). All Awards shall be subject to the terms and conditions set forth herein and to such other terms andconditions consistent with the Plan as the Board deems appropriate and as are specified in writing by the Board to theindividual in a grant instrument or an amendment to the grant instrument (the “Award Agreement”). The Board shallapprove the form and provisions of each Award Agreement. Awards under a particular Section of the Plan need notbe uniform as among the Grantees. 3.Shares Subject to the Plan(a)Shares Authorized. Subject to adjustment as described below, the aggregate number of ordinaryshares of par value US$0.01 each of the Company (“Company Stock”) that may be issued or transferred under thePlan is 345,454 (the “Share Pool”). The shares may be authorized but unissued shares of Company Stock orreacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes ofthe Plan.(b)Automatic Share Pool Increase. The Share Pool shall be increased on the first day of each Fiscal Yearbeginning with the 2016 fiscal year, in an amount equal to one-half percent (0.5%) of the outstanding shares ofCompany Stock on the last day of the immediately preceding fiscal year. (c)Adjustments to Share Pool. The Share Pool shall be reduced, on the date of grant, by one share foreach Award granted under the Plan; provided that Awards that are valued by reference to shares of Company Stockbut are required to be paid in cash pursuant to their terms shall not reduce the Share Pool. If and to the extent Optionsterminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any StockAwards or RSUs (including restricted stock received upon the exercise of Options) are forfeited, the shares ofCompany Stock subject to such Awards shall again be available for Awards under the Share Pool. Notwithstandingthe foregoing, shares tendered by Grantees, or withheld by the Company, as full or partial payment to the Companyupon the exercise of Options granted under the Plan, shall not become available for issuance under the Plan. (d)Adjustments. If there is any change in the number or kind of shares of Company Stock outstanding (i)by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares; (ii) byreason of a merger, reorganization, or consolidation; (iii) by reason of a reclassification or change in par value; or (iv)by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without theCompany’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reducedas a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum numberof shares of Company Stock available for Awards, the maximum number of shares of Company Stock that anyindividual participating in the Plan may be granted in any year, the number of shares covered by outstanding Awards,the kind of shares issued under the Plan, and the price per share of such Awards shall be adjusted by the Board toreflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stockto preclude the enlargement or dilution of rights and benefits under such Awards; provided, however, that anyfractional shares resulting from such adjustment shall be eliminated. Any adjustments determined by the Board shallbe final, binding, and conclusive.-2- 4.Eligibility for Participation(a)Eligible Persons. All members of the Board who are not employees (“Non-Employee Directors”)shall be eligible to participate in the Plan. (b)Selection of Grantees. The Board shall select the Non-Employee Directors to receive Awards andshall determine the number of shares of Company Stock subject to a particular Award in such manner as the Boarddetermines. Non-Employee Directors who receive Awards under the Plan shall hereinafter be referred to as“Grantees.” 5.Granting of OptionsThe following provisions are applicable to Options.(a)Number of Shares. The Board shall determine the number of shares of Company Stock that shall besubject to each Award of Options.(b)Type of Option and Price.(i) The purchase price (the “Exercise Price”) of Company Stock subject to an Option shall bedetermined by the Board and may be equal to or greater than the Fair Market Value (as defined below) of a share ofCompany Stock on the date the Option is granted. (ii) If the Company Stock is publicly traded, the Fair Market Value per share shall be determined asfollows: (x) if the principal trading market for the Company Stock is a national securities exchange or the NasdaqNational Market, the last reported sale price thereof on the relevant date or (if there were no trades on that date) thelatest preceding date upon which a sale was reported, or (y) if the Company Stock is not principally traded on suchexchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevantdate, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or asreported in a customary financial reporting service, as applicable and as the Board determines.(iii) If the Company Stock is not publicly traded or, if publicly traded, is not subject to reportedtransactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determinedby the Board. The Board shall determine the Fair Market Value based upon the application of a reasonable valuationmethod that considers all material information available to the Board. The Board may engage outside advisors,valuation experts and counsel to assist the Board in making a determination of Fair Market Value for purpose of thePlan. (c)Option Term. The Board shall determine the term of each Option. The term of any Option shall notexceed ten years from the date of grant. (d)Exercisability of Options. Options shall become exercisable in accordance with such terms andconditions, consistent with the Plan, as may be determined by the Board and specified in the Award Agreement. TheBoard may accelerate the exercisability of any or all outstanding Options at any time for any reason. The Board mayprovide in an Award Agreement-3- that the Grantee may elect to exercise part or all of an Option before it otherwise has become exercisable. Any sharesso purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during aspecified restriction period, with the repurchase price equal to the lesser of (A) the Exercise Price or (B) the FairMarket Value of such shares at the time of repurchase, and (C) any other restrictions determined by the Company.(e)Termination of Service, Disability, or Death.(i) Except as provided below, an Option may only be exercised while the Grantee is providingservice to the Company as a member of the Board. In the event that a Grantee ceases to provide service to theCompany for any reason other than Disability, death, or termination for Cause, any Option which is otherwiseexercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceasesto provide service to the Company (or within such other period of time as may be specified by the Board), but in anyevent no later than the date of expiration of the Option term. Except as otherwise provided by the Board or in theAward Agreement, any of the Grantee’s Options that are not otherwise exercisable as of the date on which theGrantee ceases to provide service to the Company shall terminate as of such date. (ii) In the event the Grantee ceases to provide service to the Company on account of a removalfrom the Board for Cause by the Company, any Option held by the Grantee shall terminate as of the date the Granteeceases to provide service to the Company. In addition, notwithstanding any other provisions of this Section 5, if the amajority of disinterested members of the Board determines that the Grantee has engaged in conduct that constitutesCause at any time while the Grantee is providing service to the Company or after the Grantee’s termination of service,any Option held by the Grantee shall immediately terminate, and the Grantee shall automatically forfeit all sharesunderlying any exercised portion of an Option for which the Company has not yet delivered the share certificates,upon refund by the Company of the Exercise Price paid by the Grantee for such shares. Upon any exercise of anOption, the Company may withhold delivery of share certificates pending resolution of an inquiry that could lead to afinding resulting in a forfeiture.(iii) In the event the Grantee ceases to provide service to the Company because the Grantee isDisabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one yearafter the date on which the Grantee ceases to provide service to the Company (or within such other period of time asmay be specified by the Board), but in any event no later than the date of expiration of the Option term. Except asotherwise provided by the Board, any of the Grantee’s Options which are not otherwise exercisable as of the date onwhich the Grantee ceases to provide service to the Company shall terminate as of such date.(iv) If the Grantee dies while providing service to the Company or within 90 days after the date onwhich the Grantee ceases to provide service on account of a termination specified in Section 5(f)(i) above (or withinsuch other period of time as may be specified by the Board), any Option that is otherwise exercisable by the Granteeshall terminate unless exercised within one year after the date on which the Grantee ceases to provide service to theCompany (or within such other period of time as may be specified by the Board), but in any event no later than-4- the date of expiration of the Option term. Except as otherwise provided by the Board, any of the Grantee’s Optionsthat are not otherwise exercisable as of the date on which the Grantee ceases to provide service to the Company shallterminate as of such date.(v) For purposes of this Plan:(A) “Provide service to the Company” shall mean service as a member of the Board (so that,for purposes of exercising Options and satisfying conditions with respect to Stock Awards or RSUs, aGrantee shall not be considered to have terminated service until the Grantee ceases to be a member of theBoard), unless the Board determines otherwise.(B)“Disability” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), or as otherwise determined by theBoard.(C)“Cause” shall mean that the Grantee has been convicted of a felony or crime involvingmoral turpitude; or a determination by a majority of the disinterested members of the Board that the Granteehas engaged in any of the following: (i) malfeasance in office; (ii) gross misconduct or neglect; (iii) false orfraudulent misrepresentation inducing the Grantee’s appointment to the Board; (iv) willful conversion ofcorporate funds; or (v) disclosure of trade secrets or confidential information of the Company to persons notentitled to receive such information.(f)Exercise of Options. A Grantee may exercise an Option that has become vested and exercisable, inwhole or in part, by delivering a notice of exercise to the Company. The Grantee shall pay the Exercise Price for anOption (i) in cash; (ii) by delivering shares of Company Stock owned by the Grantee (including Company Stockacquired in connection with the exercise of an Option, subject to such restrictions as the Board deems appropriate) andhaving a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribedby the Board) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal tothe Exercise Price; (iii) after an initial public offering of the Company’s stock as described in Section 17(b) (a “PublicOffering”), payment through a broker in accordance with procedures permitted by Regulation T of the FederalReserve Board; or (iv) by such other method as the Board may approve. In addition, the Grantee may elect to settlethe Option on a “net basis” by taking delivery of the number of Company Stock equal to Fair Market Value of theshares subject to any Option less the exercise price, any tax (or other governmental obligation) or other administrationfees due. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisiteperiod of time to avoid adverse accounting consequences to the Company with respect to the Option. The Granteeshall pay the Exercise Price as specified by the Board.6.Stock Awards and RSUsThe following provisions are applicable to Stock Awards and RSUs:(a)General Requirements. Shares of Company Stock issued or transferred pursuant to Stock Awardsmay be issued or transferred for consideration or for no consideration, and-5- subject to restrictions or no restrictions, as determined by the Board. The Board shall determine the number of sharesof Company Stock subject to a Stock Award and the number of RSUs to be granted to a Grantee, the duration of theperiod during which, and the conditions, if any, under which, the Stock Award and RSUs may vest or may beforfeited to the Company and the other terms and conditions of such Awards. The Board may require differentperiods of service or different performance goals and objectives with respect to different Grantees holding differentStock Awards or RSUs or to separate, designated portions of shares constituting Stock Awards.(b)Transfer Restrictions and Legend on Stock Certificate. Stock Awards and RSUs may not be sold,assigned, transferred, pledged or otherwise encumbered except as provided in the Plan or as may be provided in theapplicable Award Agreement; provided, however, that the Board may determine that Stock Awards and RSUs maybe transferred by the Grantee. Each certificate for Stock Awards shall contain a legend giving appropriate notice of therestrictions in the Award. The Grantee shall be entitled to have the legend removed from the stock certificate coveringthe shares subject to restrictions when all restrictions on such shares have lapsed. The Board may determine that theCompany shall not issue certificates for Stock Awards until all restrictions on such shares have lapsed, or that theCompany shall retain possession of certificates for Stock Awards until all restrictions on such shares have lapsed.Upon the lapse of the restrictions applicable to a Stock Award, the Company or other custodian, as applicable, shalldeliver such certificates to the Grantee or the Grantee’s legal representative.(c)Payment/Lapse of Restrictions. Each RSU shall be granted with respect to one share of CompanyStock or shall have a value equal to the Fair Market Value of one share of Company Stock. RSUs shall be paid incash, shares of Company Stock, other securities, other Awards or other property, as determined in the sole discretionof the Board, upon the lapse of restrictions applicable thereto, or otherwise in accordance with the applicable AwardAgreement. The amount payable as a result of the vesting of an RSU shall be distributed as soon as practicablefollowing the vesting date and in no event later than the fifteenth date of the third calendar month of the year followingthe vesting date of the RSU (or as otherwise permitted under Section 409A of the Code); provided, however, that aGrantee may, if and to the extent permitted by the Board, elect to defer payment of RSUs in a manner permitted bySection 409A of the Code.(d)Termination of Service. Except as otherwise set forth in the Award Agreement, if the Grantee ceasesto provide service to the Company, any Stock Award or RSUs held by the Grantee that are subject to the transferrestrictions set forth in Section 6(b) above at such time shall be forfeited. The Board may, however, provide forcomplete or partial exceptions to this requirement as it deems appropriate.(e)No Right to Vote and to Receive Dividends. Prior to the lapse of the transfer restrictions set forth inSection 6(b) above, the Grantee shall not have the right to vote shares subject to Stock Awards or to receive anydividends or other distributions paid on such shares, subject to any restrictions deemed appropriate by the Board.-6- 7.Transferability of Awards(a)Nontransferability of Awards. Except as provided below, only the Grantee may exercise rights underan Award during the Grantee’s lifetime. A Grantee may not transfer those rights except (i) by will or by the laws ofdescent and distribution or (ii) if permitted in any specific case by the Board, pursuant to a domestic relations order orotherwise as permitted by the Board. When a Grantee dies, the personal representative or other person entitled tosucceed to the rights of the Grantee may exercise such rights. Any such successor must furnish proof satisfactory tothe Company of his or her right to receive the Award under the Grantee’s will or under the applicable laws of descentand distribution.(b)Transfer of Nonqualified Stock Options. Notwithstanding the foregoing, the Board may provide, inan Award Agreement, that a Grantee may transfer Options to family members, or one or more trusts or other entitiesfor the benefit of or owned by family members, consistent with applicable securities laws, according to such terms asthe Board may determine; provided that the Grantee receives no consideration for the transfer of an Option and thetransferred Option shall continue to be subject to the same terms and conditions as were applicable to the Optionimmediately before the transfer.8.Right of First Refusal; Repurchase Right(a)Offer. Prior to a Public Offering, if at any time an individual desires to sell, encumber, or otherwisedispose of shares of Company Stock that were distributed to him or her under the Plan and that are transferable, theindividual may do so only pursuant to a bona fide written offer, and the individual shall first offer the shares to theCompany by giving the Company written notice disclosing: (i) the name of the proposed transferee of the CompanyStock; (ii) the certificate number and number of shares of Company Stock proposed to be transferred or encumbered;(iii) the proposed price; (iv) all other terms of the proposed transfer; and (v) a written copy of the proposedoffer. Within 60 days after receipt of such notice, the Company shall have the option to purchase all or part of suchCompany Stock at the price and on the terms described in the written notice; provided that the Company may paysuch price in installments over a period not to exceed four years, at the discretion of the Board.(b)Sale. In the event the Company (or a shareholder, as described below) does not exercise the option topurchase Company Stock, as provided above, the individual shall have the right to sell, encumber, or otherwisedispose of the shares of Company Stock described in subsection (a) at the price and on the terms of the transfer setforth in the written notice to the Company, provided such transfer is effected within 15 days after the expiration of theoption period. If the transfer is not effected within such period, the Company must again be given an option topurchase, as provided above.(c)Assignment of Rights. The Board, in its sole discretion, may waive the Company’s right of firstrefusal and repurchase right under this Section 8. If the Company’s right of first refusal or repurchase right is sowaived, the Board may, in its sole discretion, assign such right to the remaining shareholders of the Company in thesame proportion that each shareholder’s stock ownership bears to the stock ownership of all the shareholders of theCompany, as determined by the Board. To the extent that a shareholder has been given such-7- right and does not purchase his or her allotment, the other shareholders shall have the right to purchase such allotmenton the same basis.(d)Purchase by the Company. Prior to a Public Offering, if a Grantee ceases to provide service to theCompany, the Company shall have the right to purchase, within 60 days of the date that Grantee ceases to provideservices to the Company, all or part of any Company Stock distributed to Grantee under the Plan at the Fair MarketValue (as defined in Section 5(b)) on the date that Grantee ceases to provide services to the Company (or at such otherprice as may be established in the Award Agreement); provided, however, that such repurchase shall be made inaccordance with applicable accounting rules to avoid adverse accounting treatment.(e)Public Offering. On and after a Public Offering, the Company shall have no further right to purchaseshares of Company Stock under this Section 8.(f)Shareholder’s Agreement. Notwithstanding the provisions of this Section 8, if the Board requires thata Grantee execute a shareholder’s agreement with respect to any Company Stock distributed pursuant to the Plan,which contains a right of first refusal or repurchase right, the provisions of this Section 8 shall not apply to suchCompany Stock.9.Change of Control of the CompanyAs used herein, a “Change of Control” shall be deemed to have occurred if:(a)Any “person” (as such term is used in sections 13(d) and 14(d) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)) (other than persons who are shareholders on the effective date of the Plan)becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securitiesof the Company representing more than 50% of the voting power of the then outstanding securities of the Company;provided that a Change of Control shall not be deemed to occur as a result of a change of ownership resulting from thedeath of a shareholder, and a Change of Control shall not be deemed to occur as a result of a transaction in which theCompany becomes a subsidiary of another corporation and in which the shareholders of the Company, immediatelyprior to the transaction, will beneficially own, immediately after the transaction, shares entitling such shareholders tomore than 50% of all votes to which all shareholders of the parent corporation would be entitled in the election ofdirectors (without consideration of the rights of any class of stock to elect directors by a separate class vote); or (b)The consummation of (i) a merger or consolidation of the Company with another corporation wherethe shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own,immediately after the merger or consolidation, shares entitling such shareholders to more than 50% of all votes towhich all shareholders of the surviving corporation would be entitled in the election of directors (without considerationof the rights of any class of stock to elect directors by a separate class vote); (ii) a sale or other disposition of all orsubstantially all of the assets of the Company; or (iii) a liquidation or dissolution of the Company.(c)Notwithstanding the foregoing, the following acquisitions shall not constitute a Change of Control: (A)an acquisition by the Company or entity controlled by the Company, or-8- (B) an acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company10.Consequences of a Change of Control(a)Assumption of Awards. Upon a Change of Control where the Company is not the survivingcorporation (or survives only as a subsidiary of another corporation), unless the Board determines otherwise, alloutstanding Awards shall be assumed by, or replaced with comparable Awards by, the surviving corporation (or aparent or subsidiary of the surviving corporation).(b)Termination of Awards. Upon a Change of Control where the Company is not the survivingcorporation (or survives only as a subsidiary of another corporation), in the event the surviving corporation (or aparent or subsidiary of the surviving corporation) does not assume or replace the Awards with comparable Awards, (i)the Company shall provide each Grantee with outstanding Awards written notice of such Change of Control; (ii) alloutstanding Options shall automatically accelerate and become fully vested and exercisable; (iii) all outstanding StockAwards shall become vested and deliverable in accordance with Section 6(b); and (iv) all outstanding RSUs shallbecome vested and deliverable in accordance with Section 6(c).(c)Other Alternatives. Notwithstanding the foregoing, in the event of a Change of Control, the Boardmay take one or both of the following actions: the Board may (i) require that Grantees surrender their outstandingOptions in exchange for a payment by the Company, in cash or Company Stock as determined by the Board, in anamount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to theGrantee’s unexercised Options exceeds the Exercise Price of the Options; or (ii) after giving Grantees an opportunityto exercise their outstanding Options, terminate any or all unexercised Options at such time as the Board deemsappropriate. Such surrender or termination shall take place as of the date of the Change of Control or such other dateas the Board may specify.11.Requirements for Issuance or Transfer of Shares(a)Shareholder’s Agreement. The Board may require that a Grantee execute a shareholder’s agreement,with such terms as the Board deems appropriate, with respect to any Company Stock issued or distributed pursuant tothe Plan.(b)Limitations on Issuance or Transfer of Shares. No Company Stock shall be issued or transferred inconnection with any Award hereunder unless and until all legal requirements applicable to the issuance or transfer ofsuch Company Stock have been complied with to the satisfaction of the Board. The Board shall have the right tocondition any Award made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with suchrestrictions on his or her subsequent disposition of such shares of Company Stock as the Board shall deem necessaryor advisable, and certificates representing such shares may be legended to reflect any such restrictions. Certificatesrepresenting shares of Company Stock issued or transferred under the Plan shall be subject to such stop-transfer ordersand other restrictions as-9- may be required by applicable laws, regulations, and interpretations, including any requirement that a legend be placedthereon.(c)Lock-Up Period. If so requested by the Company or any representative of the underwriters (the“Managing Underwriter”) in connection with any underwritten offering of securities of the Company under theSecurities Act of 1933, as amended (the “Securities Act”), a Grantee (including any successor or assigns) shall not sellor otherwise transfer any shares or other securities of the Company during the 30-day period preceding and the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act forsuch underwriting (or such shorter period as may be requested by the Managing Underwriter and agreed to by theCompany) (the “Market Standoff Period”). The Company may impose stop-transfer instructions with respect tosecurities subject to the foregoing restrictions until the end of such Market Standoff Period.12.Amendment and Termination of the Plan(a)Amendment. The Board may amend or terminate the Plan at any time; provided, however, that theBoard shall not amend the Plan without shareholder approval if such approval is required in order to comply with theCode or other applicable laws or, after an Initial Public Offering, to comply with applicable stock exchangerequirements.(b)Termination of Plan. The Plan shall terminate on the day immediately preceding the tenth anniversaryof its effective date, unless the Plan is terminated earlier by the Board or is extended by the Board with the approval ofthe shareholders.(c)Termination and Amendment of Outstanding Awards. A termination or amendment of the Plan thatoccurs after an Award is made shall not materially impair the rights of a Grantee unless the Grantee consents or unlessthe Board acts under Section 18(b). The termination of the Plan shall not impair the power and authority of the Boardwith respect to an outstanding Award. Whether or not the Plan has terminated, an outstanding Award may beterminated or amended under Section 18(b) or may be amended by agreement of the Company and the Granteeconsistent with the Plan.(d)Governing Document. The Plan shall be the controlling document. No other statements,representations, explanatory materials or examples, oral or written, may amend the Plan in any manner. The Plan shallbe binding upon and enforceable against the Company and its successors and assigns.13.Funding of the PlanThe Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or tomake any other segregation of assets to assure the payment of any Awards under the Plan. In no event shall interest bepaid or accrued on any Award, including unpaid installments of Awards.-10- 14.Rights of ParticipantsNothing in the Plan shall entitle any Non-Employee Director or other person to any claim or right to be grantedan Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving any individualany rights to be retained by the Company or any other employment rights. 15.No Fractional SharesNo fractional shares of Company Stock shall be issued or delivered pursuant to the Plan or any Award. TheBoard shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractionalshares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.16.HeadingsSection headings are for reference only. In the event of a conflict between a title and the content of a Section,the content of the Section shall control.17.Effective Date of the Plan(a)Effective Date. The Plan shall be effective on September 3, 2015.(b)Public Offering. The provisions of the Plan that refer to a Public Offering, or that refer to, or areapplicable to persons subject to, section 16 of the Exchange Act, shall be effective, if at all, upon the initial registrationof the Company Stock under section 12(g) of the Exchange Act, and shall remain effective thereafter for so long assuch stock is so registered.18.Miscellaneous(a)Withholding. To the extent required by applicable Federal, state or local law, a Grantee must makearrangements satisfactory to the Company for the payment of any withholding or similar tax obligations that arise inconnection with the Plan.(b)Compliance with Law. The Plan, exercise of Options, restrictions of Stock Awards and obligations ofthe Company to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and toapprovals by any governmental or regulatory agency as may be required. With respect to persons subject to section16 of the Exchange Act, after a Public Offering, it is the intent of the Company that the Plan and all transactions underthe Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. In addition, itis the intent of the Company that the Plan and applicable Awards under the Plan comply with the applicableprovisions of section 409A of the Code. To the extent that any legal requirement of section 16 of the Exchange Actor section 409A of the Code as set forth in the Plan ceases to be required under section 16 of the Exchange Act orsection 409A of the Code, that Plan provision shall cease to apply. The Board may revoke any Award if it is contraryto law or modify an Award to bring it into compliance with any valid and mandatory government regulation. TheBoard may also adopt rules regarding the-11- withholding of taxes on payments to Grantees. The Board may, in its sole discretion, agree to limit its authority underthis Section.(c)Grantees Subject to Taxation Outside the United States. With respect to Grantees who are subject totaxation in countries other than the United States, the Board may make Awards on such terms and conditions as theBoard deems appropriate to comply with the laws of the applicable countries, and the Board may create suchprocedures, addenda, and subplans and make such modifications as may be necessary or advisable to comply withsuch laws.(d)Governing Law. The validity, construction, interpretation, and effect of the Plan and AwardAgreements issued under the Plan shall be governed and construed by and determined in accordance with the laws ofthe State of Delaware, without giving effect to the conflict of laws provisions thereof.-12-Exhibit 10.16 STRONGBRIDGE BIOPHARMA PLC NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN STOCK OPTION Strongbridge Biopharma plc (the “Company”) has granted you a Stock Option (the “Option”) under the Non-EmployeeDirector Equity Compensation Plan (the “Plan”). The terms of the grant are set forth in the Stock Option AwardAgreement provided to you (the “Agreement”). The following provides a summary of the key terms of the grant; however,you should read the entire Agreement, along with the terms of the Plan, to fully understand the grant. SUMMARY OF STOCK OPTION AWARD Grantee: Date of Grant: Vesting Schedule: Exercise Price Per Share: Total Number of Options Granted: Term/Expiration Date: STRONGBRIDGE BIOPHARMA PLC NON-EMPLOYEE DIRECTOR EQUITY COMPENSATION PLAN STOCK OPTION AWARD AGREEMENT This STOCK OPTION AWARD AGREEMENT (the “Agreement”), dated as of [ ] (the “Date ofGrant”), is delivered by Strongbridge Biopharma plc (the “Company”) to (the “Grantee”). RECITALS A.The Non-Employee Director Equity Compensation Plan (the “Plan”) provides for the grant of options topurchase shares of common stock of the Company. The Company has decided to make a stock option award as aninducement for the Grantee to promote the best interests of the Company and its stockholders. Capitalized terms that areused but not defined herein shall have the respective meanings accorded to such terms in the Plan. B.The Plan is administered and interpreted by the Board of Directors of the Company (the “Board”). NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows: 1.Grant of Option. Subject to the terms and conditions set forth in this Agreement and in the Plan, the Companyhereby grants to the Grantee a Stock Option (the “Option”) to purchase shares of common stock of the Company(“Shares”) at an exercise price of $[ ] per Share. The Option shall become vested and exercisable according to Paragraph 2 below. 2.Vesting. The Option shall become vested and exercisable, according to the following vesting schedule, if theGrantee continues to provide service to the Company (as defined in the Plan) from the Date of Grant until the applicablevesting date: Vesting Date% of Option Vested The vesting of the Option shall be cumulative, but shall not exceed 100% of the shares subject to the Option grantedabove. If the foregoing schedule would produce fractional shares, the portion of the Option that vests shall be roundeddown to the nearest whole share.- 1 - 3.Term of Option. (a)The Option shall have a term of 10 years from the Date of Grant and shall terminate at the expiration of thatperiod, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan. (b)Unless a later termination date is provided for in a Company-sponsored plan, policy or arrangement, or anyagreement to which the Company is a party, the Option shall automatically terminate upon the happening of the first of thefollowing events: (i)The expiration of the ninety (90) day period after the Grantee ceases to provide service to theCompany, if the termination is for any reason other than Disability (as defined in the Plan), death or Cause (asdefined in the Plan). (ii)The expiration of the one (1) year period after the Grantee ceases to provide service to the Companyon account of the Grantee’s Disability. (iii)The expiration of the one (1) year period after the Grantee ceases to provide service to theCompany, if the Grantee dies (x) while providing service to the Company or (y) within ninety (90) days after theGrantee ceases to provide such services on account of a termination described in subparagraph (i) above. (iv)The date on which the Grantee ceases to provide service to the Company on account of a removalfor Cause. In addition, notwithstanding the prior provisions of this Paragraph 3, if the a majority of disinterestedmembers of the Board determines that the Grantee has engaged in conduct that constitutes Cause at any time whilethe Grantee is providing service to the Company or after the Grantee’s termination of service, any Option held bythe Grantee shall immediately terminate, and the Grantee shall automatically forfeit all shares underlying anyexercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund bythe Company of the Exercise Price paid by the Grantee for such shares. Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenthanniversary of the Date of Grant. Any portion of the Option that is not vested and exercisable at the time the Granteeceases to provide service to the Company shall immediately terminate. 4.Exercise Procedures (a)Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the vestedOption by delivering a written notice of exercise to the Company in the manner provided in this Agreement, specifying thenumber of Shares as to which the Option is to be exercised. At such time as the Board shall determine, the Grantee shallpay the Exercise Price (i) in cash, (ii) by delivering shares of Company Stock owned by the Grantee (including CompanyStock acquired in connection with the exercise of an Option, subject to such restrictions as the Board deems appropriate)and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribedby the Board) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal- 2 - to the Exercise Price; (iii) after a Public Offering, payment through a broker in accordance with procedures permitted byRegulation T of the Federal Reserve Board; or (iv) by such other method as the Board may approve. In addition, subject toBoard approval, the Grantee may elect to settle the Option on a “net basis” by taking delivery of the number of CompanyStock equal to Fair Market Value of the shares subject to any Option less the exercise price, any tax (or governmentalobligation) or other administration fees due. The Company may impose from time to time such limitations as it deemsappropriate on the use of Shares of the Company to exercise the Option. (b)The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to allapplicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by theCompany, including such actions as Company counsel shall deem necessary or appropriate to comply with relevantsecurities laws and regulations. The Company may require that the Grantee (or other person exercising the Option after theGrantee’s death) represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view to orfor sale in connection with any distribution of the Shares, or such other representation as the Company deems appropriate. 5.Change of Control. The provisions of the Plan applicable to a Change of Control (as described in Sections 9 and10 of the Plan) shall apply to the Option. 6.Restrictions on Exercise. Except as the Company may otherwise permit pursuant to the Plan, only the Granteemay exercise rights under the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall beexercisable (subject to the limitations specified in the Plan) solely by the personal representative or other person entitled tosucceed to the rights of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws ofdescent and distribution, or if permitted in any case by the Board, pursuant to a domestic relations order or otherwise aspermitted by the Board, to the extent that the Option is vested and exercisable pursuant to this Agreement. Any suchsuccessor must furnish proof satisfactory to the Company of his or her right to receive the Option under the Grantee’s willor under the applicable laws of descent and distribution. 7.Adjustments. The provisions of the Plan applicable to Adjustments (as described in Section 3 of the Plan) shallapply to the Option. 8.Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of which are incorporatedherein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of theOption are subject to interpretations, regulations and determinations concerning the Plan established from time to time bythe Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights andobligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Shares, (iii) changes incapitalization of the Company and (iv) other requirements of applicable law. The Board shall have the authority tointerpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questionsarising hereunder.- 3 - 9.No Rights to Conitnued Service. The grant of the Option shall not confer upon the Grantee any right to beretained by or in the service of the Company and shall not interfere in any way with the right of the Board to terminate theGrantee’s service. 10.No Shareholder Rights. Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the eventof the Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to theOption, until certificates for Shares have been issued upon the exercise of the Option. 11.Assignment and Transfers. Except as the Board may otherwise permit pursuant to the Plan, the rights andinterests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, inthe event of the death of the Grantee, by will or by the laws of descent and distribution or if permitted in any specific caseby the Board, pursuant to a domestic relations order or otherwise as permitted by the Board. In the event of any attempt bythe Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except asprovided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rightsor interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and allrights hereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extendto any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreementmay be assigned by the Company without the Grantee’s consent. 12.Applicable Law. The validity, construction, interpretation and effect of this Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisionsthereof. 13.Notice. Any notice to the Company provided for in this Agreement shall be addressed to the Company in care ofthe Board, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll ofthe Company, or to such other address as the Grantee may designate to the Company in writing. - 4 - IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement, andthe Grantee has executed this Agreement, effective as of the Date of Grant. Strongbridge Biopharma plc By: Name: Title: I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and thisAgreement. I hereby further agree that all the decisions and determinations of the Board shall be final and binding. Grantee: Date: (Signature Page to Nonqualified Stock Option Award Agreement)Exhibit 10.17STRONGBRIDGE BIOPHARMA PLC2015 EQUITY COMPENSATION PLANNONQUALIFIED STOCK OPTIONStrongbridge Biopharma plc (the “Company”) has granted you a Non-Qualified Stock Option (the “Option”) under the 2015Equity Compensation Plan (the “Plan”). The terms of the grant are set forth in the Nonqualified Stock Option AwardAgreement provided to you (the “Agreement”). The following provides a summary of the key terms of the grant; however,you should read the entire Agreement, along with the terms of the Plan, to fully understand the grant. SUMMARY OF NONQUALIFIED STOCK OPTION AWARD Grantee: Date of Grant: Vesting Schedule: Exercise Price Per Share: Total Number of Options Granted: Term/Expiration Date: STRONGBRIDGE BIOPHARMA PLC2015 EQUITY COMPENSATION PLANNONQUALIFIED STOCK OPTION AWARD AGREEMENTThis NONQUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”), dated as of[_________________] (the “Date of Grant”), is delivered by Strongbridge Biopharma plc (the “Company”) to_____________________ (the “Grantee”).RECITALSA.The 2015 Equity Compensation Plan (the “Plan”) provides for the grant of options to purchase shares ofcommon stock of the Company. The Company has decided to make a stock option award as an inducement for the Grantee topromote the best interests of the Company and its stockholders. Capitalized terms that are used but not defined herein shallhave the respective meanings accorded to such terms in the Plan. B.The Plan is administered and interpreted by the Compensation Committee of the Board of Directors of theCompany (the “Board”) (or a subcommittee thereof), or such other committee of the Board (including, without limitation, thefull Board) to which the Board has delegated power to act under or pursuant to the provisions of the Plan (the “Committee”).The Committee may delegate authority to one or more subcommittees as it deems appropriate. If a subcommittee isappointed, all references in this Agreement to the “Committee” shall be deemed to refer to the committee.NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:1.Grant of Option. Subject to the terms and conditions set forth in this Agreement and in the Plan, the Companyhereby grants to the Grantee a Nonqualified Stock Option (the “Option”) to purchase ___________ shares of common stockof the Company (“Shares”) at an exercise price of $[____] per Share.The Option shall become vested and exercisable according to Paragraph 2 below. 2.Vesting. The Option shall become vested and exercisable, according to the vesting schedule set forth on AttachmentA, if the Grantee continues to be employed by, or provide service to, the Company (as defined in the Plan) from the Date ofGrant until the applicable vesting date.3.Term of Option.(a)The Option shall have a term of 10 years from the Date of Grant and shall terminate at the expiration of thatperiod, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.- 1 - (b)Unless a later termination date is provided for in a Company-sponsored plan, policy or arrangement, or anyagreement to which the Company is a party, the Option shall automatically terminate upon the happening of the first of thefollowing events:(i)The expiration of the ninety (90) day period after the Grantee ceases to be employed by, or provideservice to, the Company, if the termination is for any reason other than Disability (as defined in the Plan), death orCause (as defined in the Plan).(ii)The expiration of the one (1) year period after the Grantee ceases to be employed by, or provideservice to, the Company on account of the Grantee’s Disability.(iii)The expiration of the one (1) year period after the Grantee ceases to be employed by, or provideservice to, the Company, if the Grantee dies (x) while employed by, or providing service to, the Company or (y)within ninety (90) days after the Grantee ceases to be so employed or provide such services on account of atermination described in subparagraph (i) above.(iv)The date on which the Grantee ceases to be employed by, or provide service to, the Company onaccount of a termination by the Company for Cause. In addition, notwithstanding the prior provisions of thisParagraph 3, if the Company determines that the Grantee has engaged in conduct that constitutes Cause at any timewhile the Grantee is employed by, or providing service to, the Company or after the Grantee’s termination ofemployment or service, any Option held by the Grantee shall immediately terminate, and the Grantee shallautomatically forfeit all shares underlying any exercised portion of an Option for which the Company has not yetdelivered the share certificates, upon refund by the Company of the Exercise Price paid by the Grantee for suchshares.Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenthanniversary of the Date of Grant. Any portion of the Option that is not vested and exercisable at the time the Grantee ceasesto be employed by, or provide service to, the Company shall immediately terminate. 4.Exercise Procedures(a)Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the vestedOption by delivering a written notice of exercise to the Company in the manner provided in this Agreement, specifying thenumber of Shares as to which the Option is to be exercised. At such time as the Committee shall determine, the Grantee shallpay the Exercise Price (i) in cash, (ii) by delivering shares of Company Stock owned by the Grantee (including CompanyStock acquired in connection with the exercise of an Option, subject to such restrictions as the Committee deemsappropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a formprescribed by the Committee) to ownership of shares of Company Stock having a Fair Market Value on the date of exerciseequal to the Exercise Price; (iii) payment through a broker in accordance with procedures permitted by Regulation T of theFederal Reserve Board; or (iv) by such other method as the Committee may approve. In addition, subject to Committeeapproval, the Grantee may elect to settle the Option- 2 - on a “net basis” by taking delivery of the number of Company Stock equal to Fair Market Value of the shares subject to anyOption less the exercise price, any tax (or governmental obligation) or other administration fees due. The Company mayimpose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise theOption. (b)The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to allapplicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by theCompany, including such actions as Company counsel shall deem necessary or appropriate to comply with relevantsecurities laws and regulations. The Company may require that the Grantee (or other person exercising the Option after theGrantee’s death) represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view to or forsale in connection with any distribution of the Shares, or such other representation as the Company deems appropriate. (c)All obligations of the Company under this Agreement shall be subject to the rights of the Company as setforth in the Plan to withhold amounts required to be withheld for any taxes, if applicable. Subject to Committee approval,the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shareswithheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA),state and local tax liabilities.5.Change of Control. The provisions of the Plan applicable to a Change of Control (as described in Sections 11 and12 of the Plan) shall apply to the Option, provided that the Option shall become vested and exercisable in full upon aChange of Control.6.Restrictions on Exercise. Except as the Company may otherwise permit pursuant to the Plan, only the Grantee mayexercise rights under the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable(subject to the limitations specified in the Plan) solely by the personal representative or other person entitled to succeed tothe rights of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent anddistribution, or if permitted in any case by the Committee, pursuant to a domestic relations order or otherwise as permitted bythe Committee, to the extent that the Option is vested and exercisable pursuant to this Agreement. Any such successor mustfurnish proof satisfactory to the Company of his or her right to receive the Option under the Grantee’s will or under theapplicable laws of descent and distribution.7.Adjustments. The provisions of the Plan applicable to Adjustments (as described in Section 3 of the Plan) shallapply to the Option.8.Grant Subject to Plan Provisions. This grant is made pursuant to the Plan, the terms of which are incorporatedherein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the Optionare subject to interpretations, regulations and determinations concerning the Plan established from time to time by theCommittee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights andobligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Shares, (iii) changes incapitalization of the Company and (iv) other requirements of applicable law. The Committee shall have the authority tointerpret and construe the Option- 3 -  pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.9.No Employment or Other Rights. The grant of the Option shall not confer upon the Grantee any right to beretained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company toterminate the Grantee’s employment or service at any time. The right of the Company to terminate at will the Grantee’semployment or service at any time for any reason is specifically reserved.10.No Shareholder Rights. Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event ofthe Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to theOption, until certificates for Shares have been issued upon the exercise of the Option.11.Assignment and Transfers. Except as the Committee may otherwise permit pursuant to the Plan, the rights andinterests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in theevent of the death of the Grantee, by will or by the laws of descent and distribution or if permitted in any specific case by theCommittee, pursuant to a domestic relations order or otherwise as permitted by the Committee. In the event of any attempt bythe Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except asprovided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights orinterests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rightshereunder shall thereupon become null and void. The rights and protections of the Company hereunder shall extend to anysuccessors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates. This Agreement may beassigned by the Company without the Grantee’s consent.12.Applicable Law. The validity, construction, interpretation and effect of this Agreement shall be governed by andconstrued in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisionsthereof.13.Notice. Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of theCommittee, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll ofthe Company, or to such other address as the Grantee may designate to the Company in writing. - 4 - IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement, and theGrantee has executed this Agreement, effective as of the Date of Grant. Strongbridge Biopharma plc By: Name: Title: I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and thisAgreement. I hereby further agree that all the decisions and determinations of the Committee shall be final and binding. Grantee: Date: (Signature Page to Nonqualified Stock Option Award Agreement) ATTACHMENT A The Option shall become vested and exercisable according to the following vesting schedule, if the Grantee continues to beemployed by, or provide service to, the Company from the Date of Grant until the applicable vesting date: [VESTING SCHEDULE] The vesting of the Option shall be cumulative, but shall not exceed 100% of the shares subject to the Option grantedabove. If the foregoing schedule would produce fractional shares, the portion of the Option that vests shall be rounded downto the nearest whole share.  Exhibit 10.18STRONGBRIDGE BIOPHARMA PLC2015 EQUITY COMPENSATION PLANRESTRICTED STOCK UNIT AWARD AGREEMENTStrongbridge Biopharma plc (the “Company”) has determined to grant to you an award of restricted stockunits (the “RSUs”) under the 2015 Equity Compensation Plan (the “Plan”). The terms of the grant are setforth in the attached Restricted Stock Unit Award Agreement (the “Agreement”). The following providesa summary of the key terms of the Agreement; however, you should read the entire Agreement along withthe terms of the Plan, to fully understand the Agreement. SUMMARY OF RESTRICTED STOCK UNIT AWARD AGREEMENT Grantee: Date of Grant: Vesting Schedule: Total Number of Restricted Stock Units Granted:  STRONGBRIDGE BIOPHARMA PLC2015 EQUITY COMPENSATION PLANRESTRICTED STOCK UNIT AWARD AGREEMENTThis RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”), dated as of[DATE] (the “Date of Grant”) is delivered by Strongbridge Biopharma plc (the “Company”), to [NAME](the “Grantee”). The Company has determined to provide the Grantee an award of restricted stock units underthe 2015 Equity Compensation Plan (the “Plan”) and in accordance with the terms and conditions set forthin this Agreement. Capitalized terms that are used but not defined herein shall have the respectivemeanings accorded to such terms in the Plan.The Plan is administered and interpreted by the Compensation Committee of the Board of Directorsof the Company (the “Board”) (or a subcommittee thereof), or such other committee of the Board(including, without limitation, the full Board) to which the Board has delegated power to act under orpursuant to the provisions of the Plan (the “Committee”). The Committee may delegate authority to one ormore subcommittees as it deems appropriate. If a subcommittee is appointed, all references in thisAgreement to the “Committee” shall be deemed to refer to the committee. The Company and Grantee, intending to be legally bound hereby, agree as follows:1.Grant of Restricted Stock Unit Award. Subject to the terms and conditions set forth in thisAgreement and the Plan, the Company hereby awards to the Grantee [____] RSUs (as defined in the Plan)under the Plan. The Grantee accepts the RSUs and agrees to be bound by the terms and conditions of thisAgreement and the Plan with respect to the award. Each vested RSU entitles the Grantee to receive the oneshare of Common Stock, as described in Paragraph 2 below.2.Vesting of Award/Payment of Shares.(a)The RSUs shall vest in full on the second anniversary of the Date of Grant (the “VestingDate”), if the Grantee continues to be employed by, or provide service to, the Company (or one of itsSubsidiaries) from the Date of Grant until Vesting Date.(b)If and when the RSUs vest, the Company will issue to the Grantee one share ofCompany Common Stock for each whole RSU that has vested, subject to satisfaction of the Grantee’s taxwithholding obligations as described in Section 5 below. The RSUs shall cease to be outstanding uponsuch issuance of shares.(c)Unless otherwise provided in a Company-sponsored plan, policy or arrangement, or anyagreement to which the Company is a party, the Grantee shall forfeit the unvested RSUs in the event the Grantee ceases to be employed by, or provide service to, the Company (or one of itsSubsidiaries) prior to the Vesting Date.3.No Stockholder Rights Prior to Settlement; Issuance of Certificates. The Grantee shall have norights as a stockholder with respect to any shares of Common Stock represented by the RSUs until the dateof issuance of the shares of Common Stock (as evidenced by the appropriate entry on the books of theCompany or of a duly authorized transfer agent of the Company), if applicable. Except as otherwiserequired by the Plan, no adjustment shall be made for dividends, distributions, or other rights for which therecord date is prior to the date, if any, that shares of Common Stock are issued.4.Change of Control. Upon a Change of Control, as defined in the Plan, the RSUs shall accelerateand vest and shall be paid pursuant to Section 2(b) above, provided that the Grantee is employed by, orproviding service to, the Company (or one of its Subsidiaries) on the date of such Change of Control. 5.Withholding. The Grantee shall be required to pay to the Company, or make other arrangementssatisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that theEmployer is required to withhold with respect to the grant or vesting of the RSUs, or the Employer maydeduct from other wages paid by the Employer the amount of any withholding taxes due with respect to theRSUs. Subject to Committee approval, the Grantee may elect to satisfy any income tax withholdingobligation of the Employer with respect to the RSUs by having shares withheld up to an amount that doesnot exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and othertax liabilities. Unless the tax withholding obligations of the Company are satisfied, the Company shall haveno obligation to deliver to the Grantee any Common Stock. In the event the Company’s obligation towithhold arises prior to the delivery to the Grantee of Common Stock or it is determined after the deliveryof Common Stock to the Grantee that the amount of the Company’s withholding obligation was greaterthan the amount withheld by the Company, the Grantee agrees to indemnify and hold the Companyharmless from any failure by the Company to withhold the proper amount.6.Adjustments. The provisions of the Plan applicable to adjustments (as described in Section 3 ofthe Plan) shall apply to the RSUs.7.Assignment and Transfers. The rights and interests of the Grantee under this Agreement maynot be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee,by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate,assign, pledge, hypothecate, or otherwise dispose of the RSUs or any right hereunder, or in the event of thelevy or any attachment, execution or similar process upon the rights or interests hereby conferred, theCompany may terminate the RSUs by notice to the Grantee, and the RSUs and all rights hereunder shallthereupon become null and void. The rights and protections of the Company hereunder shall extend to anysuccessors or assigns of the Company and to the Company’s parents, Subsidiaries, and affiliates. ThisAgreement may be assigned by the Company without the Grantee’s consent.- 2 - 8.Miscellaneous.(a)No Right to Employment. The grant of the RSUs shall not be construed as giving theGrantee the right to be retained by or in the employ of the Employer or any other employment right.(b)Delivery Subject to Legal Requirements. The obligation of the Company to deliver stockshall be subject to the condition that if at any time the Board shall determine in its discretion that the listing,registration or qualification of the shares upon any securities exchange or under any state or federal law, orthe consent or approval of any governmental regulatory body is necessary or desirable as a condition of, orin connection with, the issue of shares, the shares may not be issued in whole or in part unless such listing,registration, qualification, consent or approval shall have been effected or obtained free of any conditionsnot acceptable to the Board. The issuance of shares to the Grantee pursuant to this Agreement is subject toany applicable taxes and other laws or regulations of the United States or of any state having jurisdictionthereof.(c)RSUs Subject to Plan. By entering into this Agreement the Grantee agrees andacknowledges that the Grantee has received and read a copy of the Plan. The RSUs are subject to thePlan. The terms and provisions of the Plan, as they may be amended from time to time, are herebyincorporated herein by reference. In the event of a conflict between any term or provision containedherein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern andprevail.(d)Committee Authority. By entering into this Agreement the Grantee agrees andacknowledges that all decisions and determinations of the Committee shall be final and binding on theGrantee, his or her beneficiaries and any other person having or claiming and interest in the RSUs.(e)Severability. If any provision of this Agreement is or becomes or is deemed to be invalid,illegal or unenforceable in any jurisdiction or would disqualify this Agreement or the RSUs under anyapplicable law, such provision shall be construed or deemed amended to conform to applicable law (or ifsuch provision cannot be so construed or deemed amended without materially altering the purpose orintent of this Agreement and the grant of the RSUs hereunder, such provision shall be stricken as to suchjurisdiction and the remainder of this Agreement and the award shall remain in full force and effect).(d)Notices. Any notice to be given to Company under the terms of this Agreement shall beaddressed to the Company, at the attention of the Committee, at its principal place of business, and anynotice to be given to Grantee may be sent to Grantee’s address as it appears in the payroll records of theCompany, or at such other addresses as either party may designate in writing to the other.(e)Section 409A. This Agreement and the RSUs granted hereunder are intended to fit withinthe “short-term deferral” exemption from Section 409A of the Code, as set forth in Treasury RegulationSection 1.409A-1(b)(4) or any successor provision, or to comply with, or otherwise be exempt from,Section 409A of the Code. This Agreement and the RSUs shall be- 3 - administered, interpreted and construed in a manner consistent with Section 409A of the Code. Eachamount payable under this Agreement is designated as a separate identified payment for purposes ofSection 409A of the Code. The payment of dividend equivalents under Section 3 of this Agreement shallbe construed as earnings and the time and form of payment of such dividend equivalents shall be treatedseparately from the time and form of payment of the underlying RSUs for purposes of Section 409A of theCode.(f)Governing Law. The validity, construction, interpretation and effect of this Agreement shallbe governed by and construed in accordance with the laws of the State of Delaware, without giving effectto the conflict of laws provisions thereof(g)Interpretation. The Grantee accepts the RSUs subject to all the terms and provisions of thisAgreement and the terms and conditions of the Plan.(g)Headings. Headings are given to the paragraphs and subparagraphs of this Agreementsolely as a convenience to facilitate reference. Such headings shall not be deemed in any way material orrelevant to the construction or interpretation of this Agreement or any provision thereof.(h)Counterparts. This Agreement may be executed in one or more counterparts, each of whichwill be deemed to be an original copy of this Agreement and all of which, when taken together, will bedeemed to constitute one and the same agreement. Facsimile or other electronic transmission of any signedoriginal document or retransmission of any signed facsimile or other electronic transmission will be deemedthe same as delivery of an original.(i)Complete Agreement. Except as otherwise provided for herein, this Agreement and thoseagreements and documents expressly referred to herein embody the complete agreement and understandingamong the parties and supersede and preempt any prior understandings, agreements or representations byor among the parties, written or oral, which may have related to the subject matter hereof in any way. Theterms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assignsof the Grantee.[Signature Page Follows] - 4 -  IN WITNESS WHEREOF, the Company and Grantee have executed this Agreement as of thegrant date shown above. Strongbridge Biopharma plc By: Name:[_________] Title:[_________] I hereby accept the RSUs described in this Agreement, and I agree to be bound by the terms of the Planand this Agreement. I hereby further agree that all the decisions and determinations of the Committee shallbe final and binding. GRANTEE: Name:[NAME] (Signature Page to Restricted Stock Unit Agreement)Exhibit 10.6 AMENDED AND RESTATED EMPLOYMENT AGREEMENTTHIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”)is made by and between Cortendo AB, a Swedish limited liability company (the “Company”), andMatthew Pauls (“Executive”) as of November 2, 2015.W I T N E S S E T H:WHEREAS, the Company and Executive entered into an employment agreement dated August23, 2014 (the “Effective Date”) (such agreement, the “Prior Agreement”);WHEREAS, the Company desires to continue to retain the services of Executive as set forth in thisAgreement, and Executive desires to serve the Company in such capacity, subject to the terms andconditions of this Agreement; andWHEREAS, the Company and Executive intend for this Agreement to replace the PriorAgreement except as otherwise set forth herein.NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligationscontained herein, Company and Executive agree as follows:ARTICLE IEMPLOYMENT AND DUTIESSection 1.01Employment and Term. The Executive shall be employed by the Company forthe period commencing on the Effective Date and expiring on the second anniversary of the Effective Date,unless sooner terminated as set forth in this Agreement (the “Term”); provided, however, that the Termshall thereafter be automatically extended for additional one-year periods unless, at least 90 days prior toexpiration of the Term, either (a) the Company gives notice to Executive not to extend the Term or (b)Executive gives notice to the Company not to extend the Term.Section 1.02Position and Duties. Executive shall serve as Chief Executive Officer of theCompany, or in such other positions as the parties may agree and shall report directly to the Board ofDirectors of the Company (the “Board”). Executive shall have the duties and responsibilities customarilyassociated with such position and will perform such other duties as reasonably directed by the Boardconsistent with such position(s).Section 1.03Scope. Executive will devote substantially all of his business time, attention, skillsand efforts to the performance of his duties. Executive acknowledges that his duties and responsibilitiesrequire Executive’s full-time business efforts and agrees to not engage in any other business activity orinterests which materially interfere or conflict with the performance of Executive’s duties. Notwithstandingthe foregoing, Executive may (a) without obtaining approval of the Board, serve on one for profit corporateboard that does not compete with the Company, (b) upon receipt of prior written approval by the Board,serve on any other for profit corporate boards that do not compete with the Company, (c) serve on civic orcharitable boards or committees of entities that do not compete with the Company, (d) deliver a reasonable number oflectures or fulfill speaking engagements or (e) manage personal investments, so long as such activities donot significantly interfere with the performance of Executive’s duties and so long as Executive does notown more than five percent (5%) of the voting stock of any publicly held corporation.ARTICLE IICOMPENSATION AND BENEFITSSection 2.01Base Salary. During the Term, the Company will pay Executive a base salary (the“Base Salary”) at an initial rate of $450,000 per year in accordance with the Company’s standard payrollpractices. Base Salary will be reviewed at least annually by the Board or a committee thereof and may beadjusted (in which case such adjusted amount shall be the “Base Salary”). Section 2.02Annual Incentive. During Executive’s employment with the Company, and asdetermined by the Board in its sole discretion, Executive shall be eligible for an annual cash incentive (the“Annual Incentive”) with a target of 50% of Base Salary (such percentage, the “Target Annual Incentive”).The Annual Incentive shall be based on the achievement of predetermined performance goals asdetermined annually by Executive and the Board, which shall be provided to the Executive in writing nolater than thirty (30) days following the beginning of the year to which they relate. The actual AnnualIncentive earned in any particular year may be greater or lower than the Target Annual Incentive,depending on the level of achievement of the applicable performance goals and the discretion of the Board.The Annual Incentive shall be paid to Executive as soon as practicable, but in no event later than the datethat is two-and-one-half months following the end of the taxable year (of Executive, or the Company,whichever is later) in which such incentive is earned.Section 2.03Long Term Incentive Plans. Executive shall be eligible to receive grants under theCompany’s long term incentive plans (including stock option, restricted stock and other equitycompensation plans and any other long-term incentive plans) at the discretion of the Company’s Board.Section 2.04Business and Entertainment Expenses. Subject to the Company’s standard policiesand procedures for expense reimbursement as applied to its executive employees generally, the Companyshall reimburse Executive for, or pay on behalf of Executive, reasonable out-of-pocket business expensesincurred by Executive on behalf of the Company. Section 2.05Other Company Benefits. Executive shall be entitled to participate in all employeebenefit plans, practices and programs maintained by the Company and made available to its similarlysituated executives, including the Company’s paid time-off policy. Executive shall also be entitled to paidtime-off for all holidays in the U.S. in accordance with the applicable Company policy. Executive shallagree to comply with a reasonable application process to permit the Company to insure his life under astandard “key man” insurance policy upon request from the Board.- 2 - ARTICLE IIITERMINATIONSection 3.01General. The Company may terminate Executive’s employment for any reason or noreason, and Executive may terminate his employment for any reason or no reason, in either case subjectonly to the terms of this Agreement. For purposes of this Agreement, the following terms have thefollowing meanings:(a)“Accrued Obligations” shall mean: (i) Executive’s earned but unpaid Base Salarythrough the Termination Date; (ii) payment of any annual, long-term, or other incentive award whichrelates to a completed fiscal year or performance period, as applicable, and is payable (but not yet paid) onor before the Termination Date; (iii) a lump-sum payment in respect of accrued but unused vacation days atExecutive’s per-business-day Base Salary rate in effect as of the Termination Date; and (iv) any unpaidexpense or other reimbursements due pursuant to Section 2.04 hereof.(b)“Cause” shall mean (i) Executive’s conviction of, or plea of guilty or nolocontendere to, any felony or any crime involving theft, embezzlement, dishonesty or moral turpitude; (ii)any act by Executive constituting willful misconduct, deliberate malfeasance, dishonesty, unethical conductor gross negligence in the performance of his duties; (iii) Executive’s willful and continued failure toperform any of the duties of his position (which has not been cured within thirty (30) days following thefirst written notice from the Company describing such failure in reasonable detail); or (iv) any materialbreach (which has not been cured within 30 days following the first written notice from the Companydescribing such breach in reasonable detail) by Executive of this Agreement or any other agreementbetween Executive and the Company or any of its affiliates.(c)“Change in Control” shall mean the occurrence of any of the following:(i)any person or group of persons becomes the beneficial owner, directly orindirectly, of securities of the Company representing more than fifty percent (50%) of the combinedvoting power of the Company’s then outstanding securities (a “Majority of the Securities”);provided that if the person or group of persons is already deemed to own more than 50% of the totalfair market value or total voting power, then the acquisition of additional stock by such person orgroup of persons shall not constitute an additional Change in Control;(ii)the stockholders of the Company approve a plan of complete liquidation ofthe Company;(iii)the sale or disposition of all or substantially all of the Company’s assets;(iv)a merger, consolidation or reorganization of the Company with or involvingany other entity, other than a merger, consolidation or reorganization that would result in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either byremaining outstanding or by being converted into voting- 3 - securities of the surviving entity) at least a 50% of the combined voting power of the Company (orsuch surviving entity) outstanding immediately after such merger, consolidation or reorganizationowned in approximately the same proportion of such ownership by each of the prior shareholdersas prior to the transaction.(v)Notwithstanding the foregoing, the following acquisitions shall not constitutea Change in Control: (A) an acquisition by the Company or entity controlled by the Company, or(B) an acquisition by an employee benefit plan (or related trust) sponsored or maintained by theCompany.(d)“Disability” shall mean Executive’s becoming incapacitated for a period of at least180 days by accident, sickness or other circumstance that renders Executive mentally or physicallyincapable of performing the material duties and services required of Executive hereunder on a full-timebasis during such period. A termination of Executive’s employment due to a Disability shall be effectiveonly if the party terminating Executive’s employment first gives at least 15 days’ written notice of suchtermination to the other party.(e)“Good Reason” shall mean, without Executive’s express written consent, theoccurrence of any one or more of the following: (i) a material diminution by the Company of Executive’sBase Salary, other than any diminution that is also applicable in a substantially similar manner andproportion to the other senior executives of the Company; (ii) the assignment to Executive of duties orresponsibilities which are materially inconsistent with Executive’s position; (iii) a change in the principallocation at which Executive performs his duties for the Company to a new location that is more than fifty(50) miles from the prior location; or (iv) an action or inaction that constitutes a material breach of thisAgreement by the Company. A termination of employment by Executive for Good Reason shall be effectuated by giving the Companywritten notice (“Notice of Termination for Good Reason”), not later than 30 days following the occurrenceof the circumstance that constitutes Good Reason, setting forth in reasonable detail the specific conduct ofthe Company that constitutes Good Reason and the specific provision(s) of this Agreement on whichExecutive relied. The Company shall be entitled, during the 45-day period following receipt of a Notice ofTermination for Good Reason, to cure the circumstances that gave rise to Good Reason, provided that theCompany shall be entitled to waive its right to cure or reduce the cure period by delivery of written noticeto that effect to Executive (such 45-day or shorter period, the “Cure Period”). If, during the Cure Period,such circumstance is remedied, Executive will not be permitted to terminate employment for Good Reasonas a result of such circumstance. If, at the end of the Cure Period, the circumstance that constitutes GoodReason has not been remedied, Executive will be entitled to terminate employment for Good Reasonduring the 30-day period that follows the end of the Cure Period. If Executive does not terminateemployment during such 30-day period, Executive will not be permitted to terminate employment for GoodReason as a result of such event. (f) “Pro-Rata Annual Incentive” shall mean an amount equal to (i) the AnnualIncentive that Executive would have been entitled to receive for the calendar year that includes theTermination Date if his employment hereunder had continued (as determined by the Board of Directorsbased upon the actual achievement of the applicable performance goals), multiplied by- 4 - (ii) a fraction, the numerator of which is the number of days he was employed hereunder during such yearand the denominator of which is the number of days in such year.(g)“Termination Date” shall mean the date on which Executive’s employmenthereunder terminates (which, in the case of a notice of non-renewal of the Term in accordance with ArticleI hereof, shall mean the date on which the Term expires, provided that Executive’s employment isterminated on such date due to the non-renewal of the Term).Section 3.02Termination Without Cause or by Executive With Good Reason. If theCompany terminates Executive’s employment without Cause, or the Executive terminates for GoodReason, the Term shall expire on the Termination Date and Executive shall be entitled to: (a) the AccruedObligations; (b) an amount equal to the sum of (i) 18 months of the annual Base Salary as in effectimmediately prior to the Termination Date and (ii) the Target Annual Incentive, paid in equal installmentson the normal payroll cycle over the 18-month period that begins on the sixtieth (60) day following theTermination Date; (c) the Pro-Rata Annual Incentive, payable in a cash lump sum to Executive on the dateCompany pays its annual incentive compensation bonuses for the year that includes the Termination Date ifExecutive’s employment continued; and (d) medical, dental benefits provided by the Company toExecutive and Executive’s spouse and dependents (in each case, as provided in any applicable plan) atleast equal to the levels of benefits provided to other similarly situated active employees of the Companyand its subsidiaries until the earlier of (i) the 18-month anniversary of the Termination Date or (ii) the datethat Executive becomes covered under a subsequent employer’s medical and dental plans.Section 3.03Termination Due to Non-Renewal of the Term by the Company. If Executive’semployment is terminated due to the non-renewal of the Term by the Company pursuant to Section 1.01,Executive shall be entitled to: (a) the Accrued Obligations; (b) an amount equal to the sum of (i) 12 monthsof the annual Base Salary as in effect immediately prior to the Termination Date and (ii) the Target AnnualIncentive, paid in equal installments on the normal payroll cycle over the 12-month period that begins onthe sixtieth (60) day following the Termination Date; (c) the Pro-Rata Annual Incentive, payable in a cashlump sum to Executive on the date Company pays its annual incentive compensation bonuses for the yearthat includes the Termination Date if Executive’s employment had continued; and (d) medical, dentalbenefits provided by the Company to Executive and Executive’s spouse and dependents (in each case, asprovided in any applicable plan) at least equal to the levels of benefits provided to other similarly situatedactive employees of the Company and its subsidiaries until the earlier of (i) the 12-month anniversary of theTermination Date or (ii) the date that Executive becomes covered under a subsequent employer’s medicaland dental plans.Section 3.04Termination Without Cause, by Executive With Good Reason, or Due to theNon-Renewal of the Term by the Company following a Change in Control of the Company. If theCompany terminates Executive’s employment without Cause, or the Executive terminates for GoodReason, or Executive’s employment is terminated due to the non-renewal of the Term by the Companypursuant to Section 1.01, in any case, within twenty-four (24) months following the occurrence of Changein Control, the Term shall expire on the Termination Date and, in lieu of the benefits set forth in Section3.02 or 3.03, Executive shall be entitled to: (a) the Accrued Obligations; (b) an amount equal to the sum of(i) 24 months of the annual Base Salary as in effect immediately prior to the Termination Date and (ii) one(1) times the Target Annual- 5 - ththIncentive, paid in equal installments on the normal payroll cycle over the 24-month period that begins onthe sixtieth (60) day following the Termination Date; (c) the Pro-Rata Annual Incentive, payable in a cashlump sum to Executive on the date Company pays its annual incentive compensation bonuses for the yearthat includes the Termination Date if Executive’s employment continued; (d) medical, dental benefitsprovided by the Company to Executive and Executive’s spouse and dependents (in each case, as providedin any applicable plan) at least equal to the levels of benefits provided to other similarly situated activeemployees of the Company and its subsidiaries until the earlier of (i) the 18-month anniversary of theTermination Date or (ii) the date that Executive becomes covered under a subsequent employer’s medicaland dental plans; and (e) the acceleration of vesting of all unvested equity or equity-based awards held byExecutive as of the Termination Date.Section 3.05Other Terminations. If Executive’s employment hereunder is terminated (a) byExecutive without Good Reason, (b) by the Company for Cause; (c) due to non-renewal of the Term byExecutive; or (d) due to Executive’s death or Executive’s Disability, the Term shall expire as of theTermination Date and Executive and/or Executive’s estate or beneficiaries shall be entitled to the AccruedObligations. Section 3.06Release. Executive’s entitlement to the payments (other than the AccruedObligations) and benefits described in this Article III is expressly contingent upon Executive providing theCompany with a signed release that is attached hereto as Attachment A (the “Release”). To be effective,such Release must be delivered by Executive to the Company no later than 45 days following theTermination Date and must not be revoked during the seven (7) days following such delivery. If suchRelease is not executed in a timely manner or is revoked, all such payments and benefits shall immediatelycease and the Executive shall be required to repay to the Company any such payments that have alreadybeen paid to the Executive.Section 3.07Resignation from Positions. Upon the termination of Executive’s employment forany reason, Executive shall immediately resign from each position held with the Company and its affiliatesas of the Termination Date, including any position on the board of directors, if requested to do so by theCompany.ARTICLE IVRESTRICTIVE COVENANTSSection 4.01Confidentiality. (a)Company Information. Executive agrees at all times during the Term of thisAgreement and thereafter, to hold in strictest confidence, and not to use, except in connection with theperformance of Executive's duties, and not to disclose to any person or entity without written authorizationof the Company, any Confidential Information of the Company. As used herein, “ConfidentialInformation” means any Company proprietary or confidential information, technical data, trade secrets orknow-how, including, but not limited to, research, product plans, products, services, customer lists andcustomers, markets, software, developments, inventions, processes, formulas, technology, designs,drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures,finances and other business information disclosed- 6 - thto Executive by the Company, either directly or indirectly in writing, orally or by drawings or inspection ofdocuments or other tangible property. However, Confidential Information does not include any of theforegoing items which has become publicly known and made generally available through no wrongful actof Executive.(b)Executive-Restricted Information. Executive agrees that during the Term of thisAgreement Executive will not improperly use or disclose any proprietary or confidential information ortrade secrets of any person or entity with whom Executive has an agreement or duty to keep suchinformation or secrets confidential.(c)Third Party Information. Executive recognizes that the Company has received andin the future will receive from third parties their confidential or proprietary information subject to a duty onthe Company's part to maintain the confidentiality of such information and to use it only for certain limitedpurposes. Executive agrees at all times during the Term of this Agreement and thereafter, to hold instrictest confidence, and not to use, except in connection with the performance of Executive's duties, andnot to disclose to any person or entity, or to use it except as necessary in performing the Executive’s duties,consistent with the Company's agreement with such third party. Section 4.02Non-Competition. (a)Executive acknowledges that, during the Term, Executive has had access toinformation concerning the Company’s critical business strategies, engineering and technologydevelopment plans, competitive analyses, organizational structure. Accordingly, in consideration of thecompensation provided under this Agreement, Executive agrees that during the Term and for the one (1)year period thereafter, Executive will not directly or indirectly, own, manage, operate, control (includingindirectly through a debt or equity investment), provide services to, or be employed by, any person or entityengaged in any business that is (i) located in or provides services or products to a region in which theCompany does business, and (ii) competitive with the business activities of the Company as they existedduring the period that Executive provided services to the Company.(b)Executive acknowledges that the restrictions contained under this Section 4.02 arereasonable and necessary to protect the legitimate interests of the Company, that the Company would nothave executed this Agreement in the absence of such restrictions, and that any violation of any provision ofthis paragraph will result in irreparable injury to the Company. In the event the provisions under thisSection 4.02 shall ever be deemed to exceed the time, scope or geographic limitations permitted byapplicable laws, then such provisions shall be reformed to the maximum time, scope or geographiclimitations, as the case may be, permitted by applicable laws.Section 4.03Injunctive Relief. Executive agrees that it is impossible to measure in money thedamages which will accrue to the Company by reason of a failure by Executive to perform any ofExecutive’s obligations under this Article IV. Accordingly, if Company or any of its affiliates institutesany action or proceeding to enforce its rights under this Article IV, to the extent permitted by applicablelaw, Executive hereby waives the claim or defense that the- 7 - Company or its affiliates has an adequate remedy at law, and Executive shall not claim that any suchremedy at law exists.ARTICLE VMISCELLANEOUSSection 5.01Withholding. The Company shall withhold all applicable federal, state and localtaxes, social security and workers’ compensation contributions and other amounts as may be required bylaw with respect to compensation payable to Executive.Section 5.02Modification of Payments. (a)In the event it shall be determined that any payment, right or distribution by theCompany or any other person or entity to or for the benefit of Executive pursuant to the terms of thisAgreement or otherwise, in connection with, or arising out of, his employment with the Company or achange in ownership or effective control of the Company or a substantial portion of its assets (a “Payment”)is a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, asamended (the “Code”) on account of the aggregate value of the Payments due to Executive being equal toor greater than three times the “base amount,” as defined in Section 280G(b)(3) of the Code, (the“Parachute Threshold”) so that Executive would be subject to the excise tax imposed by Section 4999 ofthe Code (the “Excise Tax”) and the net after-tax benefit that Executive would receive by reducing thePayments to the Parachute Threshold is greater than the net after-tax benefit Executive would receive if thefull amount of the Payments were paid to Executive, then the Payments payable to Executive shall bereduced (but not below zero) so that the Payments due to Executive do not exceed the amount of theParachute Threshold, reducing first any Payments under Section 3.02(b) hereof.(b)The Company hereby agrees that, for purposes of determining whether any paymentand benefits set forth in Section 3.04 above would be subject to the Excise Tax, the non-compete set forthin in Section 4.02 above shall be treated as an agreement for the performance of personal services. TheCompany hereby agrees to indemnify, defend, and hold harmless Executive from and against any adverseimpact, tax, penalty, or excise tax resulting from the Company or accountant’s attribution of a value to thenon-compete set forth in in Section 4.02 above that is less than the total compensation amount that wouldbe disclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K in the year prior toyear of the event that triggers the Excise Tax, to the extent the use of such lesser amount results in a largerExcise Tax than Executive would have been subject to had the Company or accountant attributed a valueto the non-compete set forth in in Section 4.02 above that is at least equal to the total compensation amountdisclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K for such year. Section 5.03Section 409A. (a)Notwithstanding anything herein to the contrary, this Agreement is intended to beinterpreted and applied so that the payment of the benefits set forth herein either shall either be exempt fromthe requirements of Section 409A of the Code (“Section 409A”) or shall comply with the requirements ofsuch provision.- 8 - (b)Notwithstanding any provision of this Agreement to the contrary, if Executive is a“specified employee” within the meaning of Section 409A, any payments or arrangements due upon atermination of Executive’s employment under any arrangement that constitutes a “nonqualified deferral ofcompensation” within the meaning of Section 409A and which do not otherwise qualify under theexemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferralexemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayedand paid or provided, without interest, on the earlier of (i) the date which is six months after Executive’s“separation from service” (as such term is defined in Section 409A and the regulations and other publishedguidance thereunder) for any reason other than death, and (ii) the date of Executive’s death. (c)After any Termination Date, Executive shall have no duties or responsibilities thatare inconsistent with having a “separation from service” within the meaning of Section 409A and,notwithstanding anything in the Agreement to the contrary, distributions upon termination of employmentof nonqualified deferred compensation may only be made upon a “separation from service” as determinedunder Section 409A and such date shall be the Termination Date for purposes of this Agreement. Eachpayment under this Agreement or otherwise shall be treated as a separate payment for purposes of Section409A. In no event may Executive, directly or indirectly, designate the calendar year of any payment to bemade under this Agreement which constitutes a “nonqualified deferral of compensation” within themeaning of Section 409A and to the extent an amount is payable within a time period, the time duringwhich such amount is paid shall be in the discretion of the Company.Section 5.04Merger Clause. Effective as of the date hereof, this Agreement contains thecomplete, full, and exclusive understanding of Executive and the Company as to its subject matter andshall, on such date, and supersede any prior employment agreement between Executive and the Company(and its affiliates), including the Prior Agreement. Any amendments to this Agreement shall be effectiveand binding on Executive and the Company only if any such amendments are in writing and signed byboth Parties. Section 5.05Assignment. (a)This Agreement is personal to Executive and, without the prior written consent ofthe Company, shall not be assigned by Executive otherwise than by will or the laws of descent anddistribution, and any assignment in violation of this Agreement shall be void.(b)Notwithstanding the foregoing Section 5.05(a), this Agreement and all rights ofExecutive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees. IfExecutive should die while any amounts would still be payable to him or her hereunder if he or she hadcontinued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with theterms of this Agreement to Executive’s devisee, legatee or other designee or, should there be no suchdesignee, to Executive’s estate.(c)The Company may assign this Agreement to any affiliate or subsidiary of theCompany without the consent of Executive and shall require any successor (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all of the business- 9 - or assets of the Company (a “Successor”) to assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would have been required to perform it if no suchsuccession had taken place. As used in this Agreement, (i) the term “Company” shall mean the Companyas hereinbefore defined and any Successor and any permitted assignee to which this Agreement is assignedand (ii) the term “Board” shall mean the Board as hereinbefore defined and the board of directors orequivalent governing body of any Successor and any permitted assignee to which this Agreement isassigned.Section 5.06Dispute Resolution. Except for any proceeding brought pursuant to Section 5.05above, the parties agree that any dispute arising out of or relating to this Agreement or the formation,breach, termination or validity thereof, will be settled by binding arbitration by a panel of three arbitrators inaccordance with the commercial arbitration rules of the American Arbitration Association. The arbitrationproceedings will be located in Philadelphia, Pennsylvania. The arbitrators are not empowered to awarddamages in excess of compensatory damages and each party irrevocably waives any damages in excess ofcompensatory damages. Judgment upon any arbitration award may be entered into any court havingjurisdiction thereof and the parties consent to the jurisdiction of any court of competent jurisdiction locatedin the Eastern District of Pennsylvania.Section 5.07GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BEMADE IN THE COMMONWEALTH OF PENNSYLVANIA, INTERPRETATION,CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTSHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIAWITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.Section 5.08Amendment; No Waiver. No provision of this Agreement may be amended,modified, waived or discharged except by a written document signed by Executive and duly authorizedofficer of the Company. The failure of a party to insist upon strict adherence to any term of this Agreementon any occasion shall not be considered as a waiver of such party’s rights or deprive such party of the rightthereafter to insist upon strict adherence to that term or any other term of this Agreement. No failure ordelay by any party in exercising any right or power hereunder will operate as a waiver thereof, nor will anysingle or partial exercise of any other right or power. No agreements or representations, oral or otherwise,express or implied, with respect to the subject matter hereof have been made by any party, which are notset forth expressly in this Agreement.Section 5.09Severability. If any term or provision of this Agreement is invalid, illegal orincapable of being enforced by any applicable law or public policy, all other conditions and provisions ofthis Agreement shall nonetheless remain in full force and effect so long as the economic and legalsubstance of the transactions contemplated by this Agreement is not affected in any manner materiallyadverse to any party. Upon any such determination that any term or other provision is invalid, illegal orincapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so asto effect the original intent of the parties as closely as possible in a mutually acceptable manner in order thatthe transactions contemplated hereby be consummated as originally contemplated to the fullest extentpossible.- 10 - Section 5.10Survival. The rights and obligations of the parties under the provisions of thisAgreement that relate to post-termination obligations shall survive and remain binding and enforceable,notwithstanding the expiration of the term of this Agreement, the termination of Executive’s employmentwith the Company for any reason or any settlement of the financial rights and obligations arising fromExecutive’s employment hereunder, to the extent necessary to preserve the intended benefits of suchprovisions.Section 5.11Notices. All notices and other communications required or permitted by thisAgreement will be made in writing and all such notices and communications will be deemed to have beenduly given when delivered or (unless otherwise specified) mailed by United States certified or registeredmail, return receipt requested, postage prepaid, addressed, if to the Company, at its principal office, and ifto Executive, at Executive’s last address on file with the Company. Either party may change such addressfrom time to time by notice to the other.Section 5.12Headings and References. The headings of this Agreement are inserted forconvenience only and neither constitute a part of this Agreement nor affect in any way the meaning orinterpretation of this Agreement. When a reference in this Agreement is made to a Section, such referenceshall be to a Section of this Agreement unless otherwise indicated.Section 5.13Counterparts. This Agreement may be executed in one or more counterparts(including via facsimile), each of which shall be deemed to be an original, but all of which together shallconstitute one and the same instrument.[signature page follows]- 11 - IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date firstwritten above. CORTENDO AB By: _________________________________ Name: Title: Chairman EXECUTIVE ____________________________________ Matthew Pauls - 12 - ATTACHMENT AGENERAL RELEASE1.Matthew Pauls (“Executive”), for and in consideration of the commitments of Cortendo AB(the “Company”) as set forth in Article III of the Amended and Restated Employment Agreement dated asof November 2, 2015 (the “Employment Agreement”), and intending to be legally bound, does herebyREMISE, RELEASE AND FOREVER DISCHARGE the Company and its present and former divisions,subsidiaries, parents, predecessor and successor corporations, officers, directors, and their respectivesuccessors, predecessors, assigns, heirs, executors, and administrators (collectively, “Releasees”) from allcauses of action, suits, debts, claims and demands whatsoever in law or in equity, which Executive everhad, now has, or hereafter may have, whether known or unknown, or which Executive’s heirs, executors, oradministrators may have, by reason of any matter, cause or thing whatsoever, up to the date of Executive’sexecution of this General Release, particularly, but without limitation of the foregoing general terms, anyclaims arising from or relating in any way to Executive’s employment relationship with the Company andReleasees, the terms and conditions of that relationship, and the termination of that relationship, including,but not limited to, any claims arising under any applicable Company employee benefit plan(s), the AgeDiscrimination in Employment Act, the Older Workers’ Benefit Protection Act, Title VII of The Civil RightsAct of 1964, the Civil Rights Act of 1991, Sections 1981 through 1988 of Title 42 of the United StatesCode, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974, theFamily and Medical Leave Act, the Worker Adjustment and Retraining Notification Act, Pennsylvaniaemployment laws, and any other federal, state and local employment laws, as amended, and any otherclaims under any federal, state or local common law, statutory, or regulatory provision, now or hereafterrecognized, and any claims for attorneys’ fees and costs. This General Release is effective without regardto the legal nature of the claims raised and without regard to whether any such claims are based upon tort,equity, implied or express contract or discrimination of any sort.2.To the fullest extent permitted by law, and subject to the provisions of Paragraph 3 below,Executive represents and affirms that (i) Executive has not filed or caused to be filed on Executive’s behalfany claim for relief against the Company or any Releasee and, to the best of Executive’s knowledge andbelief, no outstanding claims for relief have been filed or asserted against the Company or any Releasee onExecutive’s behalf; and (ii) Executive has no knowledge of any improper, unethical or illegal conduct oractivities that Executive has not already reported to any supervisor, manager, department head, humanresources representative, agent or other representative of the Company, to any member of the Company’slegal or compliance departments, or to the ethics hotline; and (iii) Executive will not file, commence,prosecute or participate in any judicial or arbitral action or proceeding against the Company or any Releaseebased upon or arising out of any act, omission, transaction, occurrence, contract, claim or event existing oroccurring on or before the date of execution of this General Release.3.The release of claims described in Paragraph 1 of this General Release does not precludeExecutive from filing a charge with the U.S. Equal Employment Opportunity Commission. However,Executive agrees and hereby waives any and all rights to any monetary relief or other personal recoveryfrom any such charge, including costs and attorneys’ fees. 4.Subject to the provisions of Paragraph 3 of this General Release, in further consideration ofthe commitments of the Company as described in the Employment Agreement, Executive agrees thatExecutive will not file, claim, sue or cause or permit to be filed, any civil action,- 13 - suit or legal proceeding seeking equitable or monetary relief (including damages, injunctive, declaratory,monetary or other relief) for himself involving any matter released in Paragraph 1. In the event that suit isfiled in breach of this release of claims, it is expressly understood and agreed that this release of claims shallconstitute a complete defense to any such suit. In the event any Releasee is required to institute litigation toenforce the terms of this paragraph, Releasees shall be entitled to recover reasonable costs and attorneys'fees incurred in such enforcement. Executive further agrees and covenants that should any person,organization, or other entity file, claim, sue, or cause or permit to be filed any civil action, suit or legalproceeding involving any matter occurring at any time in the past, Executive will not seek or acceptpersonal equitable or monetary relief in such civil action, suit or legal proceeding. Nothing in this GeneralRelease shall prohibit or restrict Executive from: (i) making any disclosure of information required by law;(ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding broughtby any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization,or the Company’s designated legal, compliance or human resources officers; or (iii) filing, testifying,participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state ormunicipal law relating to fraud, or any rule or regulation of the Securities and Exchange Commission or anyself-regulatory organization.5.Executive understands and agrees that the payments, benefits and agreements provided inthe Employment Agreement are being provided to Executive in consideration for Executive’s acceptanceand execution of, and in reliance upon Executive’s representations in, the Employment Agreement and thisGeneral Release, and that they are greater than the payments, benefits and agreements, if any, to whichExecutive would have received if Executive had not executed the Employment Agreement and this GeneralRelease. In addition, Executive acknowledges and agrees that Executive has been paid all amounts owed toExecutive as of the date of Executive’s signing of this General Release.6.Executive and the Company agree and acknowledge that the agreement by the Companydescribed in the Employment Agreement, and the settlement and termination of any asserted or unassertedclaims against the Releasees, are not and shall not be construed to be an admission of any violation of anyfederal, state or local statute or regulation, or of any duty owed by any of the Releasees to Executive.7.This General Release and the obligations of the parties hereunder shall be construed,interpreted and enforced in accordance with and be governed by the laws of Pennsylvania without referenceto its conflicts of laws principles.8.Executive certifies and acknowledges as follows:a.that Executive has read the terms of this General Release, and that Executiveunderstands its terms and effects, including the fact that Executive has agreed toRELEASE AND FOREVER DISCHARGE the Company and each and every one ofits affiliated entities from any legal action arising out of Executive’s relationship with theCompany and the termination of that relationship;b.that Executive has signed this Release voluntarily and knowingly in exchange for theconsideration described herein and in the Employment Agreement,- 14 - which Executive acknowledges is adequate and satisfactory to Executive and to whichExecutive acknowledges that Executive would not otherwise be entitled;c.that Executive has been and is hereby advised in writing to consult with an attorneyprior to signing this General Release;d.that Executive does not waive rights or claims that may arise after the date this GeneralRelease is executed;e.that the Company has provided Executive with at least 21 (twenty-one) days withinwhich to consider this General Release, that any modifications, material or otherwise,made to this General Release have not restarted or affected in any manner the original21 (twenty-one) day consideration period, and that Executive has signed on the dateindicated below after concluding that this General Release is satisfactory to Executive;f.that Executive acknowledges that this General Release may be revoked by Executivewithin seven (7) days after Executive’s execution, and it shall not become effective untilthe expiration of such seven day revocation period. If the last day of the revocationperiod is a Saturday, Sunday, or legal holiday in the state in which Executive resides,then the revocation period shall not expire until the next following day which is not aSaturday, Sunday, or legal holiday. In the event of a timely revocation by Executive,this General Release and the Employment Agreement will be deemed null and void andthe Company will have no obligations hereunder; andg.that this General Release may not be signed prior to the third calendar day before thelast day of the Term of the Employment Agreement. If this General Release is signedprior to the last day of the Term of the Employment Agreement, the Company reservesthe right to have Executive ratify the General Release on or after the last day of theTerm.- 15 - Intending to be legally bound hereby, Executive executed the foregoing General Release on thedate indicated below. Matthew Pauls Signature Date: - 16 -Exhibit 10.7AMENDED AND RESTATED EMPLOYMENT AGREEMENTTHIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”)is made by and between Cortendo AB, a Swedish limited liability company (the “Company”), and A.Brian Davis (“Executive”) as of November 2, 2015.W I T N E S S E T H:WHEREAS, the Company and Executive entered into an employment agreement dated March23, 2015 (the “Effective Date”) (such agreement, the “Prior Agreement”);WHEREAS, the Company desires to continue to retain the services of Executive as set forth in thisAgreement, and Executive desires to serve the Company in such capacity, subject to the terms andconditions of this Agreement; andWHEREAS, the Company and Executive intend for this Agreement to replace the PriorAgreement except as otherwise set forth herein.NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligationscontained herein, Company and Executive agree as follows:ARTICLE IEMPLOYMENT AND DUTIESSection 1.01Employment and Term. Executive shall be employed by the Company for theperiod commencing on the Effective Date and expiring on the third anniversary of the Effective Date,unless sooner terminated as set forth in this Agreement (the “Term”); provided, however, that the Termshall thereafter be automatically extended for additional one-year periods unless, at least ninety (90) daysprior to expiration of the Term, either (a) the Company gives notice to Executive not to extend the Term or(b) Executive gives notice to the Company not to extend the Term.Section 1.02Position and Duties. Executive shall serve as the Chief Financial Officer of theCompany, or in such other positions as the parties may agree. Executive shall have the duties andresponsibilities customarily associated with such position and will perform such other duties as reasonablydirected by the Chief Executive Officer of the Company (the “CEO”) consistent with such position(s).Section 1.03Scope. Executive will devote substantially all of his business time, attention, skills andefforts to the performance of his duties. Executive acknowledges that his duties and responsibilities requireExecutive’s full-time business efforts and agrees to not engage in any other business activity or interestswhich materially interfere or conflict with the performance of Executive’s duties. Notwithstanding theforegoing, Executive may (a) serve on corporate, civic or charitable boards or committees of entities that donot compete with the Company, with the approval of the CEO, (b) deliver a reasonable number of lecturesor fulfill speaking engagements, with the approval of the CEO, or (c) manage personal investments, so longas such activities do not significantly interfere with the performance of Executive’s duties. ARTICLE IICOMPENSATION AND BENEFITSSection 2.01Base Salary. During the Term, the Company will pay Executive a base salary (the“Base Salary”) at an initial rate of $325,000 per year in accordance with the Company’s standard payrollpractices. The Base Salary will be reviewed at least annually by the Board of Directors of the Company(the “Board”) or a committee thereof and may be adjusted (in which case such adjusted amount shall be the“Base Salary”).Section 2.02Annual Incentive. During Executive’s employment with the Company, and asdetermined by the Board in its sole discretion, Executive shall be eligible for an annual cash incentive (the“Annual Incentive”) with a target of forty percent (40%) of the Base Salary (such percentage, the “TargetAnnual Incentive”). The Annual Incentive shall be based on the achievement of predeterminedperformance goals as determined annually by the CEO and the Board, which shall be provided toExecutive in writing no later than thirty (30) days following the beginning of the year to which they relate.The actual Annual Incentive earned in any particular year may be greater or lower than the Target AnnualIncentive, depending on the level of achievement of the applicable performance goals and the discretion ofthe Board. The Annual Incentive shall be paid to Executive as soon as practicable, but in no event laterthan the date that is two-and-one-half months following the end of the taxable year (of Executive, or theCompany, whichever is later) in which such incentive is earned. Notwithstanding anything herein to thecontrary, Executive’s Annual Incentive for the 2015 fiscal year shall be based on a full year of employmentand not pro-rated.Section 2.03Lone Term Incentive Plans. Executive shall be eligible to receive grants under theCompany’s long term incentive plans (including stock option, restricted stock and other equitycompensation plans and any other long-term incentive plans) at the discretion of the CEO and the Board.Section 2.04Business and Entertainment Expenses. Subject to the Company’s standard policiesand procedures for expense reimbursement as applied to its executive employees generally, the Companyshall reimburse Executive for, or pay on behalf of Executive, reasonable out-of-pocket business expensesincurred by Executive on behalf of the Company.Section 2.05Other Company Benefits. Executive shall be entitled to participate in all employeebenefit plans, practices and programs maintained by the Company and made available to its similarlysituated executives, including the Company’s paid time-off policy. Executive shall also be entitled to paidtime-off for all holidays in the U.S. in accordance with the applicable Company policy.- 2 - ARTICLE IIITERMINATIONSection 3.01General. The Company may terminate Executive’s employment for any reason or noreason, and Executive may terminate his employment for any reason or no reason, in either case subjectonly to the terms of this Agreement. For purposes of this Agreement, the following terms have thefollowing meanings:(a)“Accrued Obligations” shall mean (i) Executive’s earned but unpaid Base Salarythrough the Termination Date; (ii) payment of any annual, long-term, or other incentive award whichrelates to a completed fiscal year or performance period, as applicable, and is payable (but not yet paid) onor before the Termination Date; (iii) a lump-sum payment in respect of accrued but unused vacation days atExecutive’s per-business-day Base Salary rate in effect as of the Termination Date; and (iv) any unpaidexpense or other reimbursements due pursuant to Section 2.04 hereof.(b)“Cause” shall mean (i) Executive’s conviction of, or plea of guilty or nolocontendere to, any felony or any crime involving theft, embezzlement, dishonesty or moral turpitude; (ii)any act by Executive constituting willful misconduct, deliberate malfeasance, dishonesty, unethical conductor gross negligence in the performance of his duties; (iii) Executive’s willful and continued failure toperform any of the duties of his position (which has not been cured within thirty (30) days following thefirst written notice from the Company describing such failure in reasonable detail); or (iv) any materialbreach (which has not been cured within thirty (30) days following the first written notice from theCompany describing such breach in reasonable detail) by Executive of this Agreement or any otheragreement between Executive and the Company or any of its affiliates.(c)“Change in Control” shall mean the occurrence of any of the following:(i)any person or group of persons becomes the beneficial owner, directly orindirectly, of securities of the Company representing more than fifty percent (50%) of the combinedvoting power of the Company’s then outstanding securities (a “Majority of the Securities”);provided that if the person or group of persons is already deemed to own more than 50% of the totalfair market value or total voting power, then the acquisition of additional stock by such person orgroup of persons shall not constitute an additional Change in Control;(ii)the stockholders of the Company approve a plan of complete liquidation of theCompany;(iii)the sale or disposition of all or substantially all of the Company’s assets;(iv)a merger, consolidation or reorganization of the Company with or involving anyother entity, other than a merger, consolidation or reorganization that would result in the votingsecurities of the Company outstanding immediately prior thereto- 3 - continuing to represent (either by remaining outstanding or by being converted into voting securitiesof the surviving entity) at least a 50% of the combined voting power of the Company (or suchsurviving entity) outstanding immediately after such merger, consolidation or reorganization ownedin approximately the same proportion of such ownership by each of the prior shareholders as priorto the transaction.(v)Notwithstanding the foregoing, the following acquisitions shall not constitute aChange in Control: (A) an acquisition by the Company or entity controlled by the Company, or (B)an acquisition by an employee benefit plan (or related trust) sponsored or maintained by theCompany.(d)“Disability” shall mean Executive’s becoming incapacitated for a period of at leastone hundred eighty (180) days by accident, sickness or other circumstance that renders Executive mentallyor physically incapable of performing the material duties and services required of Executive hereunder on afull-time basis during such period. A termination of Executive’s employment due to a Disability shall beeffective only if the party terminating Executive’s employment first gives at least fifteen (15) days’ writtennotice of such termination to the other party.(e)“Good Reason” shall mean, without Executive’s express written consent, theoccurrence of any one or more of the following: (i) a material diminution by the Company of Executive’sBase Salary, other than any diminution that is also applicable in a substantially similar manner andproportion to the other senior executives of the Company; (ii) the assignment to Executive of duties orresponsibilities which are materially inconsistent with Executive’s position; (iii) a change in the principallocation at which Executive performs his duties for the Company to a new location that is more than fifty(50) miles from the prior location; or (iv) an action or inaction that constitutes a material breach of thisAgreement by the Company.A termination of employment by Executive for Good Reason shall be effectuated by giving the Companywritten notice (“Notice of Termination for Good Reason”), not later than thirty (30) days following theoccurrence of the circumstance that constitutes Good Reason, setting forth in reasonable detail the specificconduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement onwhich Executive relied. The Company shall be entitled, during the forty-five (45) day period followingreceipt of a Notice of Termination for Good Reason, to cure the circumstances that gave rise to GoodReason, provided that the Company shall be entitled to waive its right to cure or reduce the cure period bydelivery of written notice to that effect to Executive (such forty-five (45) day or shorter period, the “CurePeriod”). If, during the Cure Period, such circumstance is remedied, Executive will not be permitted toterminate employment for Good Reason as a result of such circumstance. If, at the end of the Cure Period,the circumstance that constitutes Good Reason has not been remedied, Executive will be entitled toterminate employment for Good Reason during the thirty (30) day period that follows the end of the CurePeriod. If Executive does not terminate employment during such thirty (30) day period, Executive will notbe permitted to terminate employment for Good Reason as a result of such event.(f)“Pro-Rata Annual Incentive” shall mean an amount equal to (i) the Annual Incentivethat Executive would have been entitled to receive for the calendar year that includes the- 4 - Termination Date if his employment hereunder had continued (as determined by the Board based upon theactual achievement of the applicable performance goals), multiplied by (ii) a fraction, the numerator ofwhich is the number of days he was employed hereunder during such year and the denominator of which isthe number of days in such year.(g)“Termination Date” shall mean the date on which Executive’s employmenthereunder terminates (which, in the case of a notice of non-renewal of the Term in accordance with ArticleI hereof, shall mean the date on which the Term expires, provided that Executive’s employment isterminated on such date due to the non-renewal of the Term).Section 3.02Termination Without Cause or by Executive With Good Reason. If the Companyterminates Executive’s employment without Cause, or Executive terminates for Good Reason, the Termshall expire on the Termination Date and Executive shall be entitled to: (a) the Accrued Obligations; (b) anamount equal to the sum of (i) twelve (12) months of the annual Base Salary as in effect immediately priorto the Termination Date and (ii) the Target Annual Incentive, paid in equal installments on the normalpayroll cycle over the twelve (12) month period that begins on the sixtieth (60) day following theTermination Date; (c) the Pro-Rata Annual Incentive, payable in a cash lump sum to Executive on the dateCompany pays its annual incentive compensation bonuses for the year that includes the Termination Date ifExecutive’s employment continued; and (d) medical, dental benefits provided by the Company toExecutive and Executive’s spouse and dependents (in each case, as provided in any applicable plan) atleast equal to the levels of benefits provided to other similarly situated active employees of the Companyand its subsidiaries until the earlier of (i) the one-year anniversary of the Termination Date or (ii) the datethat Executive becomes covered under a subsequent employer’s medical and dental plans.Section 3.03Termination Due to Non-Renewal of the Term by the Company. If Executive’semployment is terminated due to the non-renewal of the Term by the Company pursuant to Section 1.01,Executive shall be entitled to: (a) the Accrued Obligations; (b) an amount equal to the sum of (i) six (6)months of the annual Base Salary as in effect immediately prior to the Termination Date and (ii) one-half ofthe Target Annual Incentive, paid in equal installments on the normal payroll cycle over the six (6) monthperiod that begins on the sixtieth (60th) day following the Termination Date; (c) the Pro-Rata AnnualIncentive, payable in a cash lump sum to Executive on the date Company pays its annual incentivecompensation bonuses for the year that includes the Termination Date if Executive’s employment hadcontinued; and (d) medical, dental benefits provided by the Company to Executive and Executive’s spouseand dependents (in each case, as provided in any applicable plan) at least equal to the levels of benefitsprovided to other similarly situated active employees of the Company and its subsidiaries until the earlier of(i) the six-month anniversary of the Termination Date or (ii) the date that Executive becomes covered undera subsequent employer’s medical and dental plans.Section 3.04Termination Without Cause, by Executive With Good Reason, or Due to Non-Renewal of the Term by the Company following a Change in Control of the Company. If theCompany terminates Executive’s employment without Cause, Executive terminates for Good Reason, orExecutive’s employment is terminated due to the non-renewal of the Term by the Company pursuant toSection 1.01, in any case, within twenty four (24) months following the occurrence of Change in Control,the Term shall expire on the Termination Date and, in lieu of the benefits set forth in Section 3.02 or 3.03,Executive shall be entitled to: (a) the- 5 - thAccrued Obligations; (b) an amount equal to the sum of (i) eighteen (18) months of the annual Base Salaryas in effect immediately prior to the Termination Date and (ii) the Target Annual Incentive, paid in equalinstallments on the normal payroll cycle over the eighteen (18) month period that begins on the sixtieth(60) day following the Termination Date; (c) the Pro-Rata Annual Incentive, payable in a cash lump sumto Executive on the date Company pays its annual incentive compensation bonuses for the year thatincludes the Termination Date if Executive’s employment continued; (d) medical, dental benefits providedby the Company to Executive and Executive’s spouse and dependents (in each case, as provided in anyapplicable plan) at least equal to the levels of benefits provided to other similarly situated active employeesof the Company and its subsidiaries until the earlier of (i) the one-year anniversary of the Termination Dateor (ii) the date that Executive becomes covered under a subsequent employer’s medical and dental plans;and (e) the acceleration of vesting of all unvested equity or equity based awards held by Executive as of theTermination Date.Section 3.05Other Terminations. If Executive’s employment hereunder is terminated (a) byExecutive without Good Reason; (b) by the Company for Cause; (c) due to non-renewal of the Term byExecutive; or (d) due to Executive’s death or Executive’s Disability, the Term shall expire as of theTermination Date and Executive and/or Executive’s estate or beneficiaries shall be entitled to the AccruedObligations.Section 3.06Release. Executive’s entitlement to the payments (other than the AccruedObligations) and benefits described in this Article III is expressly contingent upon Executive providing theCompany with a signed release that is attached hereto as Attachment A (the “Release”). To be effective,such Release must be delivered by Executive to the Company no later than forty-five (45) days followingthe Termination Date and must not be revoked during the seven (7) days following such delivery. If suchRelease is not executed in a timely manner or is revoked, all such payments and benefits shall immediatelycease and Executive shall be required to repay to the Company any such payments that have already beenpaid to Executive.ARTICLE IVRESTRICTIVE COVENANTSSection 4.01Confidentiality.(a)Company Information. Executive agrees at all times during the Term of thisAgreement and thereafter, to hold in strictest confidence, and not to use, except in connection with theperformance of Executive’s duties, and not to disclose to any person or entity without written authorizationof the Company, any Confidential Information of the Company. As used herein, “ConfidentialInformation” means any Company proprietary or confidential information, technical data, trade secrets orknow-how, including, but not limited to, research, product plans, products, services, customer lists andcustomers, markets, software, developments, inventions, processes, formulas, technology, designs,drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures,finances and other business information disclosed to Executive by the Company, either directly orindirectly in writing, orally or by drawings or inspection of documents or other tangible property. However,Confidential Information does not- 6 - thinclude any of the foregoing items which has become publicly known and made generally availablethrough no wrongful act of Executive.(b)Executive-Restricted Information. Executive agrees that during the Term of thisAgreement Executive will not improperly use or disclose any proprietary or confidential information ortrade secrets of any person or entity with whom Executive has an agreement or duty to keep suchinformation or secrets confidential.(c)Third Party Information. Executive recognizes that the Company has received and inthe future will receive from third parties their confidential or proprietary information subject to a duty on theCompany’s part to maintain the confidentiality of such information and to use it only for certain limitedpurposes. Executive agrees at all times during the Term of this Agreement and thereafter, to hold in strictestconfidence, and not to use, except in connection with the performance of Executive’s duties, and not todisclose to any person or entity, or to use it except as necessary in performing Executive’s duties, consistentwith the Company’s agreement with such third party.Section 4.02Non-Competition.(a)Executive acknowledges that, during the Term, Executive has had access toinformation concerning the Company’s critical business strategies, engineering and technologydevelopment plans, competitive analyses, organizational structure. Accordingly, in consideration of thecompensation provided under this Agreement, Executive agrees that during the Term and for the one (1)year period thereafter, Executive will not directly or indirectly, own, manage, operate, control (includingindirectly through a debt or equity investment), provide services to, or be employed by, any person or entityengaged in any business that is (i) located in or provides services or products to a region in which theCompany does business, and (ii) competitive with the business activities of the Company as they existedduring the period that Executive provided services to the Company.(b)Executive acknowledges that the restrictions contained under this Section 4.02 arereasonable and necessary to protect the legitimate interests of the Company, that the Company would nothave executed this Agreement in the absence of such restrictions, and that any violation of any provision ofthis paragraph will result in irreparable injury to the Company. In the event the provisions under thisSection 4.02 shall ever be deemed to exceed the time, scope or geographic limitations permitted byapplicable laws, then such provisions shall be reformed to the maximum time, scope or geographiclimitations, as the case may be, permitted by applicable laws.Section 4.03Injunctive Relief. Executive agrees that it is impossible to measure in money thedamages which will accrue to the Company by reason of a failure by Executive to perform any ofExecutive’s obligations under this Article IV. Accordingly, if Company or any of its affiliates institutes anyaction or proceeding to enforce its rights under this Article IV, to the extent permitted by applicable law,Executive hereby waives the claim or defense that the Company or its affiliates has an adequate remedy atlaw, and Executive shall not claim that any such remedy at law exists.- 7 - ARTICLE VMISCELLANEOUSSection 5.01Withholding. The Company shall withhold all applicable federal, state and localtaxes, social security and workers’ compensation contributions and other amounts as may be required bylaw with respect to compensation payable to Executive.Section 5.02Modification of Payments. (a)In the event it shall be determined that any payment, right or distribution by theCompany or any other person or entity to or for the benefit of Executive pursuant to the terms of thisAgreement or otherwise, in connection with, or arising out of, his employment with the Company or achange in ownership or effective control of the Company or a substantial portion of its assets (a “Payment”)is a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, asamended (the “Code”) on account of the aggregate value of the Payments due to Executive being equal toor greater than three times the “base amount,” as defined in Section 280G(b)(3) of the Code, (the“Parachute Threshold”) so that Executive would be subject to the excise tax imposed by Section 4999 ofthe Code (the “Excise Tax”) and the net after-tax benefit that Executive would receive by reducing thePayments to the Parachute Threshold is greater than the net after-tax benefit Executive would receive if thefull amount of the Payments were paid to Executive, then the Payments payable to Executive shall bereduced (but not below zero) so that the Payments due to Executive do not exceed the amount of theParachute Threshold, reducing first any Payments under Section 3.02(b) hereof.(b)The Company hereby agrees that, for purposes of determining whether anypayment and benefits set forth in Section 3.04 above would be subject to the Excise Tax, the non-competeset forth in in Section 4.02 above shall be treated as an agreement for the performance of personalservices. The Company hereby agrees to indemnify, defend, and hold harmless Executive from andagainst any adverse impact, tax, penalty, or excise tax resulting from the Company or accountant’sattribution of a value to the non-compete set forth in in Section 4.02 above that is less than the totalcompensation amount that would be disclosed under Item 402(c) of Securities and Exchange CommissionRegulation S-K if Executive had been a “named executive officer” of the Company in the year prior toyear of the event that triggers the Excise Tax, to the extent the use of such lesser amount results in a largerExcise Tax than Executive would have been subject to had the Company or accountant attributed a valueto the non-compete set forth in in Section 4.02 above that is at least equal to the total compensation amountdisclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K for such year..Section 5.03Section 409A.(a)Notwithstanding anything herein to the contrary, this Agreement is intended to beinterpreted and applied so that the payment of the benefits set forth herein either shall either be exempt fromthe requirements of Section 409A of the Code (“Section 409A”) or shall comply with the requirements ofsuch provision.- 8 - (b)Notwithstanding any provision of this Agreement to the contrary, if Executive is a“specified employee” within the meaning of Section 409A, any payments or arrangements due upon atermination of Executive’s employment under any arrangement that constitutes a “nonqualified deferral ofcompensation” within the meaning of Section 409A and which do not otherwise qualify under theexemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferralexemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayedand paid or provided, without interest, on the earlier of (i) the date which is six (6) months after Executive’s“separation from service” (as such term is defined in Section 409A and the regulations and other publishedguidance thereunder) for any reason other than death, and (ii) the date of Executive’s death.(c)After any Termination Date, Executive shall have no duties or responsibilities thatare inconsistent with having a “separation from service” within the meaning of Section 409A and,notwithstanding anything in the Agreement to the contrary, distributions upon termination of employmentof nonqualified deferred compensation may only be made upon a -separation from service” as determinedunder Section 409A and such date shall be the Termination Date for purposes of this Agreement. Eachpayment under this Agreement or otherwise shall be treated as a separate payment for purposes of Section409A. In no event may Executive, directly or indirectly, designate the calendar year of any payment to bemade under this Agreement which constitutes a -nonqualified deferral of compensation” within themeaning of Section 409A and to the extent an amount is payable within a time period, the time duringwhich such amount is paid shall be in the discretion of the Company.Section 5.04Merger Clause. Effective as of the date hereof, this Agreement contains thecomplete, full, and exclusive understanding of Executive and the Company as to its subject matter andshall, on such date, and supersede any prior employment agreement between Executive and the Company(and its affiliates), including the Prior Agreement. Any amendments to this Agreement shall be effectiveand binding on Executive and the Company only if any such amendments are in writing and signed byboth Parties.Section 5.05Assignment.(a)This Agreement is personal to Executive and, without the prior written consent ofthe Company, shall not be assigned by Executive otherwise than by will or the laws of descent anddistribution, and any assignment in violation of this Agreement shall be void.(b)Notwithstanding the foregoing Section 5.05(a), this Agreement and all rights ofExecutive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executiveshould die while any amounts would still be payable to him or her hereunder if he or she had continued tolive, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of thisAgreement to Executive’s devisee, legatee or other designee or, should there be no such designee, toExecutive’s estate.(c)The Company may assign this Agreement to any affiliate or subsidiary of theCompany without the consent of Executive and shall require any successor (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all of the business- 9 -  or assets of the Company (a “Successor”) to assume and agree to perform this Agreement in the samemanner and to the same extent that the Company would have been required to perform it if no suchsuccession had taken place. As used in this Agreement, (i) the term “Company” shall mean the Company as hereinbefore defined and any Successor and any permittedassignee to which this Agreement is assigned and (ii) the term “Board” shall mean the Board ashereinbefore defined and the board of directors or equivalent governing body of any Successor and anypermitted assignee to which this Agreement is assigned.Section 5.06Dispute Resolution. Except for any proceeding brought pursuant to Section 5.05above, the parties agree that any dispute arising out of or relating to this Agreement or the formation,breach, termination or validity thereof, will be settled by binding arbitration by a panel of three arbitrators inaccordance with the commercial arbitration rules of the American Arbitration Association. The arbitrationproceedings will be located in Philadelphia, Pennsylvania. The arbitrators are not empowered to awarddamages in excess of compensatory damages and each party irrevocably waives any damages in excess ofcompensatory damages. Judgment upon any arbitration award may be entered into any court havingjurisdiction thereof and the parties consent to the jurisdiction of any court of competent jurisdiction locatedin the Eastern District of Pennsylvania.Section 5.07GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BEMADE IN THE COMMONWEALTH OF PENNSYLVANIA, INTERPRETATION,CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTSHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIAWITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.Section 5.08Amendment; No Waiver. No provision of this Agreement may be amended,modified, waived or discharged except by a written document signed by Executive and duly authorizedofficer of the Company. The failure of a party to insist upon strict adherence to any term of this Agreementon any occasion shall not be considered as a waiver of such party’s rights or deprive such party of the rightthereafter to insist upon strict adherence to that term or any other term of this Agreement. No failure ordelay by any party in exercising any right or power hereunder will operate as a waiver thereof, nor will anysingle or partial exercise of any other right or power. No agreements or representations, oral or otherwise,express or implied, with respect to the subject matter hereof have been made by any party, which are notset forth expressly in this Agreement.Section 5.09Severability. If any term or provision of this Agreement is invalid, illegal or incapableof being enforced by any applicable law or public policy, all other conditions and provisions of thisAgreement shall nonetheless remain in full force and effect so long as the economic and legal substance ofthe transactions contemplated by this Agreement is not affected in any manner materially adverse to anyparty. Upon any such determination that any term or other provision is invalid, illegal or incapable of beingenforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect theoriginal intent of the parties as closely as possible in a mutually acceptable manner in order that thetransactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.- 10 - Section 5.10Survival. The rights and obligations of the parties under the provisions of thisAgreement that relate to post-termination obligations shall survive and remain binding and enforceable,notwithstanding the expiration of the term of this Agreement, the termination of Executive’s employmentwith the Company for any reason or any settlement of the financial rights and obligations arising fromExecutive’s employment hereunder, to the extent necessary to preserve the intended benefits of suchprovisions.Section 5.11Notices. All notices and other communications required or permitted by thisAgreement will be made in writing and all such notices and communications will be deemed to have beenduly given when delivered or (unless otherwise specified) mailed by United States certified or registeredmail, return receipt requested, postage prepaid, addressed, if to the Company, at its principal office, and ifto Executive, at Executive’s last address on file with the Company. Either party may change such addressfrom time to time by notice to the other.Section 5.12Headings and References. The headings of this Agreement are inserted forconvenience only and neither constitute a part of this Agreement nor affect in any way the meaning orinterpretation of this Agreement. When a reference in this Agreement is made to a Section, such referenceshall be to a Section of this Agreement unless otherwise indicated.Section 5.13Counterparts. This Agreement may be executed in one or more counterparts(including via facsimile), each of which shall be deemed to be an original, but all of which together shallconstitute one and the same instrument.[signature page follows]- 11 - IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date firstwritten above. CORTENDO AB By: _______________________________ Name: Matthew Pauls Title: Managing Director EXECUTIVE ___________________________________ A. Brian Davis - 12 - ATTACHMENT AGENERAL RELEASEBrian Davis (“Executive”), for and in consideration of the commitments of Cortendo AB (the“Company”) as set forth in Article III of the Amended and Restated Employment Agreement dated as ofNovember 2, 2015 (the “Employment Agreement”), and intending to be legally bound, does herebyREMISE, RELEASE AND FOREVER DISCHARGE the Company and its present and former divisions,subsidiaries, parents, predecessor and successor corporations, officers, directors, and their respectivesuccessors, predecessors, assigns, heirs, executors, and administrators (collectively, “Releasees”) from allcauses of action, suits, debts, claims and demands whatsoever in law or in equity, which Executive everhad, now has, or hereafter may have, whether known or unknown, or which Executive’s heirs, executors,or administrators may have, by reason of any matter, cause or thing whatsoever, up to the date ofExecutive’s execution of this General Release, particularly, but without limitation of the foregoing generalterms, any claims arising from or relating in any way to Executive’s employment relationship with theCompany and Releasees, the terms and conditions of that relationship, and the termination of thatrelationship, including, but not limited to, any claims arising under any applicable Company employeebenefit plan(s), the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act,Title VII of The Civil Rights Act of 1964, the Civil Rights Act of 1991, Sections 1981 through 1988 ofTitle 42 of the United States Code, the Americans with Disabilities Act, the Employee Retirement IncomeSecurity Act of 1974, the Family and Medical Leave Act, the Worker Adjustment and RetrainingNotification Act, Pennsylvania employment laws, and any other federal, state and local employment laws,as amended, and any other claims under any federal, state or local common law, statutory, or regulatoryprovision, now or hereafter recognized, and any claims for attorneys’ fees and costs. This General Releaseis effective without regard to the legal nature of the claims raised and without regard to whether any suchclaims are based upon tort, equity, implied or express contract or discrimination of any sort.To the fullest extent permitted by law, and subject to the provisions of Paragraph 3 below,Executive represents and affirms that (i) Executive has not filed or caused to be filed on Executive’s behalfany claim for relief against the Company or any Releasee and, to the best of Executive’s knowledge andbelief, no outstanding claims for relief have been filed or asserted against the Company or any Releasee onExecutive’s behalf; and (ii) Executive has no knowledge of any improper, unethical or illegal conduct oractivities that Executive has not already reported to any supervisor, manager, department head, humanresources representative, agent or other representative of the Company, to any member of the Company’slegal or compliance departments, or to the ethics hotline; and (iii) Executive will not file, commence,prosecute or participate in any judicial or arbitral action or proceeding against the Company or anyReleasee based upon or arising out of any act, omission, transaction, occurrence, contract, claim or eventexisting or occurring on or before the date of execution of this General Release.The release of claims described in Paragraph I of this General Release does not preclude Executivefrom filing a charge with the U.S. Equal Employment Opportunity Commission. However, Executiveagrees and hereby waives any and all rights to any monetary relief or other personal recovery from anysuch charge, including costs and attorneys’ fees.- 13 - Subject to the provisions of Paragraph 3 of this General Release, in further consideration of thecommitments of the Company as described in the Employment Agreement, Executive agrees thatExecutive will not file, claim, sue or cause or permit to be filed, any civil action, suit or legal proceedingseeking equitable or monetary relief (including damages, injunctive, declaratory, monetary or other relief)for himself involving any matter released in Paragraph 1. In the event that suit is filed in breach of thisrelease of claims, it is expressly understood and agreed that this release of claims shall constitute a completedefense to any such suit. In the event any Releasee is required to institute litigation to enforce the terms ofthis paragraph, Releasees shall be entitled to recover reasonable costs and attorneys’ fees incurred in suchenforcement. Executive further agrees and covenants that should any person, organization, or other entityfile, claim, sue, or cause or permit to be filed any civil action, suit or legal proceeding involving any matteroccurring at any time in the past, Executive will not seek or accept personal equitable or monetary relief insuch civil action, suit or legal proceeding. Nothing in this General Release shall prohibit or restrictExecutive from: (i) making any disclosure of information required by law; (ii) providing information to, ortestifying or otherwise assisting in any investigation or proceeding brought by any federal regulatory or lawenforcement agency or legislative body, any self-regulatory organization, or the Company’s designatedlegal, compliance or human resources officers; or (iii) filing, testifying, participating in or otherwiseassisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating tofraud, or any rule or regulation of the Securities and Exchange Commission or any self-regulatoryorganization.Executive understands and agrees that the payments, benefits and agreements provided in theEmployment Agreement are being provided to Executive in consideration for Executive’s acceptance andexecution of, and in reliance upon Executive’s representations in, the Employment Agreement and thisGeneral Release, and that they are greater than the payments, benefits and agreements, if any, to whichExecutive would have received if Executive had not executed the Employment Agreement and thisGeneral Release. In addition, Executive acknowledges and agrees that Executive has been paid all amountsowed to Executive as of the date of Executive’s signing of this General Release.Executive and the Company agree and acknowledge that the agreement by the Company describedin the Employment Agreement, and the settlement and termination of any asserted or unasserted claimsagainst the Releasees, are not and shall not be construed to be an admission of any violation of any federal,state or local statute or regulation, or of any duty owed by any of the Releasees to Executive.This General Release and the obligations of the parties hereunder shall be construed, interpretedand enforced in accordance with and be governed by the laws of Pennsylvania without reference to itsconflicts of laws principles.a.Executive certifies and acknowledges as follows:that Executive has read the terms of thisGeneral Release, and that Executive understands its terms and effects, including the fact thatExecutive has agreed to RELEASE AND FOREVER DISCHARGE the Company and eachand every one of its affiliated entities from any legal action arising out of Executive’srelationship with the Company and the termination of that relationship;- 14 - b.that Executive has signed this Release voluntarily and knowingly in exchange for theconsideration described herein and in the Employment Agreement, which Executiveacknowledges is adequate and satisfactory to Executive and to which Executive acknowledgesthat Executive would not otherwise be entitled;c.that Executive has been and is hereby advised in writing to consult with an attorney prior tosigning this General Release;d.that Executive does not waive rights or claims that may arise after the date this General Releaseis executed;e.that the Company has provided Executive with at least 21 (twenty-one) days within which toconsider this General Release, that any modifications, material or otherwise, made to thisGeneral Release have not restarted or affected in any manner the original 21 (twenty-one) dayconsideration period, and that Executive has signed on the date indicated below afterconcluding that this General Release is satisfactory to Executive;f.that Executive acknowledges that this General Release may be revoked by Executive withinseven (7) days after Executive’s execution, and it shall not become effective until the expirationof such seven day revocation period. If the last day of the revocation period is a Saturday,Sunday, or legal holiday in the state in which Executive resides, then the revocation period shallnot expire until the next following day which is not a Saturday, Sunday, or legal holiday. In theevent of a timely revocation by Executive, this General Release and the EmploymentAgreement will be deemed null and void and the Company will have no obligations hereunder;andg.that this General Release may not be signed prior to the third calendar day before the last day ofthe Term of the Employment Agreement. If this General Release is signed prior to the last dayof the Term of the Employment Agreement, the Company reserves the right to have Executiveratify the General Release on or after the last day of the Term.- 15 - Intending to be legally bound hereby, Executive executed the foregoing General Release on thedate indicated below. A. Brian Davis Signature Date: - 16 -Exhibit 10.9AMENDED AND RESTATED EMPLOYMENT AGREEMENTTHIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”)is made by and between Cortendo AB, a Swedish limited liability company (the “Company”), and RuthThieroff-Ekerdt (“Executive”) as of November 2, 2015.W I T N E S S E T H:WHEREAS, the Company and Executive entered into an employment agreementdated December 15, 2014 (the “Effective Date”) (such agreement, the “Prior Agreement”);WHEREAS, the Company desires to continue to retain the services of Executive as set forth in thisAgreement, and Executive desires to serve the Company in such capacity, subject to the terms andconditions of this Agreement; andWHEREAS, the Company and Executive intend for this Agreement to replace the PriorAgreement except as otherwise set forth herein.NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligationscontained herein, Company and Executive agree as follows:ARTICLE IEMPLOYMENT AND DUTIESSection 1.01Employment and Term. Executive shall be employed by the Company for theperiod commencing on the Effective Date and expiring on the third anniversary of the Effective Date,unless sooner terminated as set forth in this Agreement (the “Term”); provided, however, that the Termshall thereafter be automatically extended for additional one-year periods unless, at least ninety (90) daysprior to expiration of the Term, either (a) the Company gives notice to Executive not to extend the Term or(b) Executive gives notice to the Company not to extend the Term.Section 1.02Position and Duties. Executive shall serve as Chief Medical Officer of theCompany, or in such other positions as the parties may agree. Executive shall have the duties andresponsibilities customarily associated with such position and will perform such other duties as reasonablydirected by the Chief Executive Officer of the Company (the “CEO”) consistent with such position(s).Section 1.03Scope. Executive will devote substantially all of her business time, attention, skillsand efforts to the performance of her duties. Executive acknowledges that her duties and responsibilitiesrequire Executive’s full-time business efforts and agrees to not engage in any other business activity orinterests which materially interfere or conflict with the performance of Executive’s duties. Notwithstandingthe foregoing, Executive may (a) serve on corporate, civic or charitable boards or committees of entitiesthat do not compete with the Company, with the approval of the CEO, (b) deliver a reasonable number oflectures or fulfill speaking engagements, with the approval of the CEO, or (c) manage personal investments, so long as suchactivities do not significantly interfere with the performance of Executive’s duties.ARTICLE IICOMPENSATION AND BENEFITSSection 2.01Base Salary. During the Term, the Company will pay Executive a base salary (the“Base Salary”) at an initial rate of $365,000 per year in accordance with the Company’s standard payrollpractices. The Base Salary will be reviewed at least annually by the Board of Directors of the Company(the “Board”) or a committee thereof and may be adjusted (in which case such adjusted amount shall be the“Base Salary”). Section 2.02Annual Incentive. During Executive’s employment with the Company, and asdetermined by the Board in its sole discretion, Executive shall be eligible for an annual cash incentive (the“Annual Incentive”) with a target of 40% of Base Salary (such percentage, the “Target Annual Incentive”).The Annual Incentive shall be based on the achievement of predetermined performance goals asdetermined annually by the CEO and the Board, which shall be provided to the Executive in writing nolater than thirty (30) days following the beginning of the year to which they relate. The actual AnnualIncentive earned in any particular year may be greater or lower than the Target Annual Incentive,depending on the level of achievement of the applicable performance goals and the discretion of the Board. The Annual Incentive shall be paid to Executive as soon as practicable, but in no event later than the datethat is two-and-one-half months following the end of the taxable year (of Executive, or the Company,whichever is later) in which such incentive is earned. Section 2.03Long Term Incentive Plans. Executive shall be eligible to receive grants under theCompany’s long term incentive plans (including stock option, restricted stock and other equitycompensation plans and any other long-term incentive plans) at the discretion of the CEO and the Board. Section 2.04Business and Entertainment Expenses. Subject to the Company’s standard policiesand procedures for expense reimbursement as applied to its executive employees generally, the Companyshall reimburse Executive for, or pay on behalf of Executive, reasonable out-of-pocket business expensesincurred by Executive on behalf of the Company.Section 2.05Other Company Benefits. Executive shall be entitled to participate in all employeebenefit plans, practices and programs maintained by the Company and made available to its similarlysituated executives, including the Company’s paid time-off policy. Executive shall also be entitled to paidtime-off for all holidays in the U.S. in accordance with the applicable Company policy.- 2 - ARTICLE IIITERMINATIONSection 3.01General. The Company may terminate Executive’s employment for any reason orno reason, and Executive may terminate his employment for any reason or no reason, in either case subjectonly to the terms of this Agreement. For purposes of this Agreement, the following terms have thefollowing meanings:(a)“Accrued Obligations” shall mean: (i) Executive’s earned but unpaid Base Salarythrough the Termination Date; (ii) payment of any annual, long-term, or other incentive award whichrelates to a completed fiscal year or performance period, as applicable, and is payable (but not yet paid) onor before the Termination Date; (iii) a lump-sum payment in respect of accrued but unused vacation days atExecutive’s per-business-day Base Salary rate in effect as of the Termination Date; and (iv) any unpaidexpense or other reimbursements due pursuant to Section 2.04 hereof.(b)“Cause” shall mean (i) Executive’s conviction of, or plea of guilty or nolocontendere to, any felony or any crime involving theft, embezzlement, dishonesty or moral turpitude; (ii)any act by Executive constituting willful misconduct, deliberate malfeasance, dishonesty, unethical conductor gross negligence in the performance of his duties; (iii) Executive’s willful and continued failure toperform any of the duties of his position (which has not been cured within thirty (30) days following thefirst written notice from the Company describing such failure in reasonable detail); or (iv) any materialbreach (which has not been cured within thirty (30) days following the first written notice from theCompany describing such breach in reasonable detail) by Executive of this Agreement or any otheragreement between Executive and the Company or any of its affiliates.(c)“Change in Control” shall mean the occurrence of any of the following:(i)any person or group of persons becomes the beneficial owner, directly orindirectly, of securities of the Company representing more than fifty percent (50%) of the combinedvoting power of the Company’s then outstanding securities (a “Majority of the Securities”);provided that if the person or group of persons is already deemed to own more than 50% of the totalfair market value or total voting power, then the acquisition of additional stock by such person orgroup of persons shall not constitute an additional Change in Control;(ii)the stockholders of the Company approve a plan of complete liquidation ofthe Company;(iii)the sale or disposition of all or substantially all of the Company’s assets;(iv)a merger, consolidation or reorganization of the Company with or involvingany other entity, other than a merger, consolidation or reorganization that would result in the votingsecurities of the Company outstanding immediately prior thereto continuing to represent (either byremaining outstanding or by being converted- 3 - into voting securities of the surviving entity) at least a 50% of the combined voting power of theCompany (or such surviving entity) outstanding immediately after such merger, consolidation orreorganization owned in approximately the same proportion of such ownership by each of the priorshareholders as prior to the transaction.(v)Notwithstanding the foregoing, the following acquisitions shall not constitutea Change in Control: (A) an acquisition by the Company or entity controlled by the Company, or(B) an acquisition by an employee benefit plan (or related trust) sponsored or maintained by theCompany.(d)“Disability” shall mean Executive’s becoming incapacitated for a period of at leastone hundred eighty (180) days by accident, sickness or other circumstance that renders Executive mentallyor physically incapable of performing the material duties and services required of Executive hereunder on afull-time basis during such period. A termination of Executive’s employment due to a Disability shall beeffective only if the party terminating Executive’s employment first gives at least fifteen (15) days’ writtennotice of such termination to the other party.(e)“Good Reason” shall mean, without Executive’s express written consent, theoccurrence of any one or more of the following: (i) a material diminution by the Company of Executive’sBase Salary, other than any diminution that is also applicable in a substantially similar manner andproportion to the other senior executives of the Company; (ii) the assignment to Executive of duties orresponsibilities which are materially inconsistent with Executive’s position; (iii) a change in the principallocation at which Executive performs his duties for the Company to a new location that is more than fifty(50) miles from the prior location; or (iv) an action or inaction that constitutes a material breach of thisAgreement by the Company. A termination of employment by Executive for Good Reason shall be effectuated by giving the Companywritten notice (“Notice of Termination for Good Reason”), not later than thirty (30) days following theoccurrence of the circumstance that constitutes Good Reason, setting forth in reasonable detail the specificconduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement onwhich Executive relied. The Company shall be entitled, during the forty-five (45) day period followingreceipt of a Notice of Termination for Good Reason, to cure the circumstances that gave rise to GoodReason, provided that the Company shall be entitled to waive its right to cure or reduce the cure period bydelivery of written notice to that effect to Executive (such forty-five (45) day or shorter period, the “CurePeriod”). If, during the Cure Period, such circumstance is remedied, Executive will not be permitted toterminate employment for Good Reason as a result of such circumstance. If, at the end of the Cure Period,the circumstance that constitutes Good Reason has not been remedied, Executive will be entitled toterminate employment for Good Reason during the thirty (30) day period that follows the end of the CurePeriod. If Executive does not terminate employment during such thirty (30) day period, Executive will notbe permitted to terminate employment for Good Reason as a result of such event. (f)“Pro-Rata Annual Incentive” shall mean an amount equal to (i) the Annual Incentivethat Executive would have been entitled to receive for the calendar year that includes the Termination Dateif his employment hereunder had continued (as determined by the Board- 4 - based upon the actual achievement of the applicable performance goals), multiplied by (ii) a fraction, thenumerator of which is the number of days he was employed hereunder during such year and thedenominator of which is the number of days in such year.(g)“Termination Date” shall mean the date on which Executive’s employmenthereunder terminates (which, in the case of a notice of non-renewal of the Term in accordance with ArticleI hereof, shall mean the date on which the Term expires, provided that Executive’s employment isterminated on such date due to the non-renewal of the Term).Section 3.02Termination Without Cause or by Executive With Good Reason. If theCompany terminates Executive’s employment without Cause, or Executive terminates for Good Reason,the Term shall expire on the Termination Date and Executive shall be entitled to: (a) the AccruedObligations; (b) an amount equal to the sum of (i) twelve (12) months of the annual Base Salary as in effectimmediately prior to the Termination Date and (ii) the Target Annual Incentive, paid in equal installmentson the normal payroll cycle over the twelve (12) month period that begins on the sixtieth (60) dayfollowing the Termination Date; (c) the Pro-Rata Annual Incentive, payable in a cash lump sum toExecutive on the date Company pays its annual incentive compensation bonuses for the year that includesthe Termination Date if Executive’s employment continued; and (d) medical, dental benefits provided bythe Company to Executive and Executive’s spouse and dependents (in each case, as provided in anyapplicable plan) at least equal to the levels of benefits provided to other similarly situated active employeesof the Company and its subsidiaries until the earlier of (i) the one-year anniversary of the Termination Dateor (ii) the date that Executive becomes covered under a subsequent employer’s medical and dental plans.Section 3.03Termination Due to Non-Renewal of the Term by the Company. If Executive’semployment is terminated due to the non-renewal of the Term by the Company pursuant to Section 1.01,Executive shall be entitled to: (a) the Accrued Obligations; (b) an amount equal to the sum of (i) six (6)months of the annual Base Salary as in effect immediately prior to the Termination Date and (ii) one-half ofthe Target Annual Incentive, paid in equal installments on the normal payroll cycle over the six (6) monthperiod that begins on the sixtieth (60) day following the Termination Date; (c) the Pro-Rata AnnualIncentive, payable in a cash lump sum to Executive on the date Company pays its annual incentivecompensation bonuses for the year that includes the Termination Date if Executive’s employment hadcontinued; and (d) medical, dental benefits provided by the Company to Executive and Executive’s spouseand dependents (in each case, as provided in any applicable plan) at least equal to the levels of benefitsprovided to other similarly situated active employees of the Company and its subsidiaries until the earlier of(i) the six-month anniversary of the Termination Date or (ii) the date that Executive becomes covered undera subsequent employer’s medical and dental plans.Section 3.04Termination Without Cause, by Executive With Good Reason, or Due to Non-Renewal of the Term by the Company following a Change in Control of the Company. If theCompany terminates Executive’s employment without Cause, Executive terminates for Good Reason, orExecutive’s employment is terminated due to the non-renewal of the Term by the Company pursuant toSection 1.01, in any case, within twenty four (24) months following the occurrence of Change in Control,the Term shall expire on the Termination Date and, in lieu of the benefits set forth in Section 3.02 or 3.03,Executive shall be entitled to: (a) the- 5 - ththAccrued Obligations; (b) an amount equal to the sum of (i) eighteen (18) months of the annual Base Salaryas in effect immediately prior to the Termination Date and (ii) the Target Annual Incentive, paid in equalinstallments on the normal payroll cycle over the eighteen (18) month period that begins on the sixtieth(60) day following the Termination Date; (c) the Pro-Rata Annual Incentive, payable in a cash lump sumto Executive on the date Company pays its annual incentive compensation bonuses for the year thatincludes the Termination Date if Executive’s employment continued; (d) medical, dental benefits providedby the Company to Executive and Executive’s spouse and dependents (in each case, as provided in anyapplicable plan) at least equal to the levels of benefits provided to other similarly situated active employeesof the Company and its subsidiaries until the earlier of (i) the one-year anniversary of the Termination Dateor (ii) the date that Executive becomes covered under a subsequent employer’s medical and dental plans;and (e) the acceleration of vesting of all unvested equity or equity-based awards held by Executive as of theTermination Date.Section 3.05Other Terminations. If Executive’s employment hereunder is terminated (a) byExecutive without Good Reason; (b) by the Company for Cause; (c) due to non-renewal of the Term byExecutive; or (d) due to Executive’s death or Executive’s Disability, the Term shall expire as of theTermination Date and Executive and/or Executive’s estate or beneficiaries shall be entitled to the AccruedObligations. Section 3.06Release. Executive’s entitlement to the payments (other than the AccruedObligations) and benefits described in this Article III is expressly contingent upon Executive providing theCompany with a signed release that is attached hereto as Attachment A (the “Release”). To be effective,such Release must be delivered by Executive to the Company no later than 45 days following theTermination Date and must not be revoked during the seven (7) days following such delivery. If suchRelease is not executed in a timely manner or is revoked, all such payments and benefits shall immediatelycease and Executive shall be required to repay to the Company any such payments that have already beenpaid to Executive.ARTICLE IVRESTRICTIVE COVENANTSSection 4.01Confidentiality. (a)Company Information. Executive agrees at all times during the Term of thisAgreement and thereafter, to hold in strictest confidence, and not to use, except in connection with theperformance of Executive's duties, and not to disclose to any person or entity without written authorizationof the Company, any Confidential Information of the Company. As used herein, “ConfidentialInformation” means any Company proprietary or confidential information, technical data, trade secrets orknow-how, including, but not limited to, research, product plans, products, services, customer lists andcustomers, markets, software, developments, inventions, processes, formulas, technology, designs,drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures,finances and other business information disclosed to Executive by the Company, either directly orindirectly in writing, orally or by drawings or inspection of documents or other tangible property.- 6 - thHowever, Confidential Information does not include any of the foregoing items which has become publiclyknown and made generally available through no wrongful act of Executive.(b)Executive-Restricted Information. Executive agrees that during the Term of thisAgreement Executive will not improperly use or disclose any proprietary or confidential information ortrade secrets of any person or entity with whom Executive has an agreement or duty to keep suchinformation or secrets confidential.(c)Third Party Information. Executive recognizes that the Company has received andin the future will receive from third parties their confidential or proprietary information subject to a duty onthe Company's part to maintain the confidentiality of such information and to use it only for certain limitedpurposes. Executive agrees at all times during the Term of this Agreement and thereafter, to hold instrictest confidence, and not to use, except in connection with the performance of Executive's duties, andnot to disclose to any person or entity, or to use it except as necessary in performing Executive’s duties,consistent with the Company's agreement with such third party. Section 4.02Non-Competition. (a)Executive acknowledges that, during the Term, Executive has had access toinformation concerning the Company’s critical business strategies, engineering and technologydevelopment plans, competitive analyses, organizational structure. Accordingly, in consideration of thecompensation provided under this Agreement, Executive agrees that during the Term and for the one (1)year period thereafter, Executive will not directly or indirectly, own, manage, operate, control (includingindirectly through a debt or equity investment), provide services to, or be employed by, any person or entityengaged in any business that is (i) located in or provides services or products to a region in which theCompany does business, and (ii) competitive with the business activities of the Company as they existedduring the period that Executive provided services to the Company.(b)Executive acknowledges that the restrictions contained under this Section 4.02 arereasonable and necessary to protect the legitimate interests of the Company, that the Company would nothave executed this Agreement in the absence of such restrictions, and that any violation of any provision ofthis paragraph will result in irreparable injury to the Company. In the event the provisions under thisSection 4.02 shall ever be deemed to exceed the time, scope or geographic limitations permitted byapplicable laws, then such provisions shall be reformed to the maximum time, scope or geographiclimitations, as the case may be, permitted by applicable laws.Section 4.03Injunctive Relief. Executive agrees that it is impossible to measure in money thedamages which will accrue to the Company by reason of a failure by Executive to perform any ofExecutive’s obligations under this Article IV. Accordingly, if Company or any of its affiliates institutesany action or proceeding to enforce its rights under this Article IV, to the extent permitted by applicablelaw, Executive hereby waives the claim or defense that the Company or its affiliates has an adequateremedy at law, and Executive shall not claim that any such remedy at law exists.- 7 - ARTICLE VMISCELLANEOUSSection 5.01Withholding. The Company shall withhold all applicable federal, state and localtaxes, social security and workers’ compensation contributions and other amounts as may be required bylaw with respect to compensation payable to Executive.Section 5.02Modification of Payments. (a)In the event it shall be determined that any payment, right or distribution by theCompany or any other person or entity to or for the benefit of Executive pursuant to the terms of thisAgreement or otherwise, in connection with, or arising out of, his employment with the Company or achange in ownership or effective control of the Company or a substantial portion of its assets (a “Payment”)is a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, asamended (the “Code”) on account of the aggregate value of the Payments due to Executive being equal toor greater than three times the “base amount,” as defined in Section 280G(b)(3) of the Code, (the“Parachute Threshold”) so that Executive would be subject to the excise tax imposed by Section 4999 ofthe Code (the “Excise Tax”) and the net after-tax benefit that Executive would receive by reducing thePayments to the Parachute Threshold is greater than the net after-tax benefit Executive would receive if thefull amount of the Payments were paid to Executive, then the Payments payable to Executive shall bereduced (but not below zero) so that the Payments due to Executive do not exceed the amount of theParachute Threshold, reducing first any Payments under Section 3.02(b) hereof.(b)The Company hereby agrees that, for purposes of determining whether any paymentand benefits set forth in Section 3.04 above would be subject to the Excise Tax, the non-compete set forthin in Section 4.02 above shall be treated as an agreement for the performance of personal services. TheCompany hereby agrees to indemnify, defend, and hold harmless Executive from and against any adverseimpact, tax, penalty, or excise tax resulting from the Company or accountant’s attribution of a value to thenon-compete set forth in in Section 4.02 above that is less than the total compensation amount that wouldbe disclosed under Item 402(c) of Securities and Exchange Commission Regulation S-K if Executive hadbeen a “named executive officer” of the Company in the year prior to year of the event that triggers theExcise Tax, to the extent the use of such lesser amount results in a larger Excise Tax than Executive wouldhave been subject to had the Company or accountant attributed a value to the non-compete set forth in inSection 4.02 above that is at least equal to the total compensation amount disclosed under Item 402(c) ofSecurities and Exchange Commission Regulation S-K for such year.Section 5.03Section 409A. (a)Notwithstanding anything herein to the contrary, this Agreement is intended to beinterpreted and applied so that the payment of the benefits set forth herein either shall either be exempt fromthe requirements of Section 409A of the Code (“Section 409A”) or shall comply with the requirements ofsuch provision. - 8 - (b)Notwithstanding any provision of this Agreement to the contrary, if Executive is a“specified employee” within the meaning of Section 409A, any payments or arrangements due upon atermination of Executive’s employment under any arrangement that constitutes a “nonqualified deferral ofcompensation” within the meaning of Section 409A and which do not otherwise qualify under theexemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferralexemption or the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayedand paid or provided, without interest, on the earlier of (i) the date which is six (6) months after Executive’s“separation from service” (as such term is defined in Section 409A and the regulations and other publishedguidance thereunder) for any reason other than death, and (ii) the date of Executive’s death. (c)After any Termination Date, Executive shall have no duties or responsibilities thatare inconsistent with having a “separation from service” within the meaning of Section 409A and,notwithstanding anything in the Agreement to the contrary, distributions upon termination of employmentof nonqualified deferred compensation may only be made upon a “separation from service” as determinedunder Section 409A and such date shall be the Termination Date for purposes of this Agreement. Eachpayment under this Agreement or otherwise shall be treated as a separate payment for purposes of Section409A. In no event may Executive, directly or indirectly, designate the calendar year of any payment to bemade under this Agreement which constitutes a “nonqualified deferral of compensation” within themeaning of Section 409A and to the extent an amount is payable within a time period, the time duringwhich such amount is paid shall be in the discretion of the Company. Section 5.04Merger Clause. Effective as of the date hereof, this Agreement contains thecomplete, full, and exclusive understanding of Executive and the Company as to its subject matter andshall, on such date, and supersede any prior employment agreement between Executive and the Company(and its affiliates), including the Prior Agreement. Any amendments to this Agreement shall be effectiveand binding on Executive and the Company only if any such amendments are in writing and signed byboth Parties.Section 5.05Assignment. (a)This Agreement is personal to Executive and, without the prior written consent ofthe Company, shall not be assigned by Executive otherwise than by will or the laws of descent anddistribution, and any assignment in violation of this Agreement shall be void.(b)Notwithstanding the foregoing Section 5.05(a), this Agreement and all rights ofExecutive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees, devisees and legatees. IfExecutive should die while any amounts would still be payable to him or her hereunder if he or she hadcontinued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with theterms of this Agreement to Executive’s devisee, legatee or other designee or, should there be no suchdesignee, to Executive’s estate.(c)The Company may assign this Agreement to any affiliate or subsidiary of theCompany without the consent of Executive and shall require any successor (whether direct or indirect, bypurchase, merger, consolidation or otherwise) to all or substantially all of the- 9 - business or assets of the Company (a “Successor”) to assume and agree to perform this Agreement in thesame manner and to the same extent that the Company would have been required to perform it if no suchsuccession had taken place. As used in this Agreement, (i) the term “Company” shall mean the Companyas hereinbefore defined and any Successor and any permitted assignee to which this Agreement is assignedand (ii) the term “Board” shall mean the Board as hereinbefore defined and the board of directors orequivalent governing body of any Successor and any permitted assignee to which this Agreement isassigned.Section 5.06Dispute Resolution. Except for any proceeding brought pursuant to Section 5.05above, the parties agree that any dispute arising out of or relating to this Agreement or the formation,breach, termination or validity thereof, will be settled by binding arbitration by a panel of three arbitrators inaccordance with the commercial arbitration rules of the American Arbitration Association. The arbitrationproceedings will be located in Philadelphia, Pennsylvania. The arbitrators are not empowered to awarddamages in excess of compensatory damages and each party irrevocably waives any damages in excess ofcompensatory damages. Judgment upon any arbitration award may be entered into any court havingjurisdiction thereof and the parties consent to the jurisdiction of any court of competent jurisdiction locatedin the Eastern District of Pennsylvania.Section 5.07GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BEMADE IN THE COMMONWEALTH OF PENNSYLVANIA, INTERPRETATION,CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT IN ALL RESPECTSHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIAWITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAW.Section 5.08Amendment; No Waiver. No provision of this Agreement may be amended,modified, waived or discharged except by a written document signed by Executive and duly authorizedofficer of the Company. The failure of a party to insist upon strict adherence to any term of this Agreementon any occasion shall not be considered as a waiver of such party’s rights or deprive such party of the rightthereafter to insist upon strict adherence to that term or any other term of this Agreement. No failure ordelay by any party in exercising any right or power hereunder will operate as a waiver thereof, nor will anysingle or partial exercise of any other right or power. No agreements or representations, oral or otherwise,express or implied, with respect to the subject matter hereof have been made by any party, which are notset forth expressly in this Agreement.Section 5.09Severability. If any term or provision of this Agreement is invalid, illegal orincapable of being enforced by any applicable law or public policy, all other conditions and provisions ofthis Agreement shall nonetheless remain in full force and effect so long as the economic and legalsubstance of the transactions contemplated by this Agreement is not affected in any manner materiallyadverse to any party. Upon any such determination that any term or other provision is invalid, illegal orincapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so asto effect the original intent of the parties as closely as possible in a mutually acceptable manner in order thatthe transactions contemplated hereby be consummated as originally contemplated to the fullest extentpossible.- 10 - Section 5.10Survival. The rights and obligations of the parties under the provisions of thisAgreement that relate to post-termination obligations shall survive and remain binding and enforceable,notwithstanding the expiration of the term of this Agreement, the termination of Executive’s employmentwith the Company for any reason or any settlement of the financial rights and obligations arising fromExecutive’s employment hereunder, to the extent necessary to preserve the intended benefits of suchprovisions.Section 5.11Notices. All notices and other communications required or permitted by thisAgreement will be made in writing and all such notices and communications will be deemed to have beenduly given when delivered or (unless otherwise specified) mailed by United States certified or registeredmail, return receipt requested, postage prepaid, addressed, if to the Company, at its principal office, and ifto Executive, at Executive’s last address on file with the Company. Either party may change such addressfrom time to time by notice to the other.Section 5.12Headings and References. The headings of this Agreement are inserted forconvenience only and neither constitute a part of this Agreement nor affect in any way the meaning orinterpretation of this Agreement. When a reference in this Agreement is made to a Section, such referenceshall be to a Section of this Agreement unless otherwise indicated.Section 5.13Counterparts. This Agreement may be executed in one or more counterparts(including via facsimile), each of which shall be deemed to be an original, but all of which together shallconstitute one and the same instrument.[signature page follows]- 11 - IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date firstwritten above. CORTENDO AB By: ______________________________ Name: Matthew Pauls Title: Managing Director EXECUTIVE _________________________________ Ruth Thieroff-Ekerdt - 12 - ATTACHMENT AGENERAL RELEASE1.Ruth Thieroff-Ekerdt (“Executive”), for and in consideration of the commitments ofCortendo AB (the “Company”) as set forth in Article III of the Amended and Restated EmploymentAgreement dated as of November 2, 2015 (the “Employment Agreement”), and intending to be legallybound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company and its present andformer divisions, subsidiaries, parents, predecessor and successor corporations, officers, directors, and theirrespective successors, predecessors, assigns, heirs, executors, and administrators (collectively, “Releasees”)from all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which Executiveever had, now has, or hereafter may have, whether known or unknown, or which Executive’s heirs,executors, or administrators may have, by reason of any matter, cause or thing whatsoever, up to the date ofExecutive’s execution of this General Release, particularly, but without limitation of the foregoing generalterms, any claims arising from or relating in any way to Executive’s employment relationship with theCompany and Releasees, the terms and conditions of that relationship, and the termination of thatrelationship, including, but not limited to, any claims arising under any applicable Company employeebenefit plan(s), the Age Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, TitleVII of The Civil Rights Act of 1964, the Civil Rights Act of 1991, Sections 1981 through 1988 of Title 42of the United States Code, the Americans with Disabilities Act, the Employee Retirement Income SecurityAct of 1974, the Family and Medical Leave Act, the Worker Adjustment and Retraining Notification Act,Pennsylvania employment laws, and any other federal, state and local employment laws, as amended, andany other claims under any federal, state or local common law, statutory, or regulatory provision, now orhereafter recognized, and any claims for attorneys’ fees and costs. This General Release is effective withoutregard to the legal nature of the claims raised and without regard to whether any such claims are based upontort, equity, implied or express contract or discrimination of any sort.2.To the fullest extent permitted by law, and subject to the provisions of Paragraph 3 below,Executive represents and affirms that (i) Executive has not filed or caused to be filed on Executive’s behalfany claim for relief against the Company or any Releasee and, to the best of Executive’s knowledge andbelief, no outstanding claims for relief have been filed or asserted against the Company or any Releasee onExecutive’s behalf; and (ii) Executive has no knowledge of any improper, unethical or illegal conduct oractivities that Executive has not already reported to any supervisor, manager, department head, humanresources representative, agent or other representative of the Company, to any member of the Company’slegal or compliance departments, or to the ethics hotline; and (iii) Executive will not file, commence,prosecute or participate in any judicial or arbitral action or proceeding against the Company or any Releaseebased upon or arising out of any act, omission, transaction, occurrence, contract, claim or event existing oroccurring on or before the date of execution of this General Release.3.The release of claims described in Paragraph 1 of this General Release does not precludeExecutive from filing a charge with the U.S. Equal Employment Opportunity Commission. However,Executive agrees and hereby waives any and all rights to any monetary relief or other personal recoveryfrom any such charge, including costs and attorneys’ fees. 4.Subject to the provisions of Paragraph 3 of this General Release, in further consideration ofthe commitments of the Company as described in the Employment Agreement, - 13 - Executive agrees that Executive will not file, claim, sue or cause or permit to be filed, any civil action, suitor legal proceeding seeking equitable or monetary relief (including damages, injunctive, declaratory,monetary or other relief) for himself involving any matter released in Paragraph 1. In the event that suit isfiled in breach of this release of claims, it is expressly understood and agreed that this release of claims shallconstitute a complete defense to any such suit. In the event any Releasee is required to institute litigation toenforce the terms of this paragraph, Releasees shall be entitled to recover reasonable costs and attorneys'fees incurred in such enforcement. Executive further agrees and covenants that should any person,organization, or other entity file, claim, sue, or cause or permit to be filed any civil action, suit or legalproceeding involving any matter occurring at any time in the past, Executive will not seek or acceptpersonal equitable or monetary relief in such civil action, suit or legal proceeding. Nothing in this GeneralRelease shall prohibit or restrict Executive from: (i) making any disclosure of information required by law;(ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding broughtby any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization,or the Company’s designated legal, compliance or human resources officers; or (iii) filing, testifying,participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state ormunicipal law relating to fraud, or any rule or regulation of the Securities and Exchange Commission or anyself-regulatory organization.5.Executive understands and agrees that the payments, benefits and agreements provided inthe Employment Agreement are being provided to Executive in consideration for Executive’s acceptanceand execution of, and in reliance upon Executive’s representations in, the Employment Agreement and thisGeneral Release, and that they are greater than the payments, benefits and agreements, if any, to whichExecutive would have received if Executive had not executed the Employment Agreement and this GeneralRelease. In addition, Executive acknowledges and agrees that Executive has been paid all amounts owed toExecutive as of the date of Executive’s signing of this General Release.6.Executive and the Company agree and acknowledge that the agreement by the Companydescribed in the Employment Agreement, and the settlement and termination of any asserted or unassertedclaims against the Releasees, are not and shall not be construed to be an admission of any violation of anyfederal, state or local statute or regulation, or of any duty owed by any of the Releasees to Executive.7.This General Release and the obligations of the parties hereunder shall be construed,interpreted and enforced in accordance with and be governed by the laws of Pennsylvania without referenceto its conflicts of laws principles.8.Executive certifies and acknowledges as follows:a.that Executive has read the terms of this General Release, and that Executiveunderstands its terms and effects, including the fact that Executive has agreed toRELEASE AND FOREVER DISCHARGE the Company and each and every one ofits affiliated entities from any legal action arising out of Executive’s relationship with theCompany and the termination of that relationship;b.that Executive has signed this Release voluntarily and knowingly in exchange for theconsideration described herein and in the Employment Agreement,- 14 - which Executive acknowledges is adequate and satisfactory to Executive and to whichExecutive acknowledges that Executive would not otherwise be entitled;c.that Executive has been and is hereby advised in writing to consult with an attorneyprior to signing this General Release;d.that Executive does not waive rights or claims that may arise after the date this GeneralRelease is executed;e.that the Company has provided Executive with at least 21 (twenty-one) days withinwhich to consider this General Release, that any modifications, material or otherwise,made to this General Release have not restarted or affected in any manner the original21 (twenty-one) day consideration period, and that Executive has signed on the dateindicated below after concluding that this General Release is satisfactory to Executive;f.that Executive acknowledges that this General Release may be revoked by Executivewithin seven (7) days after Executive’s execution, and it shall not become effective untilthe expiration of such seven day revocation period. If the last day of the revocationperiod is a Saturday, Sunday, or legal holiday in the state in which Executive resides,then the revocation period shall not expire until the next following day which is not aSaturday, Sunday, or legal holiday. In the event of a timely revocation by Executive,this General Release and the Employment Agreement will be deemed null and void andthe Company will have no obligations hereunder; andg.that this General Release may not be signed prior to the third calendar day before thelast day of the Term of the Employment Agreement. If this General Release is signedprior to the last day of the Term of the Employment Agreement, the Company reservesthe right to have Executive ratify the General Release on or after the last day of theTerm.- 15 - Intending to be legally bound hereby, Executive executed the foregoing General Release on thedate indicated below. Ruth Thieroff-Ekerdt Signature Date: - 16 -Exhibit 12.1 CERTIFICATIONI, Matthew Pauls, certify that: 1.I have reviewed this Annual Report on Form 20-F of Strongbridge Biopharma plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects the financial condition, results of operations and cash flows of the Company as of,and for, the periods presented in this report; 4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures tobe designed under our supervision, to ensure that material information relating to the Company,including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared. b)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and c)Disclosed in this report any change in the Company’s internal control over financial reporting thatoccurred during the period covered by the annual report that has materially affected, or is reasonablylikely to materially affect, the Company’s internal control over financial reporting; and 5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internalcontrol over financial reporting, to the Company’s auditors and the audit committee of the Company’s board ofdirectors (or persons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the Company’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 asignificant role in the Company’s internal control over financial reporting. Date: March 24, 2016 /s/ MATTHEW PAULSName: Matthew PaulsTitle: Chief Executive Officer (principal executive officer) Exhibit 12.2 CERTIFICATIONI, A. Brian Davis, certify that: 1.I have reviewed this Annual Report on Form 20-F of Strongbridge Biopharma plc; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a materialfact necessary to make the statements made, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present inall material respects the financial condition, results of operations and cash flows of the Company as of, and for, theperiods presented in this report; 4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the Company, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared. b)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this reportour conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and c)Disclosed in this report any change in the Company’s internal control over financial reporting that occurredduring the period covered by the annual report that has materially affected, or is reasonably likely to materiallyaffect, the Company’s internal control over financial reporting; and 5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or personsperforming the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarizeand report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant rolein the Company’s internal control over financial reporting. Date: March 24, 2016 /s/ A. BRIAN DAVIS Name: A. Brian Davis Title: Chief Financial Officer (principal financial officer and principal accounting officer) Exhibit 13.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT 2002 In connection with the Annual Report of Strongbridge Biopharma plc (the “Company”) on Form 20-F for the period endedDecember 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, MatthewPauls, Chief Executive Officer (principal executive officer) of the Company, and A. Brian Davis, Chief Financial Officer(principal financial officer and principal accounting officer) of the Company, certify, pursuant to 18 U.S.C. §1350, asadopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that: 1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;and 2)The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company. Date: March 24, 2016 By:/s/ MATTHEW PAULS Matthew Pauls Chief Executive Officer (principal executive officer) By:/s/ A. BRIAN DAVIS A. Brian Davis Chief Financial Officer (principal financial officer and principalaccounting officer) Exhibit 99.1 March 24, 2016 Securities and Exchange Commission100 F Street, N.E.Washington, DC 20549 Ladies and Gentlemen: We have read the statements made by Strongbridge Biopharma plc (copy attached), which we understand will be filed withthe Securities and Exchange Commission as part of the Form 20-F of Strongbridge Biopharma plc dated March 24, 2016,and are in agreement with the statements contained therein. We have no basis to agree or disagree with other statementsof the registrant contained therein. /s/ Ernst & Young AB Change in Registrant’s Certifying Accountant On December 14, 2015, our Audit Committee (the “Audit Committee”) approved the appointment of Ernst &Young LLP (“EY LLP”) as our principal accountants. Ernst & Young, AB was previously our principal accountants.Following the Audit Committee’s approval of EY LLP, Ernst & Young, AB was dismissed. The audit reports of Ernst & Young, AB on the consolidated financial statements of the Company as of and forthe years ended December 31, 2013 and 2014 did not contain any adverse opinion or disclaimer of opinion, nor was theopinion qualified or modified as to uncertainty, audit scope, or accounting principles. During the two fiscal years ended December 31, 2014, and the subsequent period through December 14, 2015,there were: (1) no disagreements with Ernst & Young, AB on any matter of accounting principles or practices, financialstatement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction wouldhave caused them to make reference in connection with their opinions to the subject matter of the disagreement, or (2)no reportable events as defined under Item 16F(a)(1)(v), other than as of December 31, 2014, there was a materialweakness identified in Management’s report on internal controls over financial reporting, primarily related to the lack ofsufficient and skilled resources with knowledge of U.S. GAAP and SEC reporting requirements to ensure that accuratefinancial statements could have been prepared and reviewed on a timely basis for annual reporting purposes. Wedetermined that we had insufficient financial statement close processes and procedures, including with respect toaccount reconciliations and the resolution of complex accounting issues involving significant judgment and estimates.This material weakness was subject to discussion between the Audit Committee and Ernst & Young AB and theCompany has authorized Ernst & Young AB to respond fully to the inquiries of EY LLP concerning this matter. The Company has requested that Ernst & Young AB furnish it with a letter addressed to the SEC statingwhether or not it agrees with the above statements. A copy of such letter, dated March 24, 2016, is filed as Exhibit 99.1to this Form 20-F. 

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