Tetraphase Pharma Inc
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One)☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December 31, 2017Or☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-35837 TETRAPHASE PHARMACEUTICALS, INC.(Exact Name of Registrant as Specified in Its Charter) Delaware 04-3581650(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.)480 Arsenal WayWatertown, Massachusetts 02472(Address of Principal Executive Offices) (zip code)Registrant’s telephone number, including area code: (617) 715-3600Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common Stock, $.001 par value NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growthcompany. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Checkone): Large accelerated filer☐Accelerated filer☒Non-accelerated filer☐ (Do not check if a smaller reporting company)Smaller reporting company☐ Emerging growth company☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the registrant’s common stock, $0.001 par value per share (“Common Stock”), held by non-affiliates of the registrant, based on the last reportedsale price of the Common Stock on the NASDAQ Global Select Market at the close of business on June 30, 2017, was $269,502,064. For purposes hereof, shares of Common Stockheld by each executive officer and director of the registrant and entities affiliated with such executive officers and directors have been excluded from the foregoing calculation becausesuch persons and entities may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.The number of shares outstanding of the registrant’s Common Stock as of March 2, 2018: 51,629,987 Documents incorporated by reference:Portions of our definitive proxy statement for our 2018 annual meeting of stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.  TETRAPHASE PHARMACEUTICALS, INC.TABLE OF CONTENTS Page No.PART I2 Item 1.Business2 Item 1A.Risk Factors29 Item 1B.Unresolved Staff Comments55 Item 2.Properties55 Item 3.Legal Proceedings55 Item 4.Mine Safety Disclosures55 PART II56 Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities56 Item 6.Selected Financial Data57 Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations59 Item 7A.Quantitative and Qualitative Disclosures about Market Risk72 Item 8.Financial Statements and Supplementary Data73 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure93 Item 9A.Controls and Procedures93 Item 9B.Other Information96 PART III97 Item 10.Director, Executive Officers and Corporate Governance97 Item 11.Executive Compensation97 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters97 Item 13.Certain Relationships and Related Person Transactions, and Director Independence97 Item 14.Principal Accountant Fees and Services97 PART IV98 Item 15.Exhibits and Financial Statement Schedules98 Item 16.Form 10-K Summary98 Exhibit Index99 SIGNATURES102  References to TetraphaseThroughout this Annual Report on Form 10-K, the “Company,” “Tetraphase,” “we,” “us,” and “our,” except where the context requires otherwise,refer to Tetraphase Pharmaceuticals, Inc. and its consolidated subsidiaries, and “our board of directors” refers to the board of directors of TetraphasePharmaceuticals, Inc.The trademarks, trade names and service marks appearing in this Annual Report on Form 10-K are the property of their respective owners.Forward-Looking InformationThis Annual Report on Form 10-K contains forward-looking statements regarding, among other things, our future discovery and developmentefforts, our future operating results and financial position, our business strategy, and other objectives for our operations. The words “anticipate,” “believe,”“estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “would” and similar expressions are intended to identify forward-looking statements,although not all forward-looking statements contain these identifying words. You also can identify them by the fact that they do not relate strictly tohistorical or current facts. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicatedby forward-looking statements. These risks and uncertainties include those inherent in pharmaceutical research and development, such as adverse results inour drug discovery and clinical development activities, decisions made by the U.S. Food and Drug Administration and other regulatory authorities withrespect to the development and commercialization of our drug candidates, our ability to obtain, maintain and enforce intellectual property rights for our drugcandidates, our ability to obtain any necessary financing to conduct our planned activities, and other risk factors. We may not actually achieve the plans,intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actualresults or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have includedimportant factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the section entitled “Risk Factors” in Part I thatcould cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect thepotential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. Unless required by law, we do notundertake any obligation to publicly update any forward-looking statements. 1 PART I ITEM 1.BusinessOverviewWe are a clinical-stage biopharmaceutical company using our proprietary chemistry technology to create novel antibiotics for serious and life-threatening multidrug-resistant infections. We are developing our lead product candidate, eravacycline, a fully synthetic fluorocycline, as an intravenous, orIV antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant, or MDR, Gram-negative infections, such as those found in complicated intra-abdominal infections, or cIAI. We conducted a global phase 3 clinical program for eravacycline called IGNITE (Investigating Gram-Negative Infections Treatedwith Eravacycline).On July 25, 2017, we announced top-line data from our IGNITE4 trial, a global phase 3 randomized, double-blind, double-dummy, multicenter,prospective study assessing the efficacy, safety and pharmacokinetics of twice-daily intravenous, or IV, eravacycline (1.0 mg/kg every 12 hours) comparedwith meropenem (1g every 8 hours) for the treatment of cIAI that we conducted in 500 patients. In the trial, eravacycline met the primary endpoint ofstatistical non-inferiority of clinical response at the test-of-cure, or TOC, visit, under the guidance set by the United States Food and Drug Administration, orFDA, and the European Medicines Agency, or EMA. Prior to IGNITE4, we conducted IGNITE1, a phase 3 clinical trial of twice daily IV eravacycline (1.0mg/kg every 12 hours) compared with ertapenem (1.0g IV every 24 hours) for the treatment of cIAI. In IGNITE1, eravacycline met the primary endpoint ofstatistical non-inferiority of clinical response. On January 2, 2018, we announced the submission of a new drug application, or NDA, to the FDA for IV eravacycline for the treatment of cIAI. TheNDA submission includes data from the IGNITE1 and IGNITE4 phase 3 clinical trials. In February 2018, the FDA notified us that it had completed its initial60-day review of our NDA and August 28, 2018 was set as our Prescription Drug User Fee Act, or PDUFA, goal date for the FDA’s completion of its review ofour NDA. In the third quarter of 2017 we submitted a marketing authorization application, or MAA, to the EMA for IV eravacycline for the treatment of cIAIprimarily based upon the results of IGNITE1.The FDA has granted Qualified Infectious Disease Product (QIDP) and Fast Track designations for IV eravacycline for cIAI.In February 2018, we announced top-line data from our IGNITE3 trial, a global phase 3 randomized, multi-center, double-blind, clinical trialevaluating the efficacy and safety of once-daily intravenous, or IV, eravacycline, at a dose of 1.5mg/kg every 24 hours, compared to ertapenem, at a dose of1g every 24 hours, for the treatment of complicated urinary tract infections, or cUTI, that we conducted in 1,205 patients who were randomized 1:1 to receiveeravacycline or ertapenem for a minimum of 5 days, and then were eligible for transition to an appropriate approved oral agent. In this trial, eravacycline didnot meet the co-primary endpoints of responder rate, a combination of clinical cure and microbiological success, in the microbiological intent-to-treat, ormicro-ITT, population at the end-of-IV treatment visit and at the test-of-cure visit (5-10 days post therapy). Given the IGNITE3 results, we are no longerevaluating IV eravacycline for the treatment of cUTI and have also ceased development of an oral formulation for eravacycline for the treatment of cUTI.Eravacycline is designed to treat a broad range of infections, including infections due to multidrug-resistant bacteria. In in vitro experiments,eravacycline has demonstrated the ability to cover a wide variety of multidrug-resistant Gram-negative, Gram-positive, anaerobic and atypical bacteria,including multidrug-resistant Klebsiella pneumoniae and multi-drug resistant Acinetobacter. Multidrug-resistant Klebsiella pneumoniae is one of thecarbapenem-resistant Enterobacteriaceae (or CREs) listed as an urgent threat and multi-drug resistant Acinetobacter is listed as a serious threat by theCenters for Disease Control and Prevention, or CDC, in a September 2013 report and they are listed as Priority 1; Critical pathogens in the World HealthOrganization’s priority pathogens list for R&D, published in February 2017. CREs were a confirmed area of great concern by the World Health Organizationin an April 2014 global surveillance report. Gram-negative bacteria that are resistant to multiple available antibiotics are increasingly common and a growingthreat to public health. We believe that the ability of eravacycline to cover multidrug-resistant Gram-negative bacteria, as well as multidrug-resistant Gram-positive, anaerobic and atypical bacteria, will enable eravacycline to become the drug of choice for first-line empiric treatment of patients with cIAI.2 In 2011 and 2012, the U.S. government awarded contracts for potential funding of over $100 million for the development of our antibioticcompounds, which today consist of eravacycline, TP-6076 and TP-271. These awards include a contract for up to $67.3 million from the BiomedicalAdvanced Research and Development Authority, or BARDA, an agency of the U.S. Department of Health and Human Services, for the development oferavacycline for the treatment of disease caused by bacterial biothreat pathogens. We refer to this contract as the BARDA Contract. The funding under theBARDA Contract was used for certain activities in the development of eravacycline to treat cIAI and, prior to the IGNITE3 results, cUTI. These awards alsoinclude a contract for up to $35.8 million from the National Institute of Allergy and Infectious Diseases, or NIAID, a division of the National Institutes ofHealth, for the development of TP-271. We refer to this contract as the NIAID Contract. In addition, during 2011, NIAID awarded a separate grant for $2.9million. We refer to this award as the NIAID Grant. These awards were made to CUBRC, Inc., or CUBRC, an independent, not-for-profit, research corporationthat specializes in U.S. government-based contracts, with which we are collaborating. CUBRC serves as the prime contractor under these awards, primarilycarrying out a program management and administrative role with additional responsibility for the management of preclinical studies. We serve as leadtechnical expert on all aspects of these awards and also serve as a subcontractor of CUBRC responsible for management of chemistry, manufacturing andcontrol activities and clinical studies. The BARDA Contract includes funding for some of the activities that we would otherwise have been required to fundon our own in connection with our NDA submission for eravacycline.In March 2017, the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator, or CARB-X, an international public-privatepartnership focused on advancing new antimicrobial products to address the threat of antibiotic resistance, selected us to receive up to $4.0 million inresearch funding over 18 months for TP-6076. In connection with this funding, we entered into a cost reimbursement Sub-Award Agreement with the Trusteesof Boston University, the administrator of the program. We began recognizing revenue from the Sub-Award Agreement in April 2017. Although the Sub-Award Agreement has a term which currently expires on December 31, 2018, the project can be terminated for convenience at any time. StrategyOur goal is to become a fully integrated biopharmaceutical company that discovers, develops and commercializes novel antibiotics, such aseravacycline, for use in areas of unmet medical need. Key elements of our strategy include: •Seek regulatory approval for IV eravacycline for the treatment of cIAI. We have completed two phase 3 clinical trials of IV eravacyclinein patients with cIAI – IGNITE1 and IGNITE4. We submitted an NDA to the FDA for IV eravacycline for the treatment of cIAI based on theresults of IGNITE1 and IGNITE4. We have also submitted an MAA to the EMA for IV eravacycline for the treatment of cIAI based on theresults of IGNITE1. Both the NDA and the MAA are currently under review by the respective regulatory agencies. The PDUFA goal date isAugust 28, 2018 for the FDA to complete its review of our NDA. •Maximize the commercial potential of eravacycline for the treatment of cIAI. If eravacycline is approved for the treatment of cIAI, weintend to directly commercialize eravacycline in the United States with a targeted hospital sales force and to commercialize eravacycline inother regions through collaboration arrangements, such as the collaboration agreement we entered into with Everest Medicines Limited inFebruary 2018. We believe that eravacycline’s potent coverage of multidrug-resistant Gram-negative bacteria and other multidrug-resistantbacteria, will allow it to be used to treat cIAI patients successfully in hospitals, Skilled Nursing Facilities (SNF), and Long Term Acute CareHospitals (LTACH). •Pursue development of eravacycline in additional indications. We are developing eravacycline for the treatment of cIAI, and, subject toobtaining additional financing, intend to pursue development of eravacycline for the treatment of additional indications, including otherserious and life-threatening infections. We may pursue these development activities either by ourselves or with collaborators •Opportunistically advance development of other product candidates created using our proprietary chemistry technology. In addition toeravacycline, we are currently conducting phase 1 clinical trials of TP-271 and TP-6076. We intend to advance our antibiotic productpipeline with differentiated product candidates created using our proprietary chemistry technology and targeting hospital and acute caremarkets. We may pursue these activities either by ourselves or with collaborators.Drug-Resistant Antibiotic MarketPhysicians commonly prescribe antibiotics to treat patients with acute and chronic infectious diseases that are either presumed or known to becaused by bacteria. Inappropriate use of antibiotics and lack of new therapies has resulted in a rapid increase in bacterial infections that are resistant tomultiple antibacterial agents. Global microbial resistance, including bacteria, viruses and fungi, now results in the death of at least 700,000 people each year,according to an analysis commissioned by the U.K. government in 2016. The report predicts that failing to develop effective treatments for drug-resistantbacteria by 2050 would lead to 10 million extra3 deaths a year. In a September 2013 report, the CDC estimated that every year in the United States, more than two million people acquire serious infectionsthat are resistant to one or more of the antibiotics designed to treat those infections, with at least 23,000 dying as a result, and many more dying from otherconditions that are complicated by the occurrence of an antibiotic-resistant infection. These antibiotic-resistant infections add considerable and avoidablecosts to the U.S. healthcare system. In the same September 2013 report, the CDC noted that the total economic cost of antibiotic infections to the U.S.economy has been estimated to be as high as $20 billion in excess of direct healthcare costs. Over the last decade there has been an increase in antibioticsthat target resistant Gram-positive bacteria, but there still remain limited therapeutic options for resistant Gram-negative infections. According to the CDC,among all of the bacterial resistance problems, Gram-negative pathogens are particularly worrisome because they are becoming resistant to nearly all drugsthat would be considered for treatment, with the most serious Gram-negative infections being healthcare associated and the most common pathogens beingEnterobacteriaceae, Pseudomonas aeruginosa and Acinetobacter.Antibiotics that treat bacterial infections can be classified as broad-spectrum or narrow-spectrum. Antibiotics that are active against a mixture ofGram-positive, Gram-negative and anaerobic bacteria are referred to as broad-spectrum. Antibiotics that are active only against a select subset of bacteria arereferred to as narrow-spectrum. Because it usually takes from 24 to 72 hours from the time a specimen is received in the laboratory to definitively diagnose aparticular bacterial infection, physicians may be required to prescribe antibiotics for serious infections without having identified the bacteria. As such,effective first-line treatment of serious infections requires the use of broad-spectrum antibiotics with activity against a broad range of bacteria at least untilthe bacterial infection can be diagnosed.Broad-spectrum antibiotics are used to treat major hospital infections such as cIAI, hospital-acquired pneumonia, or HAP, and ventilator-associatedpneumonia, or VAP. Based on an analysis from a variety of industry sources, we estimate that the number of patients treated with antibiotics in the UnitedStates and European Union annually includes approximately 4.6 million cIAI patients with each patient being treated for an average of 8.6 days for acombined estimated 40 million annual average days of treatment; and 2.8 million HAP/VAP patients with each patient being treated for an average of 9.6days for a combined estimated 27 million annual average days of treatment. Of these patients, we believe that approximately 40% of cIAI patients require achange in therapy and 50% of patients with cIAI are receiving combination therapy.As such, at present, there is an acute need for new drugs to treat multidrug-resistant Gram-negative bacteria. Currently approved products, such asmeropenem are becoming increasingly ineffective against Gram-negative bacteria due to increasing resistance, limiting patients’ treatment options,particularly for patients with multidrug-resistant infections. Few new therapeutic agents have been approved or are in clinical development.A survey of infectious disease specialists published in the June 2012 edition of Clinical Infectious Disease rated multidrug-resistant Gram-negative infections as the most important unmet clinical need in current practice. In the survey, 63% of physicians reported treating a patient in the past yearwhose bacterial infection was resistant to all available antibacterial agents. A nationwide electronic database looked at the prevalence of gram negativeresistance from 2008-2015 in US Hospitals and it showed MDR rates continue to increase. Out of the 3,158,349 isolates tested 5.3% were considered MDRpathogens. Five bacteria accounted for 92.7% of all MDR isolates: E coli (39.4%), P aeruginosa (29.4%), K pneumoniae (13.2%), A baumannii (5.4%) andEnterobacter spp (5.2%). The highest rate of MDR was associated with the hospital onset setting (11.4%), followed by the admission period (6.6%), and theambulatory setting (3.5%). The database showed that 42.9% of A baumannii were MDR related isolates. The rate of MDR A baumannii was highest in theinpatient setting (58.6% of isolates from all body sources), followed by admission setting (43.2%), and ambulatory setting (24.8%).The important need for new treatment options for serious bacterial infections was further highlighted by the passage in the United States in July2012 of the Generating Antibiotic Incentives Now, or GAIN, Act, which provides regulatory incentives for the development of new antibacterial or antifungaldrugs intended to treat serious or life-threatening infections that are resistant to existing treatment. In September 2014, the United States’ President’s Councilof Advisors on Science and Technology issued a report providing recommendations to combat the rise in antibiotic resistant bacteria and advising thatwithout rapid action, the United States risks losing the tremendous progress made in antibiotic development over the last century. Their recommendationsfocused on three areas: improving surveillance, increasing longevity of current antibiotics and increasing the rate at which new antibiotics are discovered anddeveloped.New legislative initiatives have been approved as part of the 21st Century Cures Act, including the Antibiotic Development to Advance PatientTreatment Act which would provide a pathway for approval of antibiotics in limited populations of patients with few or no suitable treatment options. Otherlegislation still pending include the Developing an Innovative Strategy for Antimicrobial Resistant Microorganisms, or DISARM, Act which woulddesignate certain novel antibiotics used to treat serious bacterial infections to receive higher Medicare reimbursement, and an amendment to the GAIN Act,which would allow successful QIDP sponsors to transfer up to one year of exclusivity to another product, including products marketed by other companies.4 Limitations of Available Treatment OptionsWhen confronted with a new patient suffering from a serious infection caused by an unknown pathogen, a physician may be required to quicklyinitiate first-line empiric antibiotic treatment to stabilize the patient prior to definitively diagnosing the particular bacterial infection. However, currentantibiotics for first-line empiric treatment of serious bacterial infections suffer from significant limitations, including one or more of the following:Insufficient Coverage of Multidrug-resistant Bacteria. A physician cannot risk prescribing an inappropriate antibiotic when initially treating apatient for a serious infection where the pathogen has not yet been definitively identified. Frequently used products, such as linezoid and daptomycin, arelimited to Gram-positive bacteria and thus are rarely used as a first-line empiric monotherapy if broad bacterial coverage is required. Recently approvedproducts are limited to specific Gram-negative bacteria and thus are rarely used as a first-line empiric monotherapy if broad bacterial coverage is required. Inaddition, other popular antibiotics that have been used as first-line empiric monotherapies, such as levofloxacin, piperacillin/tazobactam, carbapenems, andimipenem/cilastatin, have seen their utility as first-line empiric monotherapies diminished as the number of bacterial strains resistant to these therapies hasincreased.Complicated and Expensive Multi-Drug Cocktails and Multi-Dose Regimens. Due to gaps in the spectrum of coverage of antibiotics, physiciansare often confronted with the need to design complicated multi-drug cocktails for the first-line empiric treatment of patients with serious infections. Theclinical situation is further complicated when each drug in the multi-drug cocktail has a different dosing regimen, such as three or four times a day, resultingin an added burden on the pharmacy and nursing staff, higher costs due to multiple drug administrations and an increased potential for medical errors or drug-drug interactions. We believe that, with the exception of eravacycline, most of the antibiotics that are in development or have recently been approved by theFDA that are intended to cover a broad range of bacteria, including Gram-negative bacteria, or solely to address Gram-negative bacteria, are being developedor are approved for use in combination with one or more other antibiotics, and require the addition of a third drug such as metronidazole to address thepresence of anaerobic bacteria.Safety and Tolerability Concerns. Concerns about antibiotic safety and tolerability are among the leading reasons why patients stop treatment andfail therapy. Antibiotics on the market have been associated with adverse effects such as myelosuppression, seizures, nephrotoxicity and gastrointestinaldisorders.Given these limitations, there is an unmet medical need for a first-line empiric antibiotic treatment that has the following characteristics: •Potency and effectiveness against a broad range of bacteria, including multidrug-resistant Gram-negative, Gram-positive, atypical andanaerobic bacteria; •Capability of being used as a monotherapy in the majority of patients in the hospital with cIAI and other multidrug-resistant infections; •A convenient dosing regimen, such as once or twice-daily; and •A favorable safety and tolerability profile.Based on our belief that eravacycline and our other pipeline candidates have, or potentially have, each of these characteristics, our goal is todevelop eravacycline and our other pipeline candidates to be the drug of choice for first-line empiric treatment of a wide variety of serious and life-threatening infections.Drug Development ProgramsThe following table sets forth our clinical and earlier-stage antibiotic compounds that we are developing for the treatment of serious and life-threatening infections and their status. Candidate Indication StatusEravacycline cIAI (IV) Phase 3 IGNITE1 study completed; met primary end pointPhase 3 IGNITE4 study completed; met primary end point TP-271 Bacterial biothreats Phase 1 clinical trials ongoingTP-6076 Multidrug-resistant Gram-negative infections Phase 1 clinical trials ongoing5 EravacyclineOverviewWe are developing our lead product candidate, eravacycline, as an IV antibiotic for use as a first-line empiric monotherapy for the treatment ofresistant and multidrug-resistant infections, including multidrug-resistant Gram-negative bacteria in patients, such as those with cIAI. We developederavacycline using our proprietary chemistry technology.To date, we have completed four phase 3 clinical trials with eravacycline: IGNITE1 and IGNITE4, each a phase 3 clinical trial evaluating the safetyand efficacy of eravacycline with IV administration for the treatment of cIAI; IGNITE2, a phase 3 clinical trial evaluating the safety and efficacy oferavacycline with IV-to-oral transition therapy for the treatment of cUTI and IGNITE3, a phase 3 clinical trial evaluating the safety and efficacy oferavacycline with IV administration for the treatment of cUTI.In December 2014, we announced that in IGNITE1, eravacycline met the primary endpoint of statistical non-inferiority compared to the controltherapy for the trial. In the third quarter of 2017 we submitted a marketing authorization application, or MAA, to the EMA for IV eravacycline for thetreatment of cIAI primarily based upon the results of IGNITE1. In July 2017, we announced that in IGNITE4, eravacycline met the primary endpoint ofstatistical non-inferiority compared to the control therapy for the trial. On January 2, 2018, we announced the submission of an NDA, to the FDA for IVeravacycline for the treatment of cIAI. The NDA submission includes data from the IGNITE1 and IGNITE4 phase 3 clinical trials. The PDUFA goal date isAugust 28, 2018 for the FDA to complete its review of our NDA.In September 2015, we announced that eravacycline did not meet the primary endpoint of statistical non-inferiority in IGNITE2 compared to thecontrol therapy for this trial. In February 2018, we announced that eravacycline did not meet the co-primary endpoints of statistical non-inferiority inIGNITE3 compared to the control therapy for this trial. Given the IGNITE3 results, we are no longer evaluating IV eravacycline for the treatment of cUTI andhave also ceased development of an oral formulation for eravacycline for the treatment of cUTI.Tetracycline antibiotics have been in clinical use for over 50 years and have a demonstrated record of safety and effectiveness. However, as withmost classes of antibiotics, a high incidence of resistance among many bacteria has limited their effectiveness and resulted in tetracyclines being relegated tosecond- or third-line therapy several decades after their introduction. Chemists have generally been unable to synthesize new tetracyclines that couldovercome bacterial resistance mechanisms. We have used our proprietary chemistry technology to create more than 3,000 new tetracycline derivatives thatwe believe could not be practically created with conventional methods. Many of these new derivatives, including eravacycline, have been able to overcomebacterial resistance in in vitro studies.Eravacycline is a novel, fully synthetic fluorocycline antibiotic. We selected eravacycline for development from tetracycline derivatives that wegenerated using our proprietary chemistry technology.In designing eravacycline, we inserted a fluorine atom into the tetracycline scaffold, which we call a fluorocycline, and modified the scaffold atanother position. We believe that these modifications enable eravacycline to not be subject to tetracycline-specific mechanisms of drug resistance. As aresult, we believe that eravacycline is active against multidrug-resistant bacteria in ways that tetracyclines currently on the market or in development are not.In in vitro studies, including a surveillance study published in December 2014 using over 4,000 patient bacterial isolates collected in New YorkCity, eravacycline has been highly active against emerging multidrug-resistant pathogens like Acinetobacter baumannii as well as clinically importantspecies of Enterobacteriaceae, including those isolates that produce ESBLs or are resistant to the carbapenem class of antibiotics, and anaerobes, incomparison to commonly used antibiotics.Data published in August 2016 demonstrated that eravacycline retained potency against E. coli clinical isolates containing a plasmid expressingmcr-1 (ERV MIC90=0.5 µg/mL; colistin MIC90=16 µg/mL). The in vitro potency of eravacycline was unaffected by inducible overexpression of the mcr-1gene in an engineered laboratory E. coli strain.Eravacycline has also demonstrated strong activity in vitro against Gram-positive pathogens, including both nosocomial and community-acquiredmethicillin susceptible or resistant Staphylococcus aureus strains, vancomycin susceptible or resistant Enterococcus faecium and Enterococcus faecalis, andpenicillin-susceptible or resistant strains of Streptococcus pneumoniae. In in vitro studies of pathogens most prevalent in cIAI infections, eravacyclineconsistently exhibited strong activity against enterococci and streptococci. One of the most frequently isolated anaerobic pathogens in cIAI, either as thesole pathogen or often in conjunction with another Gram-negative bacterium, is Bacteroides fragilis. In these studies eravacycline demonstrated activityagainst Bacteroides fragilis and a wide range of Gram-positive and Gram-negative anaerobes.6 Key Differentiating Attributes of EravacyclineWe believe that the following key attributes of eravacycline, observed in clinical trials and preclinical studies, differentiate eravacycline fromother antibiotics targeting multidrug-resistant infections, including multidrug-resistant Gram-negative infections. We believe these attributes will makeeravacycline a safe and effective treatment for cIAI and potentially other serious and life-threatening infections for which we may develop eravacycline. •Offers a broad range of activity against a wide variety of multidrug-resistant Gram-negative, Gram-positive and anaerobic bacteria.In our phase 2 and phase 3 clinical trials of the IV formulation of eravacycline, eravacycline demonstrated a high cure rate against a widevariety of multidrug-resistant Gram-negative, Gram-positive and anaerobic bacteria. In addition, in in vitro studies, eravacyclinedemonstrated potent antibacterial activity against Gram-negative bacteria, including ESBL-producing enterobacteriaceae;Carbapenemase-producing Enterobacteriaceae (CRE); MCR-1 gene resistance bacteria; Acinetobacter baumannii, includingcarbapenem resistant Acinetobacter (CRAB); Gram-positive bacteria, including MRSA and vancomycin-resistant enterococcus, or VRE;and anaerobic pathogens. As a result, we believe that eravacycline has the potential to be used as a first-line empiric monotherapy for thetreatment of cIAI and potentially other serious and life-threatening infections. •Lower probability of drug resistance. To date, in the clinical trials and preclinical studies of eravacycline that we have conducted for thetreatment of cIAI, we have seen little decrease in susceptibility that would suggest increased resistance to eravacycline. We believe that, asa fluorocycline, eravacycline will not be subject to tetracycline-specific mechanisms of drug resistance in certain multidrug-resistant, orMDR, pathogens. •Favorable safety and tolerability profile. Eravacycline has been evaluated in over 2,700 subjects in the phase 1, phase 2 and phase 3clinical trials that we have conducted through February 2018. In these trials, eravacycline has demonstrated a favorable safety andtolerability profile. In our phase 2 and phase 3 clinical trials of eravacycline in patients with cIAI, no patients suffered any drug-relatedserious adverse events, and safety and tolerability were comparable to the respective control therapies for the trials. In the phase 3 clinicaltrials of eravacycline in patients with cUTI, safety and tolerability were comparable to the respective control therapies for these trials. Inaddition, in these phase 2 and phase 3 clinical trials, the rate at which gastrointestinal adverse events such as nausea and emesis occurred inthe eravacycline arms was low. •Convenient dosing regimen. In our clinical trials to date, we have dosed eravacycline once or twice a day as a monotherapy. We believethat eravacycline will be able to be administered as a first-line empiric monotherapy with twice-daily dosing, avoiding the need forcomplicated dosing regimens typical of multi-drug cocktails and the increased risk of negative drug-drug interactions inherent to multi-drug cocktails.Clinical ExperienceWe have studied IV and oral formulations of eravacycline in over 2,700 subjects in 21 clinical trials completed from October 2009 to February2018.Phase 3 Clinical ProgramWe designed our IGNITE phase 3 program for eravacycline to enable us to position eravacycline as a first-line empiric monotherapy for thetreatment of cIAI and cUTI due to eravacycline’s broad-range of coverage against resistant and multidrug-resistant infections, including multidrug-resistantGram-negative infections. We are now focusing our efforts on the development of eravacycline for the treatment of cIAI.cIAIOur initial phase 3 clinical trial of eravacycline for the treatment of patients with cIAI was our IGNITE1 trial. In December 2014, we announced thateravacycline met the primary endpoint of statistical non-inferiority compared to ertapenem in IGNITE1 for the treatment of cIAI. In July 2017, we announcedthat eravacycline met the primary endpoint of statistical non-inferiority compared to meropenem in IGNITE4 for the treatment of cIAI.On January 2, 2018, we announced the submission of an NDA to the FDA for IV eravacycline for the treatment of cIAI. The NDA submissionincludes data from the IGNITE1 and IGNITE4 phase 3 clinical trials. The PDUFA goal date is August 28, 2018 for the FDA to complete its review of our NDA.In the third quarter of 2017 we submitted an MAA to the EMA for IV eravacycline for the treatment of cIAI primarily based upon the results of IGNITE1. 7 IGNITE1Eravacycline Phase 3 IGNITE1 Study Design We designed IGNITE1 as a non-inferiority study. Under FDA guidance, the primary endpoint of the trial was clinical response at the TOC visit inthe microbiological intent-to-treat, or micro-ITT, population which consisted of all randomized patients in the trial who had baseline bacterial pathogens thatcause cIAI and against which eravacycline has antibacterial activity. Under EMA guidance, the primary endpoint of the trial was clinical response at the TOCvisit in the modified intent-to-treat, or MITT, population which consisted of all patients who received at least one dose of study drug, and in the clinicallyevaluable, or CE, patient population, which consisted of all randomized patients in the trial who meet key inclusion/exclusion criteria and follow otherimportant components of the trial. We designed the trial to be consistent with the FDA’s cIAI guidance, in which the FDA suggested that the primary efficacyendpoint for a trial of cIAI should be complete resolution of baseline signs and symptoms attributable to cIAI in the micro-ITT patient population 28 daysafter randomization and the absence of clinical failure including death and unplanned surgical procedures through the period ending 28 days followingrandomization.In December 2014, we announced top-line data from IGNITE1. In the trial, eravacycline met the primary endpoint of statistical non-inferiority ofclinical response at the TOC visit, under the guidance set by the FDA and the EMA. The primary analysis under the FDA guidance was conducted using a10% non-inferiority margin in the micro-ITT population. In the micro-ITT population, the lower and upper bounds of the 95% confidence interval were -7.1% and 5.5%, respectively. Under the EMA guidance, the primary analysis was conducted using a 12.5% non-inferiority margin in the CE and MITTpatient populations. In the CE population, the lower and upper bounds of the 95% confidence interval were -6.3% and 2.8%, respectively, and the lower andupper bounds of the 99% confidence interval were -7.9% and 4.4%, respectively. In the MITT population, the lower and upper bounds of the 95% confidenceinterval were -7.4% and 3.8%, respectively, and the lower and upper bounds of the 99% confidence interval were -9.2% and 5.6%, respectively. The mostcommonly reported drug-related adverse events for eravacycline were gastrointestinal, including nausea (3.3%) and emesis (2.2%). This adverse event profilefor eravacycline was consistent with that seen in the phase 2 clinical trial of eravacycline in cIAI. The spectrum of pathogens in this trial was similar to thatseen in other pivotal trials of antibiotics in this patient population. The most common Gram-negative pathogens in the trial included Escherichia coli,Klebsiella pneumonia, Pseudomonas and Bacteroides.8 IGNITE4Eravacycline Phase 3 IGNITE4 Study Design We designed IGNITE4 as a non-inferiority study. Under FDA guidance, the primary endpoint of the trial was clinical response at the TOC visit inthe microbiological intent-to-treat, or micro-ITT, population, which consisted of randomized patients in the trial who had baseline bacterial pathogens thatcause cIAI and against which eravacycline has antibacterial activity. Under EMA guidance, the primary endpoint of the trial was clinical response at the TOCvisit in the modified intent-to-treat, or MITT, population, which consisted of patients in the trial who received at least one dose of study drug, and in theclinically evaluable, or CE, patient population, which consisted of patients in the trial who met key inclusion/exclusion criteria and followed other importantcomponents of the trial. Secondary endpoints included clinical response at the end-of-treatment, TOC and follow-up visits in the intent-to-treat population,the CE population, the micro-ITT population and the microbiologically evaluable, or ME, population. The ME population consisted of all micro-ITTpatients who met key inclusion/exclusion criteria and followed other important components of the trial. In the trial, we also studied microbiologic response atthe end-of-treatment and TOC visits in the micro-ITT and ME populations, the safety and tolerability of eravacycline in the safety population andpharmacokinetic parameters after eravacycline administration.On July 25, 2017, we announced top-line data from IGNITE4. In the trial, eravacycline met the primary endpoint of statistical non-inferiority ofclinical response at the TOC visit, under the guidance set by the FDA and the EMA. The primary efficacy analysis under the FDA guidance was conductedusing a 12.5% non-inferiority margin in the micro-ITT population. Clinical cure rates in the micro-ITT population were 90.8% and 91.2% for eravacycline(n=195) and meropenem (n=205), respectively (95% CI: -6.3%,5.3%). Under the EMA guidance, the primary analysis was conducted using a 12.5% non-inferiority margin of the MITT and CE patient populations. Clinical cure rates in the MITT population were 92.4% and 91.6% for eravacycline (n=250) andmeropenem (n=249), respectively (95% CI: -4.1%,5.8%). Clinical cure rates in the CE population were 96.9% and 96.1% for eravacycline (n=225) andmeropenem (n=231), respectively (95% CI: -2.9%,4.5%). The secondary analyses were consistent with, and supportive of, the primary outcome. The mostcommonly reported drug-related adverse events for eravacycline were gastrointestinal, including nausea (2.4%) and emesis (1.6%). This adverse event profilefor eravacycline was consistent with that seen in the phase 2 clinical trial of eravacycline in cIAI. The spectrum of pathogens in this trial was similar to thatseen in other pivotal trials of antibiotics in this patient population. The most common Gram-negative pathogens in the trial included Escherichia coli,Klebsiella pneumonia, Pseudomonas and Bacteroides. cUTIOur initial phase 3 clinical trial of eravacycline for the treatment of patients with cUTI was our IGNITE2 trial. In September 2015, we announcedthat eravacycline did not meet the primary endpoint of statistical non-inferiority compared to levofloxacin in IGNITE2 for the treatment of cUTI.9 Following the failure of eravacycline to meet the primary endpoint of IGNITE2, and based on discussions with the FDA, we determined toconduct our IGNITE3 phase 3 clinical trial evaluating the IV formulation of eravacycline in patients with cUTI and to continue our developmentprogram for an oral formulation of eravacycline.IGNITE3IGNITE3 was a phase 3 randomized, double-blind, double-dummy, multi-center, prospective study that is designed to assess the efficacy, safetyand pharmacokinetics of once-daily IV eravacycline (1.5mg/kg every 24 hours) compared to ertapenem (1g every 24 hours), the control therapy in this trial,for the treatment of cUTI. We enrolled approximately 1,200 adult patients in the trial, who were randomized 1:1 to receive eravacycline or ertapenem for aminimum of 5 days and were then be eligible for transition to an approved oral agent. The co-primary endpoints of responder rate (a combination of clinicalcure and microbiological success) in the micro-ITT population at the end-of-IV treatment visit and at the TOC visit (Day 5-10 post therapy) were evaluatedusing a 10% non-inferiority margin. On February 13, 2018, we announced top-line data from our IGNITE3 trial. In this trial, eravacycline did not meet the co-primaryendpoints of responder rate, a combination of clinical cure and microbiological success, in the micro-ITT, population at the end-of-IV treatmentvisit and at the test-of-cure visit. Responder rates in the micro-ITT population at the end-of-IV treatment visit were 84.8% and 94.8% for eravacycline (n=428) andertapenem (n=403), respectively (-10.0% CI: -14.1%, -6.0%). Responder rates at the TOC visit were 68.5% and 74.9% for eravacycline (n=428)and ertapenem (n=403), respectively (-6.5% CI: -12.6%, -0.3%). While eravacycline was well tolerated in this trial, it did not meet the co-primaryendpoints. Non-inferiority to ertapenem was not demonstrated. We continue to analyze the data of this study. However, given the IGNITE3 results,we are no longer evaluating IV eravacycline for the treatment of cUTI and have also ceased development of an oral formulation for eravacycline forthe treatment of cUTI.IGNITE2IGNITE2 was a two-part, multi-center, randomized, double-blind phase 3 clinical trial, our IGNITE2 trial, to assess the efficacy and safety oferavacycline compared with levofloxacin in the treatment of cUTI. We enrolled 143 patients in the lead-in portion of the trial. These patients wererandomized into three arms on a 1:1:1 basis: an arm in which patients received 1.5 mg/kg IV eravacycline every 24 hours followed by 200 mg of eravacyclineorally every 12 hours; an arm in which patients received 1.5 mg/kg IV eravacycline every 24 hours followed by 250 mg of eravacycline orally every 12hours; and an arm in which patients received 750 mg IV levofloxacin every 24 hours followed by 750 mg of levofloxacin orally every 24 hours.We enrolled 908 patients in the pivotal portion of the trial. These patients were randomized on a 1:1 basis to receive 1.5 mg/kg IV eravacyclineevery 24 hours followed by 200 mg of eravacycline orally every 12 hours or 750 mg IV levofloxacin every 24 hours followed by 750 mg of levofloxacinorally every 24 hours. In both treatment arms, subjects received a minimum of three days of IV therapy and then, if clinically indicated, were eligible totransition to oral therapy for the remaining doses for a total treatment period of 7 days. We designed the pivotal portion of the trial as a non-inferiority studyin compliance with both FDA and EMA guidance. Under FDA guidance, the primary endpoint of the pivotal portion of the trial was clinical andmicrobiological response in the micro-ITT population at the PT visit. Under EMA guidance, the primary endpoint of the pivotal portion of the trial wasmicrobiological response in the micro-MITT and ME populations. The micro-MITT population consisted of any patient who received study drug who hadbaseline bacterial pathogens that cause cUTI and against which eravacycline has antibacterial activity. The ME population consisted of all micro-ITTpatients who met key inclusion/exclusion criteria and followed other important components of the trial. In order to achieve the primary endpoint under bothFDA and EMA guidance, eravacycline would have needed to demonstrate non-inferiority as compared to levofloxacin within a margin of no more than 10%.A key secondary endpoint in IGNITE2 was to test for superiority of eravacycline over levofloxacin in the treatment of cUTI for those subjects with infectionscaused by quinolone-resistant pathogens by evaluation of clinical and microbiological response in the micro-ITT population at the PT visit. In September 2015, we announced that eravacycline did not meet the primary endpoint of statistical non-inferiority compared to levofloxacin inIGNITE2 for the treatment of cUTI under the guidance set by the FDA. The primary analysis under the FDA guidance was conducted using a 10% non-inferiority margin in the micro-ITT population. In the micro-ITT population, the lower and upper bounds of the 95% confidence interval were -14.1% and1.2%, respectively.10 Previous clinical trials of eravacyclinePhase 2 clinical trial of IV formulation in cIAIIn June 2012, we completed a global, multi-center, randomized, double-blind phase 2 clinical trial to evaluate the efficacy, safety andpharmacokinetics of the IV formulation of eravacycline compared to ertapenem in patients with cIAI.We enrolled 143 hospitalized patients with cIAI in the trial. These patients were randomized into three arms on a 2:2:1 basis: an arm in whichpatients received 1.5 mg/kg IV eravacycline administered once per day; an arm in which patients received 1.0 mg/kg IV eravacycline administered twice perday; and a control arm in which patients received 1.0 g IV ertapenem administered once per day, which is the standard dosing regimen for ertapenem.Investigators obtained baseline intra-abdominal cultures at the time of operation and treated patients for a minimum of four days and a maximumof 14 days. The length of treatment for each patient was determined by the physician based on pre-set parameters. A TOC visit took place ten to 14 days afterthe last dose of drug was administered and a final or follow-up visit occurred within four to six weeks after the last dose of drug was administered.In the trial, ME patients in the eravacycline arms experienced similar infection cure rates to the ME patients in the ertapenem arm, as summarizedin the table below. The table also shows the 95% confidence interval, a statistical determination that demonstrates the range of possible differences in thepoint estimates of success that will arise 95% of the time the endpoint is measured.Eravacycline Phase 2 Trial Primary Endpoint Analysis Population Eravacycline(1.5 mg/kg every24 hours) Eravacycline(1.0 mg/kg every12 hours) Ertapenem(1.0 g Every24 hours)Microbiologically Evaluable (ME) N=42 N=41 N=26% Cure in ME (95% Confidence Interval) 92.9 (80.5-98.5) 100 (91.4-100) 92.3 (74.9-99.1) Investigators in the trial had the discretion to determine the period that patients remained on the applicable treatment. The mean duration oftreatment in the trial was 6.1 days for the patients receiving 1.5 mg/kg IV eravacycline administered once per day; 5.6 days for the patients receiving 1.0mg/kg IV eravacycline administered twice per day; and 6.0 days for the patients receiving 1.0 g IV ertapenem administered once per day.11 The figure below shows the overall pathogen mix identified in the phase 2 cIAI clinical trial. Of the pathogens isolated from the micro-MITTpatients enrolled in the phase 2 clinical trial, approximately 60% were members of the Enterobacteriaceae family. Micro-MITT patients in the trial wereinfected with an average of 1.8 pathogens. The Gram-negative aerobic pathogens occurring most frequently were Escherichia coli, Klebsiella pneumonia,Klebsiella oxytoca, Pseudomonas aeruginosa, Acinetobacter baumannii complex and Morganella morganii. The Gram-positive aerobic pathogens occurringmost frequently were Streptococcus spp., Enterococcus faecalis and Staphylococcus aureus. The anaerobic pathogens occurring most frequently wereBacteroides fragilis and Clostridium spp.Of particular importance in the trial results was the performance of eravacycline against confirmed drug-resistant Gram-negative pathogens as wellas other challenging Gram-negative pathogens. Due to the global, multi-center nature of the trial and our emphasis on sites in known geographic “hot spots”for multidrug-resistant Gram-negative bacteria, 25% of the Gram-negative pathogens identified in micro-MITT patients were confirmed to be multidrug-resistant as a result of being ESBL-positive and/or carbapenem-resistant. The figure below shows that the patients cured with eravacycline in the phase 2 cIAIclinical trial had 23 confirmed multidrug-resistant Gram-negative pathogens.In the phase 2 clinical trial, eravacycline demonstrated a comparable safety and tolerability profile to ertapenem. No patients in the trial sufferedany serious adverse events that were found to be related to eravacycline, and the percentage of patients in the trial arms that experienced treatment emergentadverse events, or TEAEs, were similar. In addition, gastrointestinal adverse events known to be associated with tetracyclines such as nausea and emesis,occurred at low rates in the eravacycline arms that were similar to the rates for the ertapenem arm. Adverse events associated with infusion sites were limitedand similar in all treatment groups.12 Phase 1 clinical trials of IV formulationWe studied the IV formulation of eravacycline in several phase 1 clinical trials in a total of 140 healthy volunteers and at doses ranging from 0.1mg/kg to 3.0 mg/kg. No serious adverse events were reported during the phase 1 clinical trials and no clinically significant dose-related safety signals werereported. As expected in this class of antibiotics, transient gastrointestinal adverse events such as nausea and emesis were observed at the higher dose levelsin the phase 1 clinical trials. Additionally, pharmacokinetic data demonstrates that eravacycline achieves high concentration levels in the blood and urine.TP-271TP-271 is a fully-synthetic, broad-spectrum fluorocycline being developed for respiratory diseases caused by bacterial biothreat pathogens underfunding provided by NIAID. We are collaborating with CUBRC on the TP-271 program funded by NIAID.We created TP-271 using our proprietary chemistry technology. In doing so, we made modifications to the tetracycline scaffold that were designedto improve potency and effectiveness against a broader spectrum of bacteria as compared to tetracycline and doxycycline, which are currently used for thetreatment of pneumonia and other respiratory ailments.In our development program for TP-271, we have conducted a number of in vitro, toxicology and animal studies to evaluate the efficacy of TP-271against biothreat pathogens. TP-271 has performed as well as, or better than, standard-of-care comparators in studies in murine respiratory infection modelschallenged with public health pathogens. In susceptibility studies, TP-271 also demonstrated broad-spectrum activity against NIAID Category A and Bpublic health bacterial pathogens including Francisella tularensis, Yersinia pestis, Burkholderia mallei, Burkholderia pseudomallei, Bacillus anthracis, andNIAID Category C public health bacterial pathogens (in vitro and in vivo) that are associated with CABP, including Streptococcus pneumoniae, includingmultidrug-resistant pneumococci, Staphylococcus aureus (methicillin-susceptible and methicillin-resistant), Haemophilus influenzae, Moraxella catarrhalisand Legionella pneumophila, including strains that are tetracycline-resistant.In June 2017, we announced positive results from a phase 1 single-ascending dose clinical trial of the IV formulation of TP-271 in healthyvolunteers. In the study, TP-271 was well tolerated at single doses that resulted in high plasma exposures. There were no clinically significant changes in labvalues, ECG parameters, or physical exam findings. There were no serious or severe adverse events, or discontinuations due to an adverse event during thestudy. We are conducting a multiple-ascending dose trial for the IV formulation of TP-271. In 2017 we completed a single ascending dose phase 1 study forthe oral formulation of TP-271. Using this formulation, in early 2018 we initiated a multiple-ascending dose phase 1 study for the oral formulation of TP-271.In February 2017, we also received Qualified Infectious Disease Product and Fast Track designations from the FDA.Funding for TP-271 is covered by two awards from NIAID. The first award is a grant awarded to CUBRC in July 2011 that provides up toapproximately $2.9 million in funding, which we refer to as the NIAID Grant. The second award is a contract awarded to CUBRC in September 2011 thatprovides up to approximately $35.8 million in funding. The NIAID Grant and the NIAID Contract each support the development, manufacturing and clinicalevaluation of TP-271 for respiratory diseases caused by biothreat and antibiotic-resistant public health pathogens, including Francisella tularensis, Yersiniapestis and Bacillus anthracis, as well as bacterial pathogens associated with community-acquired bacterial pneumonia.In connection with the NIAID Contract, in October 2011, we entered into a cost-plus-fixed-fee subcontract with CUBRC under which we mayreceive funding of up to approximately $16.9 million, reflecting the portion of the NIAID Contract funding that may be paid to us for our activities. Inconnection with the NIAID Grant, in November 2011, CUBRC awarded us a subaward of approximately $0.9 million, reflecting the portion of the NIAIDGrant funding that may be paid to us for our activities.The NIAID Grant expired in May 2017. Although the NIAID Contract and our subcontract with CUBRC under the NIAID Contract have termswhich currently expire on March 31, 2019, NIAID is entitled to terminate the project for convenience at any time, and is not obligated to provide continuedfunding beyond March 31, 2019. To the extent that NIAID ceases to provide funding of the programs to CUBRC, CUBRC has the right to cease providingfunding to us. As of December 31, 2017, committed funding from CUBRC under the subcontract with respect to the NIAID Contract and the subaward withrespect to the NIAID Grant is $16.9 million, of which $13.2 million had been received through December 31, 2017. Through December 31, 2017, theCompany had received all committed funding of $0.9 million from CUBRC under the Company’s subaward with respect to the NIAID Grant.TP-6076TP-6076, a fully-synthetic fluorocycline derivative, is the lead candidate under our second-generation program to target unmet medical needs,including multidrug-resistant Gram-negative bacteria. In June 2017, we announced positive results from a phase 1 randomized, placebo-controlled, double-blind, single-ascending dose study evaluating the safety, tolerability and pharmacokinetics13 of IV TP-6076. In the study, TP-6076 was well tolerated, and there were no serious or severe adverse events, or discontinuations due to an adverse event.There were no clinically significant safety findings in any laboratory assessments, vital signs, ECGs or physical examinations. We also are conducting amultiple-ascending study in healthy volunteers of the IV formulation of TP-6076. Funding for TP-6076 is partially covered by an award from CARB-X. In March 2017, CARB-X selected us to receive up to $4.0 million in researchfunding over eighteen months for TP-6076. In connection with this funding, we entered into a cost reimbursement Sub-Award Agreement or “Sub-AwardAgreement”, with the Trustees of Boston University, the administrator of the program. We began recognizing revenue from the Sub-Award Agreement inApril 2017. During the year ended December 31, 2017, we recognized revenue of $0.7 million under this Sub-Award Agreement. This Sub-Award Agreementwill fund certain activities through the end of 2018. This Sub-Award Agreement can be terminated for convenience at any time, subject to 30 days priorwritten notice.Commercialization StrategyOur commercialization strategy is to develop our product candidates into leading therapies that will be available worldwide for the treatment ofserious multidrug-resistant infections. We have retained worldwide commercial rights to all of our product candidates other than eravacycline in China andother Asian territories. We exclusively licensed our commercial rights in China and other Asian territories to Everest Medicines Limited in February 2018. Inthe future we may enter into additional regional licensing transactions similar to the Everest license agreement. We intend to retain control over thecommercial execution of each of our product candidates in the United States.We are currently developing our lead product candidate, eravacycline, as an IV antibiotic for use as a first-line empiric monotherapy for thetreatment of serious and life-threatening infections, including a wide variety of multidrug-resistant infections, such as those found in patients with cIAI. Weintend to directly commercialize eravacycline in the United States. We intend to build a commercial organization in the United States, and recruitexperienced sales and medical education professionals and to develop a commercial strategy to target institutions with the greatest use of drugs formultidrug-resistant serious and life-threatening infections. We expect that our sales force will focus on educating hospital and institution-based physicians,nurses, pharmacy directors and payers about the benefits of eravacycline for the product’s approved indications. We plan to commercialize eravacyclineoutside the United States with the assistance of collaborators.Manufacturing and SupplyWe do not own or operate manufacturing facilities for the production of any of our product candidates, nor do we have plans to develop our ownmanufacturing operations in the foreseeable future. All of our product candidates are organic compounds of low molecular weight, commonly referred to assmall molecules. They are manufactured in a fully synthetic process from readily available starting materials.We currently rely on a limited number of third-party contract manufacturers for all of our required raw materials, drug substance and finishedproduct for our preclinical research and clinical trials. We do not have long-term agreements with any of these third parties. We also do not have any currentcontractual relationships for the manufacture of commercial supplies of any of our product candidates after they are approved. If any of our products areapproved by any regulatory agency, we intend to enter into agreements with third-party contract manufacturers for the commercial production of thoseproducts. We currently employ internal resources to manage our manufacturing.Patheon UK Limited Master Manufacturing Services AgreementIn June 2017, we and Patheon UK Limited and certain of its affiliates, or Patheon, entered into a master manufacturing services agreement, or thePatheon agreement. Under the Patheon agreement, we are responsible for supplying the active pharmaceutical ingredient for eravacycline to Patheon, andPatheon is responsible for manufacturing eravacycline, conducting quality control, quality assurance, analytical testing and stability testing and packaging.We entered into two related product agreements pursuant to the Patheon agreement that govern the terms and conditions of Patheon’s manufacture ofcommercial supplies of eravacycline at Patheon’s Greenville, North Carolina and Ferentino, Italy manufacturing sites. Each product agreement is governedby the terms of the Patheon agreement, unless expressly modified in such product agreement. Pursuant to the Patheon agreement, we have agreed to orderfrom Patheon at least a certain percentage of our annual commercial requirements for eravacycline in the United States and European Union each year for theterm of the Patheon agreement.The Patheon agreement has an initial term ending December 31, 2022, and will automatically renew after the initial term for successive terms oftwo years each, unless either party gives notice of its intention to terminate at least 18 months prior to the end of the then current term. We may terminate aproduct agreement upon 30 days’ prior written notice if any governmental agency takes any14 action that prevents us from importing, exporting, purchasing or selling eravacycline. Either party may terminate the Patheon agreement or a productagreement (a) upon written notice if the other party has failed to remedy a material breach under the Patheon agreement or a product agreement within aspecified time following receipt of written notice of such breach, and (b) immediately upon written notice to the other party in the event that the other party isdeclared insolvent or bankrupt, a voluntary petition of bankruptcy is filed in any court by such other party or the Pantheon agreement or a product agreementis assigned by such other party for the benefit of creditors. Patheon may terminate the Patheon agreement or a product agreement upon six months writtennotice if we assign the Patheon agreement to an assignee that, in the opinion of Patheon acting reasonably, is (i) not a creditworthy substitute for us or (ii) acompetitor of Patheon.The Patheon agreement contains, among other provisions, customary representations and warranties by the parties, a grant to Patheon of certainlimited license rights to our intellectual property in connection with Patheon’s performance of the services under the Patheon agreement, certainindemnification rights in favor of both parties, limitations of liability and customary confidentiality provisions.Finorga SAS Commercial Supply AgreementIn October 2017, we and Finorga SAS, or Novasep entered into a Commercial Supply Agreement, or the Novasep agreement. Under the Novasepagreement, Novasep will, pursuant to accepted purchase orders entered into under the Novasep agreement, manufacture for commercial supply the activepharmaceutical ingredient, or API, for eravacycline for us.Under the Novasep agreement, we will submit to Novasep on a periodic basis on or before the first business day of each calendar quarter a rollingforecast for a certain time period that sets forth the total quantity of the API for eravacycline for commercial supply that we either have ordered, desire to orderor expect to order from Novasep. A certain time period of each such forecast is binding on us and constitutes a “firm order”. The remainder of each forecastwill be for planning purposes only, and will not be binding. Novasep has no obligation to manufacture the API for eravacycline in accordance with anyforecast that is not the subject of a firm order and which is increased by a certain percentage above the previously forecast amount.The Novasep agreement has an initial term ending October 16, 2022, and will automatically renew after the initial term, unless either party givesnotice of its intention to terminate at least 18 months prior to the end of the then current term. We may terminate the Novasep agreement upon 30 days’ priorwritten notice (a) if any regulatory authority takes any action, or raises any objection, that prevents us from importing, exporting, purchasing or selling theAPI for eravacycline, or (b) in the event that Novasep experiences a force majeure event. Either party may terminate the Novasep agreement (a) upon writtennotice if the other party has failed to remedy a material breach under the Novasep agreement within a specified time following receipt of written notice ofsuch breach, and (b) immediately upon written notice to the other party in the event the other party makes a general assignment for the benefit of its creditors,or proceedings of a case are commenced in any court of competent jurisdiction by or against the other party seeking (i) such party’s reorganization,liquidation, dissolution, arrangement or winding up, or the composition or readjustment of its debts, (ii) the appointment of a receiver or trustee for or oversuch party’s property, or (iii) similar relief in respect of such party under any law relating to bankruptcy, insolvency, reorganization, winding up orcomposition or adjustment of debt, and such proceedings shall continue undismissed, or an order with respect to the foregoing shall be entered and continueunstayed, for a period of more than 60 days.The Novasep agreement contains, among other provisions, customary representations and warranties by the parties, a grant to Novasep of certainlimited license rights to the Company’s intellectual property in connection with Novasep’s performance of the services under the Novasep agreement, certainindemnification rights in favor of both parties, limitations of liability and customary confidentiality provisions.Intellectual PropertyWe strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended tocover our product candidates and compositions, their methods of use and processes for their manufacture and any other inventions that are commerciallyimportant to the development of our business. We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do notconsider appropriate for, patent protection.Our success will significantly depend on our ability to obtain and maintain patent and other proprietary protection for commercially importanttechnology and inventions and know-how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets and operatewithout infringing the valid and enforceable patents and proprietary rights of third parties. We also rely on know-how and continuing technologicalinnovation to develop and maintain our proprietary position.15 As of February 26, 2018, we owned nine U.S. patents, 42 foreign patents, seven pending U.S. patent applications, three pending applications filedunder the Patent Cooperation Treaty, or PCT, and 62 pending foreign patent applications in Europe and 20 other jurisdictions. The PCT is an internationalpatent law treaty that provides a unified procedure for filing a single initial patent application for an invention simultaneously in each of the member states.Although a PCT application is not itself examined and cannot issue as a patent, it allows the applicant to seek protection in any of the member states throughnational-phase applications. In addition, we have exclusively licensed from Harvard University rights under 12 U.S. patents, 30 foreign patents, one pendingU.S. patent application and eight pending foreign patent applications in Europe and ten other jurisdictions. Certain of our patents and patent applications aredirected to the composition of matter and/or use of eravacycline and patents have granted or applications are pending in the United States, Europe, Japan andother countries.Tetraphase-Owned Intellectual Property Relating to Eravacycline and Other Compounds Under DevelopmentWe have patent applications directed to the composition of matter and/or use of eravacycline and other fluorocyclines pending in the United Statesand other countries. Patents specific to the composition of matter, pharmaceutical compositions and/or use of eravacycline have been granted in the UnitedStates, Europe, Australia, China, Colombia, India, Japan, Korea, Mexico, New Zealand, Hong Kong, Taiwan, Israel and Singapore. The granted patents havean expiration date of August 7, 2029, and any patents that may issue from the pending applications will also have an expiration date of August 7, 2029,absent any term extensions or adjustments that may be available. The term of one of the U.S. patents has received 508 days of patent term adjustment underthe America Invents Act.We have also filed patent applications directed to the composition of matter and use of various derivatives of tetracycline and pentacycline (atetracycline scaffold extended to five rings) under the PCT and in the United States, Europe and other foreign countries. Any patents that might issue fromthese pending applications will have an expiration date no earlier than 2030, with some expiration dates as late as 2038.Exclusively Licensed Intellectual Property Relating to Our Proprietary Chemistry TechnologyThe patents and patent applications that we exclusively license from Harvard provide patent protection for the proprietary chemistry technologyused in our fully synthetic process to make eravacycline and other tetracycline derivatives. The key intermediates that enable our fully synthetic process arecommonly referred to as enone intermediates. The licensed patents and patent applications are directed towards the composition of matter of enoneintermediates and compounds used to make the enone intermediates, referred to as key precursors, as well as synthetic routes to those enone intermediates,precursors and our tetracycline derivatives under development.Composition of matter for the enone intermediates and precursors used in preparing the enone intermediates, and methods of making the precursorsand enone intermediates are covered by the U.S. patents we license from Harvard, which will expire no earlier than 2025, not taking into consideration patentterm adjustment. Corresponding patent applications have been filed in foreign jurisdictions and any patents that have issued and might issue from theseapplications also expire or will expire no earlier than 2025.Exclusively Licensed Intellectual Property Relating to Pentacycline and Tetracycline DerivativesOur license from Harvard also includes patent applications directed to the composition of matter and use of other novel tetracycline orpentacycline derivatives. These applications are pending in the United States, Europe and other countries. Any patents that might issue from these pendingapplications will have an expiration date no earlier than 2027.Patent Term and Patent Term ExtensionsThe term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries, including theUnited States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may belengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in examining andgranting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a patent that covers a drug, biologicalproduct or medical device approved pursuant to a pre-market approval may also be eligible for patent term extension when FDA approval is granted,provided statutory and regulatory requirements are met. The length of the patent term extension is related to the length of time the drug is under regulatoryreview while the patent is in force. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent termextension of up to five years beyond the expiration date set for the patent. Patent extension cannot extend the remaining term of a patent beyond a total of 14years from the date of product approval, only one patent applicable to each regulatory review period may be granted an extension and only those claimsreading on the approved drug are extended. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent thatcovers an approved drug.16 Trademark Applications Relating to the Company Name and LogoAs of February 1, 2018, we owned ten intent-to-use trademark applications pending before the United States Patent and Trademark Office relatingto the Company Name, the Company Logo, combinations thereof, design marks relating to eravacycline and potential commercial names of eravacycline.Trade SecretsWe rely, in some circumstances, on trade secrets to protect our unpatented technology. However, trade secrets can be difficult to protect. We seek toprotect our trade secrets and proprietary technology and processes, in part, by confidentiality agreements with our employees, consultants, scientific advisorsand contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises andphysical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems,agreements or security measures may be breached. We may not have adequate remedies for any breach and could lose our trade secrets through such a breach.In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors orcollaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting trade secrets, know-howand inventions.Harvard University License AgreementOn August 3, 2006, we entered into a license agreement with The President and Fellows of Harvard College, under which Harvard granted us anexclusive worldwide license under specified Harvard patent rights to develop and commercialize tetracycline-based products such as eravacycline. Under thelicense agreement, we also have the right to expand the patent rights subject to the license to include improvement patents that may be owned by Harvard inthe future and that meet specified criteria by paying to Harvard an additional license issuance fee in an amount to be agreed between Harvard and us. We alsohave a right of negotiation to expand the license to include additional patents relating to tetracycline chemistry within a specified category that may beowned by Harvard in the future, including patents covering inventions made by Andrew Myers, Ph.D., our scientific founder, under his consulting agreementwith us. Since entering into the license agreement, we have entered into amendments to the license agreement pursuant to which we expanded the patentrights subject to the license in accordance with these rights. Under the license agreement, we are obligated to satisfy diligence requirements, including usingcommercially reasonable efforts to develop and commercialize licensed compounds and to implement a specified development plan, meeting specifieddevelopment milestones and providing an update on progress on an annual basis. Our license grant from Harvard is subject to academic rights retained byHarvard and United States government rights and obligations that are customary in patent license agreements with universities in the United States.In consideration for the rights granted to us by Harvard under the license agreement, as of December 31, 2017, we have paid Harvard an aggregateof $6.1 million in upfront license fees and development milestone payments, and issued 31,379 shares of our common stock to Harvard. In addition, we haveagreed to make payments to Harvard upon the achievement of specified future development and regulatory milestones totaling up to $15.1 million for eachlicensed product candidate ($4.8 million of which has already been paid with respect to eravacycline), and to pay tiered royalties in the single digits based onannual worldwide net sales, if any, of licensed products by us, our affiliates and sublicensees in certain circumstances. We are also obligated to pay Harvard aspecified share of non-royalty sublicensing and other revenues that we receive from sublicensees for the grant of sublicenses under the license in certaincircumstances, and to reimburse Harvard for specified patent prosecution and maintenance costs.The license agreement expires on a licensed product-by-licensed product and country-by-country basis upon the expiration of the last-to-expirepatent covering the applicable product in the applicable country that is included in the license. Harvard may terminate the license agreement based on ouruncured material breach or insolvency or bankruptcy. We have the right to terminate the license agreement for any or no reason at any time on sixty (60) daysprior written notice to Harvard.Government ContractsEravacyclineWe received funding for eravacycline under an award from BARDA. In January 2012, BARDA awarded to CUBRC a five-year contract thatprovided a total of up to $67.3 million in funding. The BARDA Contract contemplates that CUBRC will collaborate with us on the development,manufacturing and clinical evaluation of a novel tetracycline antibiotic with potential as an empiric countermeasure for respiratory diseases caused bybiothreat and antibiotic-resistant public health pathogens, including Francisella tularensis, which causes tularemia, Yersinia pestis, which causes plague,and Bacillus anthracis, which causes anthrax disease, as well as bacterial pathogens associated with moderate-to-severe CABP and other serious hospitalinfections. The BARDA Contract also provided funding for certain activities in the development of eravacycline to treat certain infections caused by life-threatening multidrug-resistant bacteria. In connection with the BARDA Contract, in February 2012, we entered into a cost-plus-fixed-fee subcontract withCUBRC under which we can receive up to $41.9 million to fund specific work performed by us related to eravacycline. The terms of the subcontract expireon December 31, 2018.17 We collaborated with CUBRC in seeking government funding of this development program because we did not have any expertise in bidding for,or the administration and management of, government-funded contracts. Because CUBRC had the expertise to manage and administer awards issued bygovernment funding agencies, we agreed with CUBRC that CUBRC would serve as the prime contractor under the BARDA Contract, primarily carrying out aprogram management and administrative role with additional responsibility for the management of certain preclinical studies. We serve as lead technicalexperts on all aspects of the BARDA Contract and serve as a subcontractor of CUBRC responsible for management of chemistry, manufacturing and controlactivities and clinical studies. The flow of funds under this arrangement follows the respective activities being conducted by us and by CUBRC, with fundsbeing paid to us under our subcontract with CUBRC reflecting payment for our activities.We have agreed upon a research plan with CUBRC detailing the activities to be conducted by CUBRC and by us. In addition to our obligations toconduct the activities provided for by the research plan, we are also obligated under the CUBRC subcontract to satisfy various federal reporting requirements,extending to technical reporting with respect to our activities, reporting with respect to intellectual property and financial reporting.Payments under our subcontract with CUBRC are made in installments as activities are conducted in accordance with the research plan. Paymentsare based on direct and indirect costs incurred plus fixed fees, where applicable.Under the subcontract, CUBRC’s use of our eravacycline data is expressly limited to purposes of performing CUBRC’s obligations under theBARDA Contract, and CUBRC and its other subcontractors must assign to us, subject to government rights, all intellectual property rights relating to ourcompounds and related data that arise from the project. Under standard government contracting terms, the government receives only limited rights forgovernment use of certain of our pre-existing data and certain data produced with non-federal funding, to the extent such data are required for delivery toBARDA under the project. The government receives unlimited rights to use and disclose new data first produced under the project with BARDA funding, andthe government is entitled to at least a nonexclusive, worldwide, royalty-free license to practice or have practiced any patent on an invention that isconceived or first reduced to practice under the project.BARDA is entitled to terminate the project for convenience at any time, and is not obligated to provide continued funding beyond current-yearamounts from Congressionally approved annual appropriations, and CUBRC has a right to terminate its subcontract with us only to the extent that BARDAfirst cancels the corresponding portions of CUBRC’s prime contract.We retain a right to terminate CUBRC’s rights to use eravacycline. Permissible grounds for such termination of CUBRC’s rights include but are notlimited to the sale of our assets relating to the project, an acquisition of us or our granting an exclusive or partially exclusive license to use eravacycline to alicensee that declines to continue CUBRC’s license rights. In such an event, the subcontract may be terminated upon CUBRC’s negotiation of acorresponding termination of CUBRC’s obligations to BARDA.TP-271Our program to develop TP-271 is funded by NIAID through the NIAID Grant, a grant awarded in July 2011 that provided up to approximately$2.9 million in funding, and the NIAID Contract, a separate agreement that provides up to $35.8 million in funding that NIAID awarded to CUBRC inOctober 2011. The NIAID Contract and the NIAID Grant contemplate that CUBRC will collaborate with us on the development, manufacturing and clinicalevaluation of a novel broad-spectrum tetracycline antibiotic for respiratory diseases caused by biothreat and antibiotic-resistant public health pathogens,including Francisella tularensis, Yersinia pestis and Bacillus anthracis, as well as bacterial pathogens associated with CABP.In connection with the NIAID Contract, in October 2011, we entered into a subcontract with CUBRC under which we may receive funding of up toapproximately $16.9 million, reflecting the portion of the NIAID Contract funding that may be paid to us for our activities. The term of the NIAIDsubcontract now runs through March 31, 2019. In connection with the NIAID Grant, in November 2011, CUBRC awarded us a subaward of approximately$0.9 million, reflecting the portion of the NIAID Grant funding that may be paid to us for our activities. The term of the sub-award under the NIAID grantexpired in May 2017.We collaborated with CUBRC in seeking government funding of this development program because we did not have any expertise in bidding for,or the administration and management of, government-funded contracts. Because CUBRC had the expertise to manage and administer awards issued bygovernment funding agencies, we agreed with CUBRC that CUBRC would serve as the prime contractor under the NIAID Contract, primarily carrying out aprogram management and administrative role with additional responsibility for the management of certain preclinical studies. We serve as lead technicalexperts on all aspects of the NIAID Contract and serve as a subcontractor of CUBRC responsible for management of chemistry, manufacturing and controlactivities and clinical studies. The flow of funds under this arrangement follows the respective activities being conducted by us and by CUBRC, with fundsbeing paid to us under our subcontract with, and subaward from, CUBRC reflecting payment for our activities.18 We have agreed upon a research plan with CUBRC detailing the activities to be conducted by CUBRC and by us. In addition to our obligations toconduct the activities provided for by the research plan, we are also obligated under the CUBRC subcontract to satisfy various federal reporting requirements,extending to technical reporting with respect to our activities, reporting with respect to intellectual property and financial reporting.Payments under our subcontract with CUBRC are made in installments as activities are conducted in accordance with the research plan. Paymentsare based on direct and indirect costs incurred plus fixed fees, where applicable.Under the subcontract, CUBRC’s use and disclosure of our proprietary data pertaining to the project are expressly subject to a separateconfidentiality agreement between CUBRC and us. CUBRC and its other subcontractors or subawardees must assign to us, subject to government rights, allintellectual property rights relating to our compounds and related data that arise from the project. Under standard government contracting terms and grantconditions, the government is entitled to at least a nonexclusive, worldwide, royalty-free license to practice or have practiced any patent on an invention thatis conceived or first reduced to practice under the project.NIAID is entitled to terminate the NIAID Contract for convenience at any time, and is not obligated to provide continued funding beyondMarch 31, 2019 and CUBRC has a right to terminate its subcontract with, or subaward to, us only to the extent that NIAID first cancels the correspondingportions of CUBRC’s prime contract or award.We retain rights to terminate the subcontract if CUBRC breaches the subcontract, subject in certain cases to CUBRC’s failure to cure such breach,or by written notice to CUBRC, effective upon CUBRC’s negotiation of a corresponding termination of CUBRC’s obligations to NIAID.TP-6076Our program to develop TP-6076 is partially covered by an award from CARB-X. In March 2017, CARB-X selected the Company to receive up to$4.0 million in research funding over eighteen months for TP-6076. In connection with this funding, the Company entered into a cost reimbursement Sub-Award Agreement (the “Sub-Award Agreement”) with the Trustees of Boston University, the administrator of the program. This Sub-Award Agreement willfund certain activities through the end of 2018. This Sub-Award Agreement can be terminated for convenience at any time, subject to 30 days prior writtennotice.CollaborationsIn February 2018, we entered into a license agreement, which we call the Everest license agreement, with Everest Medicines Limited, or EverestMedicines, whereby we granted Everest Medicines an exclusive license to develop and commercialize eravacycline, for the treatment of complicated intra-abdominal infections and other indications, in mainland China, Taiwan, Hong Kong, Macau, South Korea and Singapore, or the territory. Under the terms of the Everest license agreement, we are eligible to receive from Everest Medicines an upfront cash payment of $7.0 million to bepaid within 15 business days of the effective date of the Everest license agreement, and up to an aggregate of $16.5 million in clinical development andregulatory milestone payments and up to $20.0 million annually, provided that certain sales thresholds are met. There can be no guarantee that any suchmilestones or sales thresholds will in fact be met. We are obligated to make certain payments to Harvard based on amounts received from Everest Medicinesunder the Everest license agreement pursuant to the existing license agreement by and between Harvard and us. We will also be entitled to receive double-digit tiered royalties on sales in the territory, if any, of products containing eravacycline. Royalties arepayable with respect to each jurisdiction in the territory until the latest to occur of: (i) the last-to-expire of specified patent rights in such jurisdiction in theterritory; (ii) expiration of marketing or regulatory exclusivity in such jurisdiction in the territory; or (iii) ten (10) years after the first commercial sale of aproduct in such jurisdiction in the territory. In addition, royalties payable under the Everest license agreement will be subject to reduction on account ofgeneric competition and after patent expiry in a jurisdiction if required by applicable law, with any such reductions capped at certain percentages of theamounts otherwise payable during the applicable royalty payment period. Under the terms and conditions of the Everest license agreement, Everest Medicines will be solely responsible for the development andcommercialization of licensed products in the territory.If either we or Everest Medicines materially breaches the Everest license agreement and does not cure such breach within 90 days (or fewer days incertain cases), the non-breaching party may terminate the Everest license agreement in its entirety. However,19 if the breach relates only to any jurisdiction other than mainland China, the non-breaching party may only terminate the Everest license agreement withrespect to such jurisdiction. Either party may also terminate the Everest license agreement, effective immediately upon written notice, if the other party filesfor bankruptcy, is dissolved or has a receiver appointed for substantially all of its property. We may terminate the Everest license agreement if EverestMedicines, its affiliates or its sublicensees challenges the validity or enforceability of any of our patents covering any of the licensed compounds or products.In certain circumstances, if we materially breaches the Everest license agreement Everest Medicines may reduce royalties owed to us in lieu of a termination.Moreover, if we materially breaches the Everest license agreement and Everest Medicines terminates the Everest license agreement with respect to anyjurisdiction and we then commercializes a licensed product in that jurisdiction, we will pay to Everest Medicines a low, single digit royalty on such sales ofthe licensed product in such jurisdiction for a minimum of five years after such termination.Research and Development ExpensesFor the years ended December 31, 2017, 2016 and 2015, we incurred $101.7 million, $63.8 million, and $73.8 million, respectively, in expenseson research and development activities.CompetitionThe biopharmaceutical industry is characterized by intense competition and rapid innovation. Our potential competitors include largepharmaceutical and biotechnology companies, specialty pharmaceutical companies and generic drug companies. Many of our potential competitors havegreater financial, technical and human resources than we do, as well as greater experience in the discovery and development of product candidates, obtainingFDA and other regulatory approvals of products and the commercialization of those products. Accordingly, our potential competitors may be more successfulthan us in obtaining FDA approval for drugs and achieving widespread market acceptance. We anticipate that we will face intense and increasingcompetition as new drugs enter the market and advanced technologies become available. Finally, the development of new treatment methods for the diseaseswe are targeting could render our product candidates less competitive or obsolete.We believe the key competitive factors that will affect the development and commercial success of our most advanced product candidate,eravacycline, if approved, will be efficacy, coverage of drug-resistant strains of bacteria, safety and tolerability profile, reliability, convenience of dosing,price, availability of reimbursement from governmental and other third-party payers and susceptibility to drug resistance.We are developing eravacycline as an IV antibiotic for use as a first-line empiric monotherapy for the treatment of resistant and multidrug-resistantinfections such as those found in patients with cIAI. If approved, eravacycline would compete with a number of currently marketed antibiotics, includingmeropenem, which is marketed by AstraZeneca as Merrem, imipenem/cilastatin, which is marketed by Merck & Co., or Merck, as Primaxin, tigecycline,which is marketed by Pfizer as Tygacil, piperacillin/tazobactam, which is marketed by Pfizer as Zosyn, ceftolozane/tazobactam, which is marketed by Merckas Zerbaxa, and ceftazidime/avibactam, which is marketed by Allergan, Inc., and AstraZeneca as Avycaz, meropenem and vaborbactam, which is marketed byMelinta Therapeutics as Vabomere, as well as several antibiotics currently in phase 3 development. We also expect that eravacycline, if approved, wouldcompete with future and current generic versions of marketed antibiotics.If approved, we believe that eravacycline would compete effectively against these compounds on the basis of: •broad range of activity against a wide variety of resistant and multidrug-resistant Gram-negative, Gram-positive and anaerobic bacteria; •lower probability of drug resistance; •a favorable safety and tolerability profile; •a convenient dosing regimen; •allows for monotherapy; and •no drug to drug interactions20 Recent Changes in the Regulatory LandscapeThe FDA’s Division of Anti-Infective Products, or DAIP, has undergone evolution in recent years, primarily driven by concerns that increasinglyless effective antibiotics may have been approved in the last 10 to 15 years and a desire to bring what DAIP perceives to be greater statistical rigor to theiranalyses. The impact of this was a rethinking of how antibiotic efficacy is measured in clinical trials, and a review of the statistical tools used to analyze thedata. In February 2015, the FDA published guidance documents for industry entitled “Complicated Urinary Tract Infections: Developing Drugs forTreatment” and guidance entitled “Complicated Intra-Abdominal Infections: Developing Drugs for Treatment.” The purpose of these guidance documentswas to address considerations surrounding the clinical development of drugs for cUTI and cIAI indications, including clinical trial design and efficacyconsiderations.On December 13, 2016, President Obama signed into law the 21st Centuries Cures Act, which builds on the FDA’s ongoing efforts to advancemedical product innovation. One key component of this Act is the Limited Population pathway, which is designed to help streamline the developmentprograms for certain antibacterials intended to treat targeted groups of patients suffering from serious or life-threatening infections where unmet need existsdue to lack of available therapies. Approvals of these antimicrobials are expected to rely on data primarily targeting these limited populations. The statement“Limited Population” will appear prominently next to the drug’s name in labeling, which will provide notice to healthcare providers that the drug isindicated for use in a limited and specific population of patients. There is additional legislation pending in the U.S. Congress, including the DISARM Act,which would designate certain novel antibiotics used to treat serious bacterial infections to receive higher Medicare reimbursement, and an amendment to theGAIN Act, which would successful QIDP sponsors to transfer up to one year exclusivity to another product, including products marketed by other companies.Government Regulation and Product ApprovalGovernment authorities in the United States, at the federal, state and local level, and in other countries, extensively regulate, among other things,the research, development, clinical trials, testing, manufacture, including any manufacturing changes, authorization, pharmacovigilance, adverse eventreporting, recalls, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical productsand product candidates such as those we are developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, alongwith subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources.U.S. Government RegulationIn the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and implementing regulations. Theprocess of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requiresthe expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the productdevelopment process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’srefusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, totalor partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil and/or criminalpenalties.The process required by the FDA before a drug may be marketed in the United States generally involves the following: •completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice,or GLP, regulations; •submission to the FDA of an IND which must become effective before human clinical trials may begin; •approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; •performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, to establish thesafety and efficacy of the proposed drug product for each indication; •submission to the FDA of an NDA; •satisfactory completion of an FDA advisory committee review, if applicable; •satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product is produced toassess compliance with current good manufacturing practices, or cGMP, and to assure that the facilities, methods and controls are adequateto preserve the drug’s identity, strength, quality and purity; and •FDA review and approval of the NDA.21 Preclinical StudiesPreclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safetyand efficacy. Preclinical tests intended for submission to the FDA to support the safety of a product candidate must be conducted in compliance with theFDA’s Good Laboratory Practice (GLP) regulations and the United States Department of Agriculture’s Animal Welfare Act. A drug sponsor must submit theresults of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, tothe FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days afterreceipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial ona clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submissionof an IND may not result in the FDA allowing clinical trials to commence.Clinical TrialsClinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators inaccordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participationin any clinical trial along with the requirement to ensure that the data and results reported from the clinical trials are credible and accurate. Clinical trials areconducted under protocols detailing, among other things, the objectives of the trial, the criteria for determining subject eligibility, the dosing plan, theparameters to be used in monitoring safety, the procedure for timely reporting of adverse events, and the effectiveness criteria to be evaluated. A protocol foreach clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institutionparticipating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution. Information about certainclinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on theirwww.clinicaltrials.gov website.Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosagetolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. During phase 1 clinical trials,sufficient information about the investigational drug’s or biological product’s pharmacokinetics and pharmacological effects may be obtained to permit thedesign of well-controlled and scientifically valid phase 2 clinical trials.Phase 2: The drug is administered to a larger, but still limited patient population to identify possible adverse effects and safety risks, topreliminarily evaluate the efficacy of the product for specific targeted indications and to determine dosage tolerance and optimal dosage. Phase 2 clinicaltrials are typically well-controlled and closely monitored.Phase 3: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlledclinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profileof the product, and to provide adequate information for the labeling of the product. Phase 3 clinical trials usually involve a larger number of participants thana phase 2 clinical trial.Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverseevents occur. Phase 1, phase 2 and phase 3 clinical trials may not be completed successfully within any specified period, or at all. Results from one trial maynot be predictive of results from subsequent trials. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on variousgrounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approvalof a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated withunexpected serious harm to patients.Special Protocol AssessmentThe special protocol assessment, or SPA, process is designed to facilitate the FDA’s review and approval of drugs by allowing the FDA to evaluatethe proposed design and size of phase 3 clinical trials that are intended to form the primary basis for determining a drug product’s efficacy. Generally, the trialmust have already been discussed with the relevant FDA review division at an end-of-phase 2/pre-phase 3 meeting to be eligible for SPA review. Uponspecific request by a clinical trial sponsor, the FDA will evaluate the protocol and respond to a sponsor’s questions regarding, among other things, primaryefficacy endpoints, trial conduct and data analysis, within 45 days of receipt of the request.22 The FDA ultimately assesses whether the protocol design and planned analysis of the trial are acceptable to support regulatory approval of theproduct candidate with respect to effectiveness of the indication studied. All agreements and disagreements between the FDA and the sponsor regarding anSPA must be clearly documented in an SPA letter or the minutes of a meeting between the sponsor and the FDA.Even if the FDA agrees to the design, execution and analyses proposed in protocols reviewed under the SPA process, the FDA may revoke or alterits agreement under the following circumstances: •public health concerns emerge that were unrecognized at the time of the protocol assessment, or the director of the review divisiondetermines that a substantial scientific issue essential to determining safety or efficacy has been identified after testing has begun; •a sponsor fails to follow a protocol that was agreed upon with the FDA; or •the relevant data, assumptions, or information provided by the sponsor in a request for SPA change are found to be false statements ormisstatements, or are found to omit relevant facts.A documented SPA may be modified, and such modification will be deemed binding on the FDA review division, except under the circumstancesdescribed above, if FDA and the sponsor agree in writing to modify the protocol and such modification is intended to improve the study.Marketing ApprovalAssuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailedinformation relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDArequesting approval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application userfee. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” ofa standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA issubmitted to FDA because the FDA has approximately two months to make a “filing” decision. Furthermore, the FDA is not required to complete its reviewwithin the established ten-month timeframe and may extend the review process by issuing requests for additional information or clarification. The PDUFAgoal date for the FDA to complete its review of our NDA is currently August 28, 2018. In addition, under the Pediatric Research Equity Act of 2003, as amended and reauthorized, certain NDAs or supplements to an NDA must containdata that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to supportdosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request ofthe applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from thepediatric data requirements.Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. Our product candidatesare not designated as orphan drugs.The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to mitigate any identified or suspected seriousrisks. The REMS plan could include medication guides, physician communication plans, assessment plans, and elements to assure safe use, such as restricteddistribution methods, patient registries, or other risk minimization tools.The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determinewhether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In thisevent, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts itfor filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among otherthings, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed toassure the product’s continued safety, quality and purity.The FDA is required to refer an application for a novel drug to an advisory committee or explain why such referral was not made. An advisorycommittee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as towhether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but itconsiders such recommendations carefully when making decisions.23 Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve anapplication unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistentproduction of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trialsites to assure compliance with GCP.The FDA generally accepts data from foreign clinical trials in support of an NDA if the trials were conducted under an IND. If a foreign clinical trialis not conducted under an IND, the FDA nevertheless may accept the data in support of an NDA if the study was conducted in accordance with GCPs and theFDA is able to validate the data through an on-site inspection, if deemed necessary. Although the FDA generally requests that marketing applications besupported by some data from domestic clinical studies, the FDA may accept foreign data as the sole basis for marketing approval if (1) the foreign data areapplicable to the U.S. population and U.S. medical practice, (2) the studies were performed by clinical investigators with recognized competence, and (3) thedata may be considered valid without the need for an on-site inspection or, if the FDA considers the inspection to be necessary, the FDA is able to validatethe data through an on-site inspection or other appropriate means.The testing and approval process for an NDA requires substantial time, effort and financial resources, and each may take several years to complete.Data obtained from preclinical and clinical testing are not always conclusive and may be susceptible to varying interpretations, which could delay, limit orprevent regulatory approval. The FDA may not grant approval on a timely basis, or at all.After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regardingthe manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete responseletter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinicalor preclinical testing in order for FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide thatthe application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA willtypically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specificindications.Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings orprecautions be included in the product labeling, require that post-approval studies, including phase 4 clinical trials, be conducted to further assess a drug’ssafety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, includingdistribution and use restrictions or other risk management mechanisms under a REMS which can materially affect the potential market and profitability of theproduct. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval,some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to furthertesting requirements and FDA review and approval.Special FDA Expedited Review and Approval ProgramsThe FDA has various programs, including fast track designation, accelerated approval and priority review, that are intended to expedite or simplifythe process for the development and FDA review of drugs that are intended for the treatment of serious or life threatening diseases or conditions anddemonstrate the potential to address unmet medical needs. The purpose of these programs is to provide important new drugs to patients earlier than understandard FDA review procedures.To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious orlife threatening disease or condition and demonstrates the potential to address an unmet medical need, or if the drug qualifies as a QIDP under the recentlyenacted GAIN Act. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapythat may be potentially superior to existing therapy based on efficacy or safety factors. Fast track designation provides additional opportunities forinteraction with the FDA’s review team and may allow for rolling review of NDA components before the completed application is submitted. The FDAgranted eravacycline fast track designation as a QIDP in April 2014; granted fast track designation and as a QIDP for the IV formulation of TP-271 inSeptember 2015 and for the oral formulation of TP-271 in February 2017. The FDA may decide to rescind the fast track designation if it determines that thequalifying criteria no longer apply.The FDA may give a priority review designation to drugs that offer major advances in treatment for a serious condition, or provide a treatmentwhere no adequate therapy exists. Most products that are eligible for fast track designation are also likely to be considered appropriate to receive a priorityreview. A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under currentPDUFA guidelines. Under the new PDUFA agreement, these six and ten month review periods are measured from the “filing” date rather than the receipt datefor NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission.24 In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningfultherapeutic benefit over existing treatments may receive accelerated approval, meaning that it may be approved on (1) the basis of adequate and well-controlled clinical trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or (2) onan intermediate clinical endpoint that can be measured earlier than irreversible morbidity or mortality and that is reasonably likely to predict an effect onirreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lackof alternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketingstudies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to acceleratedwithdrawal procedures.Moreover, under the provisions of the new Food and Drug Administration Safety and Innovation Act, or FDASIA, enacted in 2012, a sponsor canrequest designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy is defined as a drug that is intended, alone or in combinationwith one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug maydemonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observedearly in clinical development. Drugs designated as breakthrough therapies are also eligible for accelerated approval. The FDA must take certain actions, suchas holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy.Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions forqualification or decide that the time period for FDA review or approval will not be shortened.Post-Approval RequirementsDrugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, amongother things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting ofadverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, aresubject to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at whichsuch products are manufactured, as well as new application fees for supplemental applications with clinical data.The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness aftercommercialization.In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register theirestablishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliancewith cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDAregulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsorand any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in thearea of production and quality control to maintain cGMP compliance.The FDA strictly regulates the marketing, labeling, advertising and promotion of drug products that are placed on the market. A product cannot becommercially promoted before it is approved, and approved drugs may generally be promoted only for their approved indications. Promotional claims mustalso be consistent with the product’s FDA-approved label, including claims related to safety and effectiveness. The FDA and other federal agencies alsoclosely regulate the promotion of drugs in specific contexts such as direct-to-consumer advertising, industry-sponsored scientific and education activities,and promotional activities involving the Internet and social media.Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or ifproblems occur after the product reaches the market.25 Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or withmanufacturing processes, or failure to comply with regulatory requirements, may result in mandatory 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 or other restrictions under a REMSprogram. Other potential consequences of regulatory non-compliance include, among other things: •restrictions on, or suspensions of, the marketing or manufacturing of the product, complete withdrawal of the product from the market orproduct recalls; •interruption of production processes, including the shutdown of manufacturing facilities or production lines or the imposition of newmanufacturing requirements; •fines, warning letters or other enforcement letters or holds on post-approval clinical trials; •refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals; •product seizure or detention, or refusal to permit the import or export of products; or •injunctions or the imposition of civil or criminal penalties.In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulatesthe distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by thestates. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountabilityin distribution.Exclusivity and Approval of Competing ProductsHatch-Waxman ExclusivityMarket and data exclusivity provisions under the FDCA can delay the submission or the approval of certain applications for competing products.The FDCA provides a five-year period of non-patent data exclusivity within the United States to the first applicant to gain approval of an NDA for a newchemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is themolecule or ion responsible for the activity of the drug substance. We believe that eravacycline and our other product candidates are new chemical entities.During the exclusivity period, the FDA may not accept for review an abbreviated new drug application, or ANDA, or a 505(b)(2) NDA submitted by anothercompany that references the previously approved drug. However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification ofpatent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA, or supplement to an existingNDA or 505(b)(2) NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant, are deemed bythe FDA to be essential to the approval of the application or supplement. Three year exclusivity may be awarded for changes to a previously approved drugproduct, such as new indications, dosages, strengths or dosage forms of an existing drug. This three-year exclusivity covers only the conditions of useassociated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for genericversions of the original, unmodified drug product. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, anapplicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlledclinical trials necessary to demonstrate safety and effectiveness. For drug products that contain an “antibiotic” ingredient approved prior to 1997, such astetracycline, the statute imposes certain limitations on the award of non-patent exclusivity. However, we do not believe these limitations would apply toeravacycline or any of our other investigational antibiotics.Qualified Infectious Disease Product ExclusivityUnder the GAIN provisions of FDASIA, which was signed into law in July 2012, the FDA may designate a product as a “qualified infectious diseaseproduct,” or QIDP. In order to receive this designation, a drug must qualify as an antibacterial or antifungal drug for human use intended to treat serious orlife-threatening infections, including those caused by either (1) an antibacterial or antifungal resistant pathogen, including novel or emerging infectiouspathogens, or (2) a so-called “qualifying pathogen” found on a list of potentially dangerous, drug-resistant organisms to be established and maintained bythe FDA under the new law. A sponsor must request such designation before submitting a marketing application. We obtained a QIDP designation for the IVformulation of eravacycline for cUTI and cIAI in July 2013, the oral formulation in March 2014, the IV formulation of TP-271 in September 2015, the oralformulation of TP-271 in February 2017, and expect to request QIDP designations for our other product candidates prior to submitting a marketingapplication for such product candidates, as appropriate.26 Upon approving an application for a qualified infectious disease product, the FDA will extend by an additional five years any non-patentmarketing exclusivity period awarded, such as a five-year exclusivity period awarded for a new molecular entity. This extension is in addition to anypediatric exclusivity extension awarded, and the extension will be awarded only to a drug first approved on or after the date of enactment.The GAIN provisions prohibit the grant of an exclusivity extension where the application is a supplement to an application for which an extensionis in effect or has expired, is a subsequent application for a specified change to an approved product, or is an application for a product that does not meet thedefinition of qualified infectious disease product based on the uses for which it is ultimately approved.Foreign RegulationIn addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial salesand distribution of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities offoreign countries or economic areas, such as the European Union, before we may commence clinical trials or market products in those countries or areas. Theapproval process and requirements governing the conduct of clinical trials, product authorization, pricing and reimbursement vary greatly from place toplace, and the time may be longer or shorter than that required for FDA approval.Under European Union regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralizedprocedure. The centralized procedure is compulsory for medicinal products produced by biotechnology or those medicinal products containing new activesubstances for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, viral diseases and designated orphanmedicines, and optional for other medicines which are highly innovative. Under the centralized procedure, a marketing application is submitted to theEuropean Medicines Agency where it will be evaluated by the Committee for Medicinal Products for Human Use and a favorable opinion typically results inthe grant by the European Commission of a single marketing authorization that is valid for all European Union member states within 67 days of receipt of theopinion. The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period. The decentralized procedureprovides for approval by one or more “concerned” member states based on an assessment of an application performed by one member state, known as the“reference” member state. Under the decentralized approval procedure, an applicant submits an application, or dossier, and related materials to the referencemember state and concerned member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days afterreceipt of a valid application. Within 90 days of receiving the reference member state’s assessment report, each concerned member state must decide whetherto approve the assessment report and related materials. If a member state does not recognize the marketing authorization, the disputed points are eventuallyreferred to the European Commission, whose decision is binding on all member states.Pharmaceutical Coverage and ReimbursementSales of our products will depend, in part, on the availability and extent of coverage and reimbursement by third-party payors, such as governmenthealth programs, including Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third-party payors are increasinglychallenging the price and limiting the coverage and reimbursement amounts for medical products and services.The containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort.The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, includingprice controls, restrictions on coverage and reimbursement, and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue andresults. Decreases in third-party reimbursement for our product candidates or a decision by a third-party payor to not cover our product candidates couldreduce physician usage of the product candidate and have a material adverse effect on our sales, results of operations and financial condition.In the U.S., the federal government provides health insurance for people who are 65 or older, and certain people with disabilities or certainconditions irrespective of their age, through the Medicare program, which is administered by the Centers for Medicare & Medicaid Services, or CMS.Coverage and reimbursement for products and services under Medicare are determined in accordance with the Social Security Act and pursuant to regulationspromulgated by CMS, as well as the agency’s subregulatory coverage and reimbursement guidance and determinations.27 Medicaid is a health insurance program for low-income children, families, pregnant women, and people with disabilities that is jointly funded bythe federal and state governments, but administered by the states. In general, state Medicaid programs are required to cover drugs and biologicals ofmanufacturers that have entered into a Medicaid Drug Rebate Agreement, although such drugs and biologicals may be subject to prior authorization or otherutilization controls.The U.S. Congress and state legislatures from time to time propose and adopt initiatives aimed at cost containment, which could impact our abilityto sell our products profitably. Recently, a number of legislative reform measures have been passed to contain healthcare reimbursement for pharmaceuticals,including drugs such as our product candidates. For example, the federal Patient Protection and Affordable Care Act, as amended by the Health Care andEducation Reconciliation Act of 2010, known collectively as ACA, among other things, establishes annual fees to be paid by manufacturers for certainbranded prescription drugs, requires manufacturers to participate in a discount program for certain outpatient drugs under Medicare Part D, increasesmanufacturer rebate liabilities under the Medicaid Drug Rebate Program for outpatient drugs dispensed to Medicaid recipients, addresses a new methodologyby which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are line extensions of current drugs, andexpands oversight and support for the federal government’s comparative effectiveness research of services and products. In addition, other legislativechanges have been proposed and adopted since the ACA was enacted. We cannot predict the full impact of ACA or future reform measures on our operations.In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirementsgoverning drug pricing vary widely from country to country. For example, in the EU, the sole legal instrument at the EU level governing the pricing andreimbursement of medicinal products is Council Directive 89/105/EEC, or the Price Transparency Directive. The aim of this Directive is to ensure that pricingand reimbursement mechanisms established in the EU Member States are transparent and objective, do not hinder the free movement of and trade inmedicinal products in the EU, and do not hinder, prevent or distort competition on the market. The Price Transparency Directive does not provide anyguidance concerning the specific criteria on the basis of which pricing and reimbursement decisions are to be made in individual EU Member States, nor doesit have any direct consequence for pricing or reimbursement levels in individual EU Member States. The EU Member States are free to restrict the range ofmedicinal products for which their national health insurance systems provide reimbursement, and to control the prices and/or reimbursement levels ofmedicinal products for human use. An EU Member State may approve a specific price or level of reimbursement for the medicinal product, or alternativelyadopt a system of direct or indirect controls on the profitability of the company responsible for placing the medicinal product on the market, includingvolume-based arrangements, caps and reference pricing mechanisms.Health Technology Assessment, or HTA, of medicinal products is becoming an increasingly common part of the pricing and reimbursementprocedures in some EU Member States, including the United Kingdom, France, Germany, Ireland, Italy and Sweden. The HTA process in the EU MemberStates is governed by the national laws of these countries. HTA is the procedure according to which the assessment of the public health impact, therapeuticimpact, and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the individual country is conducted.HTA generally focuses on the clinical efficacy and effectiveness, safety, cost, and cost-effectiveness of individual medicinal products as well as theirpotential implications for the healthcare system. Those elements of medicinal products are compared with other treatment options available on the market.The outcome of HTA regarding specific medicinal products will often influence the pricing and reimbursement status granted to these medicinal products bythe competent authorities of individual EU Member States. The extent to which pricing and reimbursement decisions are influenced by the HTA of thespecific medicinal product vary between EU Member States. A negative HTA of one of our products by a leading and recognized HTA body, such as theNational Institute for Health and Care Excellence in the United Kingdom, could not only undermine our ability to obtain reimbursement for such product inthe EU Member State in which such negative assessment was issued, but also in other EU Member States. For example, EU Member States that have not yetdeveloped HTA mechanisms could rely to some extent on the HTA performed in countries with a developed HTA framework, such as the United Kingdom,when adopting decisions concerning the pricing and reimbursement of a specific medicinal product.Other Healthcare LawsAlthough we currently do not have any products on the market, if our drug candidates are approved and we begin commercialization, we may besubject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which weconduct our business. Such laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims, privacy and security and physiciansunshine laws and regulations. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, wemay be subject to penalties, including, without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations,exclusion from participation in federal and state healthcare programs and imprisonment, any of which could adversely affect our ability to operate ourbusiness and our financial results.28 Legal ProceedingsWe are not currently a party to any material legal proceedings.EmployeesAs of March 5, 2018, we had 78 full-time employees, 50 of whom were primarily engaged in research and development activities. A total of 24employees have an M.D. or Ph.D. degree. None of our employees is represented by a labor union and we consider our employee relations to be good.Available InformationWe file reports and other information with the Securities and Exchange Commission as required by the Securities Exchange Act of 1934, asamended, which we refer to as the Exchange Act. You can find, copy and inspect information we file at the SEC’s Public Reference Room, which is located at100 F Street, N.E., Room 1580, Washington, DC 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the SEC’s Public Reference Room. You can review our electronically filed reports and otherinformation that we file with the SEC on the SEC’s web site at http://www.sec.gov.We were incorporated under the laws of the State of Delaware on July 7, 2006 as Tetraphase Pharmaceuticals, Inc. Our principal executive officesare located at 480 Arsenal Way, Watertown, Massachusetts, 02472, and our telephone number is (617) 715-3600. Our Internet website ishttp://www.tphase.com. We make available free of charge through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, currentreports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act. We make these reportsavailable through our website as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC. In addition,we regularly use our website to post information regarding our business, product development programs and governance, and we encourage investors to useour website, particularly the information in the section entitled “Investor Relations,” as a source of information about us.The foregoing references to our website are not intended to, nor shall they be deemed to, incorporate information on our website into this AnnualReport on Form 10-K by reference.Item 1A.Risk FactorsOur business faces many risks. We caution you that the following important factors, among others, could cause our actual results to differmaterially from those expressed in forward-looking statements made by us or on our behalf in this Annual Report on Form 10-K and other filings with theSEC, press releases, communications with investors and oral statements. The risks described below may not be the only risks we face. Additional risks we donot yet know of or which we currently believe are immaterial may also impair our business operations. If any of the events or circumstances described in thefollowing risks actually occurs, our business, financial condition or results of operations could suffer and the trading price of our common stock coulddecline.Risks Relating to Our Financial Position and Need for Additional CapitalWe have incurred significant losses since inception, expect to incur losses for at least the next several years and may never achieve or sustainprofitability.We have incurred annual net operating losses in every year since our inception. Our net loss was $114.8 million for the year ended December 31,2017, $77.5 million for the year ended December 31, 2016 and $83.2 million for the year ended December 31, 2015. As of December 31, 2017, we had anaccumulated deficit of $461.9 million. We have not generated any product revenues and have financed our operations primarily through the public offeringand private placements of our equity securities, debt financings and revenue from U.S. government grants and contract awards. We have not completeddevelopment of any product candidate and have devoted substantially all of our financial resources and efforts to research and development, includingpreclinical and clinical development.We expect to continue to incur significant expenses and operating losses for at least the next several years. The net losses we incur may fluctuatesignificantly from quarter to quarter. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equityand working capital.29 We expect that our expenses will decrease in 2018 compared with 2017, as the completion of the IGNITE clinical program will offset cost increasesassociated with conducting pre-commercialization activities for eravacycline and, if approved, the launch of eravacycline. If we obtain marketing approvalfor eravacycline, we do expect to incur significant sales, marketing, distribution and outsourced manufacturing expenses. More specifically, if we obtainmarketing approval of eravacycline, we expect to incur significant sales, marketing, and distribution and outsourced manufacturing expenses. Our expensesmay increase if and as we: •maintain, expand and protect our intellectual property portfolio; •in-license or acquire other products and technologies; and •add operational, financial and management information systems and personnel, including personnel to support our product developmentand planned future commercialization efforts.Our ability to become and remain profitable depends on our ability to generate revenue. We do not expect to generate significant revenue unlessand until we obtain marketing approval for, and commercialize, eravacycline, which will require us to be successful in a range of challenging activities,including: •obtaining marketing approval for eravacycline; •protecting and maintaining our rights to our intellectual property portfolio related to eravacycline; •contracting for the manufacture of commercial quantities of eravacycline; and •establishing sales, marketing and distribution capabilities to effectively market and sell eravacycline.Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict thetiming or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses could increase if we are required by the U.S.Food and Drug Administration, or FDA, or the European Medicines Agency, or EMA, to perform clinical trials and non-clinical studies in addition to thosethat have been conducted or are currently expected, or if there are any delays in the development of any of our product candidates or the manufacture of anyof our product candidates.We may be unable to develop and commercialize eravacycline or any other product candidate and, even if we do, may never achieve profitability.Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remainprofitable would decrease the value of our company and could impair our ability to raise capital, expand our business or continue our operations. A declinein the value of our company could cause our stockholders to lose all or part of their investment in us.We expect that we will need additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminateour product development programs or commercialization efforts.Developing pharmaceutical products, including conducting preclinical studies, clinical trials and manufacturing activities, is a time-consuming,expensive and uncertain process that takes years to complete. We expect that our expenses will decrease in 2018 compared with 2017, as the completion ofthe IGNITE clinical program will offset cost increases associated with conducting pre-commercialization activities for eravacycline and, if approved, thelaunch of eravacycline. If we obtain marketing approval for eravacycline, we do expect to incur significant sales, marketing, distribution and outsourcedmanufacturing expenses.We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditures, potentially obtainregulatory approvals in the United States and Europe for IV eravacycline for the treatment of complicated intra-abdominal infections, or cIAI, and to performpre-commercialization activities and commercially launch eravacycline for the treatment of cIAI, if approved. It is also possible that we will not achieve theprogress that we expect with respect to eravacycline because the actual costs and timing of regulatory activities are difficult to predict and are subject tosubstantial risks and delays. As a result, we will be required to obtain further funding through public or private equity offerings, debt financings,collaborations and licensing arrangements or other sources.These estimates are based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currentlyexpect. Changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more moneythan currently expected because of circumstances beyond our control.Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would havea negative impact on our financial condition and our ability to pursue our business strategy.30 Our future funding requirements, both short-term and long-term, will depend on many factors, including: •the outcome, timing and costs of seeking regulatory approvals generally; •the costs of commercialization activities for eravacycline and other product candidates if we receive marketing approval, including thetiming and costs of establishing product sales, marketing, distribution and manufacturing capabilities; •the timing and costs of manufacturing activities in anticipation of commercial launch of eravacycline; •the timing and costs of our ongoing clinical trials for our product candidates; •the amount of funding that we receive under our subcontracts awarded to us by our collaborator CUBRC, Inc., or CUBRC, under itsgovernment contracts with the Biomedical Advanced Research and Development Authority, or BARDA, and with the National Institutes ofHealth’s, or NIH’s, National Institute of Allergy and Infectious Diseases, or NIAID, and under our subaward from CUBRC under its grantfrom NIAID, and our award from the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator, or CARB-X, and theactivities funded under these contracts; •the number and characteristics of product candidates that we pursue; •the timing and costs of developing eravacycline for additional indications; •revenue received from commercial sales of eravacycline, subject to receipt of marketing approval; •the terms and timing of any future collaborations, partnerships, licensing, marketing, distribution or other arrangements that we mayestablish; •the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing,prosecution, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments andpatent prosecution fees that we are obligated to pay to Harvard pursuant to our license agreement; •the costs of maintaining and protecting our intellectual property rights and defending against intellectual property related claims; and •the extent to which we in-license or acquire other products and technologies.Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologiesor product candidates.Currently, our only external source of funds is funding under subcontracts awarded to us by CUBRC pursuant to government contracts fromBARDA and NIAID, and an award from CARB-X. Although the BARDA contract and our subcontract with CUBRC under the BARDA contract have termswhich currently expire on September 30, 2018, BARDA is entitled to terminate the project for convenience at any time, and is not obligated to providecontinued funding beyond current-year amounts from congressionally approved annual appropriations. To the extent that BARDA ceases to provide fundingof the program to CUBRC, CUBRC has the right to cease providing funding to us. Committed funding from CUBRC under our BARDA subcontract is for upto $41.9 million from the initial contract date through September 30, 2018, of which $35.7 million had been received through December 31, 2017.Similarly, although the NIAID contract and our subcontract with CUBRC under the NIAID contract have terms which currently expire on March31, 2019, NIAID is entitled to terminate the project for convenience at any time, and is not obligated to provide continued funding beyond March 31, 2019.To the extent NIAID ceases to provide funding of the programs to CUBRC, CUBRC has the right to cease providing funding to us. Committed funding fromCUBRC under our subcontract with respect to the NIAID contract is for up to $16.9 million, of which $13.2 million had been received through December 31,2017.Similarly, although the CARB-X Award has a term which currently expires on December 31, 2018, CARB-X is entitled to terminate the project forconvenience at any time. Committed funding from the CARB-X Award is for up to $4.0 million from the initial award date through December 31, 2018, ofwhich $44,000 had been received through December 31, 2017.As a result, unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cashneeds through public or private equity offerings, debt financings or collaborations and licensing arrangements. In addition, we may seek additional capitaldue to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.31 To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownershipinterest of our stockholders may be materially diluted, and the terms of these securities could include liquidation or other preferences and anti-dilutionprotections that could adversely affect their rights. In addition, debt financing, if available, would result in increased fixed payment obligations and mayinvolve agreements that include restrictive covenants that limit our ability to take specific corporate actions, such as incurring additional debt, merging withor acquiring another entity, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. In addition,securing additional financing would require a substantial amount of time and attention from our management and may divert a disproportionate amount oftheir attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development of our product candidates.If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, wemay have to relinquish valuable rights to our technologies, future revenue streams or product candidates or to grant licenses on terms that may not befavorable to us.We have a limited operating history and no history of commercializing pharmaceutical products, which may make it difficult to evaluate theprospects for our future viability.We began operations in the third quarter of 2006. Our operations to date have been limited to financing and staffing our company, developing ourtechnology and developing eravacycline and other product candidates. We have not yet demonstrated an ability to obtain marketing approval, manufacture acommercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful productcommercialization. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operatinghistory or a history of successfully developing and commercializing pharmaceutical products.Risks Related to Product Development and CommercializationWe are dependent on the success of our lead product candidate, eravacycline, and our ability to develop, obtain marketing approval for andsuccessfully commercialize eravacycline. If we are unable to develop, obtain marketing approval for and successfully commercialize eravacycline orexperience significant delays in doing so, our business could be materially harmed.We currently have no products approved for sale and have invested a significant portion of our efforts and financial resources in the developmentof eravacycline for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections. Specifically, we were developing eravacylinefor the treatment of both cIAI and cUTI. We have conducted four phase 3 clinical trials – IGNITE1 and IGNITE4 for the treatment of cIAI and IGNITE2 andIGNITE3 for the treatment of cUTI. We submitted an NDA to the FDA for IV eravacycline for the treatment of cIAI and a marketing authorization application,or MAA, to the EMA for IV eravacycline for the treatment of cIAI. In February 2018, we announced top-line data from IGNITE3, our phase 3 clinical trialevaluating the safety and efficacy of eravacycline with IV administration for the treatment of cUTI. IGNITE3 failed to meet the co-primary efficacy endpoints.As a result, we are no longer developing eravacycline for the treatment of cUTI.Our prospects are substantially dependent on our ability to develop, obtain marketing approval for and successfully commercialize eravacyclinefor the treatment of cIAI. The success of eravacycline will depend on several factors, including the following: •successful outcome of discussions with regulatory agencies regarding our planned marketing applications; •receipt of marketing approvals from applicable regulatory authorities; •establishment of arrangements with third-party manufacturers to obtain manufacturing supply; •obtainment and maintenance of patent and trade secret protection and regulatory exclusivity; •protection of our rights in our intellectual property portfolio; •successful manufacturing of commercial scale batches of eravacycline; •commercial launch of eravacycline, if and when approved, whether alone or in collaboration with others; •acceptance of eravacycline, if and when approved, by patients, the medical community and third-party payors; •favorable results of any additional clinical trials involving eravacycline that we may conduct; •competition with other therapies; and •a continued acceptable safety profile of eravacycline following approval.32 If we are unable to develop, receive marketing approval for, or successfully commercialize eravacycline for the treatment of cIAI, or experiencedelays as a result of any of these matters or otherwise, our business could be materially harmed.If clinical trials of eravacycline or of any other product candidate that we advance to clinical trials fail to demonstrate safety and efficacy to thesatisfaction of the FDA or comparable foreign regulatory authorities or do not otherwise produce favorable results, we may incur additional costs orexperience delays in completing, or ultimately be unable to complete, the development and commercialization of eravacycline or any other productcandidate.We are not permitted to commercialize, market, promote, or sell any product candidate in the United States without obtaining marketing approvalfrom the FDA or in other countries without obtaining approvals from comparable foreign regulatory authorities, such as the EMA, and we may never receivesuch approvals. We must complete extensive preclinical development and clinical trials to demonstrate the safety and efficacy of our product candidates inhumans before we will be able to obtain these approvals. Clinical testing is expensive, difficult to design and implement, can take many years to completeand is inherently uncertain as to outcome. We have not previously submitted an NDA to the FDA, an MAA to the EMA or similar drug approval filings tocomparable foreign regulatory authorities for any of our product candidates.The clinical development of eravacycline and other product candidates is susceptible to the risk of failure inherent at any stage of drugdevelopment, including failure to achieve efficacy in a trial or across a broad population of patients, the occurrence of severe adverse events, failure tocomply with protocols or applicable regulatory requirements, and determination by the FDA or any comparable foreign regulatory authority that a drugproduct is not approvable. The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interimresults of a clinical trial do not necessarily predict final results. For example, although eravacycline achieved favorable results in the lead-in part of IGNITE2,the pivotal portion of IGNITE2 did not meet the primary endpoint of statistical non-inferiority compared to levofloxacin. In July 2017 we announcedpositive top line data from IGNITE4. Further, in the first quarter of 2018 we reported top-line data for our IGNITE3 phase 3 clinical trial evaluating the safetyand efficacy of eravacycline with IV administration for the treatment of cUTI. IGNITE3 failed to meet the co-primary efficacy endpoints of responder rate (acombination of clinical cure and microbiological success) in the microbiological intent-to-treat population at the end-of-IV treatment visit and at the test-of-cure visit, which were evaluated using a 10% non-inferiority margin. We may fail to achieve success in any other future clinical trial of any other productcandidate.In addition, preclinical and clinical data are often susceptible to varying interpretations and analyses. Many companies that believed their productcandidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval for the product candidates.Even if we believe that the results of our clinical trials warrant marketing approval, the FDA or comparable foreign regulatory authorities may disagree andmay not grant marketing approval of our product candidates.In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due tonumerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, adherence to thedosing regimen and other trial protocols and the rate of dropout among clinical trial participants. In addition, in the case of our clinical trials, results maydiffer on the basis of the type of bacteria with which patients are infected. We cannot be certain that other clinical trials that we may conduct will demonstrateconsistent or adequate efficacy and safety to obtain regulatory approval to market our product candidates.We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent us from obtaining regulatoryapproval for eravacycline or any of our other product candidates, including: •clinical trials of our product candidates may produce unfavorable or inconclusive results; •we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; •the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinicaltrials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; •our third-party contractors, including those manufacturing our product candidates or conducting clinical trials on our behalf, may fail tocomply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; •regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial ata prospective trial site;33 •we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participantsare being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of the product candidate; •regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons,including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks,undesirable side effects or other unexpected characteristics of the product candidate; •the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-partymanufacturers with which we enter into agreement for clinical and commercial supplies; •the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may beinsufficient or inadequate; and •the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a mannerrendering our clinical data insufficient for approval.If we are required to conduct additional clinical trials or other testing of eravacycline, or any other product candidate that we develop beyond thetrials and testing that we contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of thesetrials or tests are unfavorable or are only modestly favorable or if there are safety concerns associated with eravacycline or our other product candidates, wemay: •be delayed in obtaining marketing approval for our product candidates; •not obtain marketing approval at all; •obtain approval for indications or patient populations that are not as broad as intended or desired; •obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxedwarnings; •be subject to additional post-marketing testing or other requirements; or •remove the product from the market after obtaining marketing approval.Our product development costs will also increase if we experience delays in testing or marketing approvals and we may be required to obtainadditional funds to complete clinical trials. We cannot be certain that our clinical trials will begin as planned or be completed on schedule, if at all, or that wewill not need to restructure our trials after they have begun. Significant clinical trial delays also could shorten any periods during which we may have theexclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability tosuccessfully commercialize our product candidates, which may harm our business and results of operations. In addition, many of the factors that cause, or leadto, clinical trial delays may ultimately lead to the denial of regulatory approval of eravacycline or any other product candidate.If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could bedelayed or prevented.We may not be able to initiate or continue clinical trials for any other product candidate that we develop if we are unable to locate and enroll asufficient number of eligible patients to participate in clinical trials for such other product candidate as required by the FDA or comparable foreign regulatoryauthorities, such as the EMA. Patient enrollment is a significant factor in the timing of clinical trials, and is affected by many factors, including: •the size and nature of the patient population; •the severity of the disease under investigation; •the proximity of patients to clinical sites; •the eligibility criteria for the trial; •the design of the clinical trial; and •competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied inrelation to other available therapies, including any new drugs that may be approved for the indications we are investigating.34 Serious adverse events or undesirable side effects or other unexpected properties of eravacycline or any other product candidate may beidentified during development or after approval, if obtained, that could delay, prevent or cause the withdrawal of the product candidates’ regulatoryapproval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if obtained.Serious adverse events or undesirable side effects caused by, or other unexpected properties of, our product candidates could cause us, aninstitutional review board, or regulatory authorities to interrupt, delay or halt our clinical trials and could result in a more restrictive label, the imposition ofdistribution or use restrictions or the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities. If eravacycline or any ofour other product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need toabandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are lessprevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in clinical or earlier stage testinghave later been found to cause undesirable or unexpected side effects that prevented further development of the compound. In our clinical trials oferavacycline, some treatment-related adverse events have been reported. The most common treatment-related adverse events observed in clinical trials oferavacycline have been nausea and emesis. Additional adverse events, undesirable side effects or other unexpected properties of eravacycline or any of ourother product candidates could arise or become known either during clinical development or, if approved, after the approved product has been marketed. Ifsuch an event occurs during development, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could orderus to cease further development of, or deny approval of, eravacycline or our other product candidates. If such an event occurs after eravacycline or such otherproduct candidates are approved, a number of potentially significant negative consequences may result, including: •regulatory authorities may withdraw the approval of such product; •regulatory authorities may require additional warnings on the label or impose distribution or use restrictions; •regulatory authorities may require one or more postmarketing studies; •we may be required to create a medication guide outlining the risks of such side effects for distribution to patients; •we could be sued and held liable for harm caused to patients; and •our reputation may suffer.Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate, if approved, or couldsubstantially increase commercialization costs and expenses, which could delay or prevent us from generating revenues from the sale of our products andharm our business and results of operations.Even if eravacycline or any other product candidate that we develop receives marketing approval, it may fail to achieve the degree of marketacceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success and the market opportunityfor eravacycline or other product candidates may be smaller than we estimate.We have never commercialized a product candidate for any indication. Even if eravacycline or any other product candidates that we develop areapproved by the appropriate regulatory authorities for marketing and sale, they may nonetheless fail to gain sufficient market acceptance by physicians,patients, third-party payors and others in the medical community. Efforts to educate the medical community and third-party payors on the benefits of ourproduct candidates may require significant resources and may not be successful. If physicians, rightly or wrongly, associate our product candidates withantibiotic resistance issues of other products of the same class, physicians might not prescribe our product candidates for treating a broad range of infections.If eravacycline or any other product candidate that we develop does not achieve an adequate level of market acceptance, we may not generate significantproduct revenues and, therefore, we may not become profitable. The degree of market acceptance of eravacycline, if approved, or any other product candidatethat is approved for commercial sale, will depend on a number of factors, including, but not limited to: •the efficacy and safety of the product; •the potential advantages of the product compared to alternative treatments; •the prevalence and severity of any side effects; •the clinical indications for which the product is approved; •limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved riskevaluation and mitigation strategy; •our ability to offer the product for sale at competitive prices;35 •the product’s convenience and ease of administration compared to alternative treatments; •the willingness of the target patient population to try, and of physicians to prescribe, the product; •whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy forparticular infections; •the strength of marketing and distribution support; •the approval of other new products for the same indications; •the timing of market introduction of our approved products as well as competitive products; •the cost of treatment in relation to alternative treatments; •availability and level of coverage and amount of reimbursement from government payors, managed care plans and other third-party payors; •the effectiveness of our sales and marketing efforts; •adverse publicity about the product or favorable publicity about competitive products; and •the development of resistance by bacterial strains to the product.In addition, the potential market opportunity for eravacycline is difficult to estimate. Our estimates of the potential market opportunity arepredicated on several key assumptions such as industry knowledge, third-party research reports and other surveys. While we believe that our internalassumptions are reasonable, these assumptions involve the exercise of significant judgment on the part of our management, are inherently uncertain and thereasonableness of these assumptions has not been assessed by an independent source. If any of the assumptions proves to be inaccurate, then the actualmarket for eravacycline could be smaller than our estimates of the potential market opportunity. If the actual market for eravacycline is smaller than weexpect, or if the product fails to achieve an adequate level of acceptance by physicians, health care payors and patients, our product revenue may be limitedand it may be more difficult for us to achieve or maintain profitability.If we are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with thirdparties, we may not be successful in commercializing eravacycline or such other product candidates that we develop if and when eravacycline or any otherproduct candidates are approved.We currently do not have a sales, marketing or distribution infrastructure and as a company have little experience in the sales, marketing, ordistribution of pharmaceutical products. To achieve commercial success for any approved product, we must either develop a sales and marketingorganization or outsource these functions to third parties. We intend to develop and build a commercial organization in the United States and recruitexperienced sales, marketing and distribution professionals, which will require substantial resources, will be time-consuming and could delay any productlaunch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and distribution capabilities is delayed ordoes not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization costs. This may be costly, and our investmentwould be lost if we cannot retain or reposition our sales and marketing personnel. In addition, we may not be able to hire a sales force in the United States thatis sufficient in size or has adequate expertise in the medical markets we intend to target. If we are unable to establish a sales force and marketing anddistribution capabilities, our operating results may be adversely affected.Factors that may inhibit our efforts to commercialize our products on our own include: •our inability to recruit and retain adequate numbers of effective sales and marketing personnel; •the ability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products; •the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative tocompanies with more extensive product lines; and •unforeseen costs and expenses associated with creating an independent sales and marketing organization.36 We plan to commercialize eravacycline outside the United States with the assistance of collaborators. As a result of entering into arrangements withthird parties to perform sales, marketing and distribution services, our product revenues or the profitability of these product revenues to us may be lower thanif we were to directly market and sell products in those markets. As an example, if Everest Medicines is unsuccessful in developing eravacycline in theChinese market, we may not receive any future milestone or royalty payments. Furthermore, we may be unsuccessful in entering into the necessaryarrangements with third parties or may be unable to do so on terms that are favorable to us. In addition, we likely will have little control over such thirdparties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively.If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not besuccessful in commercializing our product candidates.We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suffer if we fail tocompete effectively.The development and commercialization of new drug products is highly competitive. We face competition from major pharmaceutical companies,specialty pharmaceutical companies and biotechnology companies worldwide with respect to eravacycline and our other product candidates that we mayseek to develop or commercialize in the future. There are a number of large pharmaceutical and biotechnology companies that currently market and sellproducts or are pursuing the development of product candidates for the treatment of multidrug-resistant infections. Potential competitors also includeacademic institutions, government agencies and other public and private research organizations. Our competitors may succeed in developing, acquiring orlicensing technologies and drug products that are more effective or less costly than any product candidates that we are currently developing or that we maydevelop, which could render our product candidates obsolete or noncompetitive.There are a variety of available therapies marketed for the treatment of resistant or even multidrug-resistant infections that we would expect wouldcompete with eravacycline, including meropenem/vaborbactam, which is being marketed by Melinta Therapeutics as Vabomere, ceftazidime/avibactam,which is marketed by Allergan, Inc. as Avycaz; meropenem, which is marketed by AstraZeneca as Merrem; ceftolozane/tazobactam, imipenem/cilastatin, andertapenem which are marketed by Merck & Co., Inc. as Zerbaxa, Primaxin and Invanz, respectively; tigecycline, which is marketed by Pfizer, Inc. as Tygacil;and piperacillin/tazobactam, which is marketed by Pfizer, Inc. as Zosyn. Many of the available therapies are well established and widely accepted byphysicians, patients and third-party payors. Insurers and other third-party payors may also encourage the use of generic products. If eravacycline is approved,it may be priced at a significant premium over other competitive products. This may make it difficult for eravacycline to compete with these products.There are also a number of products currently in phase 3 development by third parties to treat multidrug-resistant infections, including plazomicin,which is being developed by Achaogen, Inc., imipenem/relebactam, which is being developed by Merck & Co., Inc., and cefiderocol, which is beingdeveloped by Shionogi. Some of these companies may obtain marketing approval from the FDA or comparable foreign regulatory authorities for theirproduct candidates more rapidly than we do, which could result in our competitors establishing a strong market position before we are able to enter themarket.Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinicaltesting, conducting clinical trials and obtaining regulatory approvals than we do. Mergers and acquisitions in the pharmaceutical and biotechnologyindustries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early stage companies mayalso prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties competewith us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, aswell as in acquiring technologies complementary to, or necessary for, our programs.In July 2012, the Food and Drug Administration Safety and Innovation Act was passed, which included the GAIN Act. The GAIN Act is intended toprovide incentives for the development of new, qualified infectious disease products. These incentives may result in more competition in the market for newantibiotics, and may cause pharmaceutical and biotechnology companies with more resources than we have to shift their efforts towards the development ofproducts that could be competitive with eravacycline and our other product candidates.37 Even if we are able to commercialize eravacycline or any other product candidate that we develop, the product may become subject tounfavorable pricing regulations, third-party payor coverage and reimbursement policies or healthcare reform initiatives that could harm our business.Marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Some countries requireapproval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product approval isgranted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval isgranted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay ourcommercial launch of the product, possibly for lengthy time periods, which may negatively impact the revenues we are able to generate from the sale of theproduct in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our productcandidates obtain marketing approval.Our ability to commercialize eravacycline or any other product candidate will depend in part on the extent to which coverage and reimbursementfor these products and related treatments will be available from government authorities, private health insurers, health maintenance organizations and otherthird-party payors. The healthcare industry is acutely focused on cost containment, both in the United States and elsewhere. As a result, governmentauthorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications, whichcould affect our ability to sell our product candidates profitably.There may also be delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than theindications for which the drug is approved by the FDA or comparable foreign regulatory authorities. Increasingly, third-party payors are requiring higherlevels of evidence of the benefits and clinical outcomes of new technologies and are challenging the prices charged. Moreover, obtaining coverage does notimply that any drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution.Reimbursement rates may vary, by way of example, according to the use of the drug and the clinical setting in which it is used. Reimbursement rates may alsobe based in part on existing reimbursement amounts for lower cost drugs or may be bundled into the payments for other services.We cannot be sure that coverage will be available for eravacycline or any other product candidate that we commercialize and, if available, that thereimbursement rates will be adequate. Further, the net reimbursement for drug products may be subject to additional reductions if there are changes to lawsthat presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. An inability to promptly obtaincoverage and adequate payment rates from both government-funded and private payors for any approved products that we develop could have a materialadverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization of anyproducts that we may develop.We face an inherent risk of product liability claims as a result of the clinical testing of our product candidates despite obtaining appropriateinformed consents from our clinical trial participants. We will face an even greater risk if we commercially sell eravacycline or any other product candidatethat we develop. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinicaltesting, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failureto warn of dangers inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protectionacts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercializationof our product candidates. Regardless of the merits or eventual outcome, liability claims may result in: •reduced resources of our management to pursue our business strategy; •decreased demand for our product candidates or products that we may develop; •injury to our reputation and significant negative media attention; •withdrawal of clinical trial participants; •initiation of investigations by regulators; •product recalls, withdrawals or labeling, marketing or promotional restrictions; •significant costs to defend resulting litigation; •substantial monetary awards to trial participants or patients;38 •loss of revenue; and •the inability to commercialize any products that we may develop.Although we maintain general liability insurance of $6 million in the aggregate and clinical trial liability insurance of $6 million in the aggregatefor all product candidates, this insurance may not fully cover potential liabilities that we may incur. The cost of any product liability litigation or otherproceeding, even if resolved in our favor, could be substantial. We will need to increase our insurance coverage if and when we begin selling eravacycline orany other product candidate that receives marketing approval. In addition, insurance coverage is becoming increasingly expensive. If we are unable to obtainor maintain sufficient insurance coverage at an acceptable cost or to otherwise protect against potential product liability claims, it could prevent or inhibitthe development and commercial production and sale of our product candidates, which could adversely affect our business, financial condition, results ofoperations and prospects.If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs thatcould have a material adverse effect on our business.We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and thehandling, use, storage, treatment and disposal of hazardous materials and wastes. From time to time and in the future, our operations may involve the use ofhazardous and flammable materials, including chemicals and biological materials, and may also produce hazardous waste products. Even if we contract withthird parties for the disposal of these materials and wastes, we cannot completely eliminate the risk of contamination or injury resulting from these materials.In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liabilitycould exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws andregulations.We maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from theuse of hazardous materials, but this insurance may not provide adequate coverage against potential liabilities. However, we do not maintain insurance forenvironmental liability or toxic tort claims that may be asserted against us.In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. Currentor future environmental laws and regulations may impair our research, development or production efforts, which could adversely affect our business, financialcondition, results of operations or prospects. In addition, failure to comply with these laws and regulations may result in substantial fines, penalties or othersanctions.Our research and development efforts may not result in additional drug candidates being discovered on anticipated timelines, which could limitour ability to generate revenues.Some of our research and development programs are at preclinical stages. Additional drug candidates that we may develop or acquire will requiresignificant commitment of resources. We cannot predict whether our research will lead to the discovery and development of any additional drug candidatesthat could generate revenues for us.Risks Related to Our Dependence on Third PartiesWe expect to depend on collaborations with third parties for the development and commercialization of some of our product candidates. Ourprospects with respect to those product candidates will depend in part on the success of those collaborations.Although we expect to commercialize eravacycline ourselves in the United States, we intend to seek to commercialize eravacycline outside theUnited States through collaboration arrangements. For instance, in February 2018, we entered into a license agreement with Everest Medicines Limitedwhereby we granted Everest Medicines an exclusive license to develop and commercialize eravacycline for the treatment of complicated intra-abdominalinfections and other indications, in mainland China and several other Asian territories and countries. In addition, we may seek third-party collaborators fordevelopment and commercialization of other product candidates. Our likely collaborators for any marketing, distribution, development, licensing or broadercollaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnologycompanies. We are not currently party to any such arrangements.We may derive revenue from research and development fees, license fees, milestone payments and royalties under any collaborative arrangementinto which we enter. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform thefunctions assigned to them in these arrangements. In addition, our collaborators39 may have the right to abandon research or development projects and terminate applicable agreements, including funding obligations, prior to or upon theexpiration of the agreed upon terms. As a result, we can expect to relinquish some or all of the control over the future success of a product candidate that welicense to a third party.Collaborations involving our product candidates, such as our license arrangement with Everest Medicines, may pose a number of risks, includingthe following: •collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; •collaborators may not perform their obligations as expected or in compliance with applicable regulatory requirements; •collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renewdevelopment or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or availablefunding, or external factors, such as an acquisition, that divert resources or create competing priorities; •collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a productcandidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; •product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own productcandidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; •a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing anddistribution of such product or products; •disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course ofdevelopment, might cause delays or termination of the research, development or commercialization of product candidates, might lead toadditional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; •collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way asto invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potentiallitigation; •collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and •collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development orcommercialization of the applicable product candidates.Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If acollaborator of ours is involved in a business combination, it could decide to delay, diminish or terminate the development or commercialization of anyproduct candidate licensed to it by us.We may have to alter our development and commercialization plans if we are not able to establish collaborations.We will require additional funds to complete the development and potential commercialization of eravacycline and our other product candidates.For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potentialcommercialization of those product candidates. For example, we intend to utilize a variety of types of collaboration arrangements for commercialization oferavacycline outside the United States. Our ability to enter into any such collaboration may be significantly delayed, or the terms on which we enter intocollaborations may be adversely affected, due to the unfavorable results of IGNITE3.We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend,among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and theproposed collaborator’s evaluation of a number of factors. Those factors may include: •the design or results of clinical trials, such as the negative results of our clinical trials of eravacycline for the treatment of cUTI; •the likelihood of approval by the FDA or comparable foreign regulatory authorities;40 •the potential market for the subject product candidate; •the costs and complexities of manufacturing and delivering such product candidate to patients; •the potential for competing products; •our patent position protecting the product candidate, including any uncertainty with respect to our ownership of our technology or ourlicensor’s ownership of technology we license from them, which can exist if there is a challenge to such ownership without regard to themerits of the challenge; •the need to seek licenses or sub-licenses to third-party intellectual property; and •industry and market conditions generally.The collaborator may also consider alternative product candidates or technologies for similar indications that may be available for collaborationand whether such collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under future licenseagreements from entering into agreements on certain terms with potential collaborators. In addition, there have been a significant number of recent businesscombinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators.If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail thedevelopment of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potentialcommercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercializationactivities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additionalexpertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not havesufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our productcandidates or bring them to market and our business may be materially and adversely affected.We rely on third parties to conduct our clinical trials. If they do not perform satisfactorily, our business may be materially harmed.We do not independently conduct clinical trials of eravacycline. We rely on third parties, such as contract research organizations, clinical datamanagement organizations, medical institutions and clinical investigators, to conduct our clinical trials. Any of these third parties may terminate theirengagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities.Our reliance on these third parties for clinical development activities limits our control over these activities but we remain responsible for ensuringthat each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards. For example, notwithstanding theobligations of a contract research organization for a trial of one of our product candidates, we remain responsible for ensuring that each of our clinical trials isconducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards,commonly referred to as current Good Clinical Practices, or cGCPs, for conducting, recording and reporting the results of clinical trials to assure that data andreported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. The FDA enforces these cGCPsthrough periodic inspections of trial sponsors, principal investigators, clinical trial sites and institutional review boards. If we or our third-party contractorsfail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to performadditional clinical trials before approving our product candidates, which would delay the regulatory approval process. We cannot be certain that, uponinspection, the FDA will determine that any of our clinical trials comply with cGCPs. We are also required to register clinical trials and post the results ofcompleted clinical trials on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adversepublicity and civil and criminal sanctions.Furthermore, the third parties conducting clinical trials on our behalf are not our employees, and except for remedies available to us under ouragreements with such contractors, we cannot control whether or not they devote sufficient time and resources to our ongoing development programs. Thesecontractors may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials orother drug development activities, which could impede their ability to devote appropriate time to our clinical programs. If these third parties do notsuccessfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our statedprotocols, we may not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates. If that occurs, we will not be ableto, or may be delayed in our efforts to, successfully commercialize our product candidates. In such an event, our financial results and the commercialprospects for eravacycline or any other product candidates that we seek to develop could be harmed, our costs could increase and our ability to generaterevenues could be delayed, impaired or foreclosed.41 We also rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributorscould delay clinical development or marketing approval of our product candidates or commercialization of any resulting products, producing additionallosses and depriving us of potential product revenue.We contract with third parties for the manufacture of eravacycline for clinical trials and expect to continue to do so in connection with thecommercialization of eravacycline and for clinical trials and commercialization of any other product candidates that we develop. This reliance on thirdparties increases the risk that we will not have sufficient quantities of our product candidates or such quantities at an acceptable cost, which could delay,prevent or impair our development or commercialization efforts.We do not currently have nor do we plan to build the internal infrastructure or capability to manufacture eravacycline or our other productcandidates for use in the conduct of our clinical trials or for commercial supply. We currently rely on and expect to continue to rely on third-party contractmanufacturers to manufacture clinical supplies of eravacycline and our other product candidates, and we have relied and expect to continue to rely on third-party contract manufacturers to manufacture registration batches and commercial quantities of any product candidate that we commercialize followingapproval for marketing by applicable regulatory authorities. Reliance on third-party manufacturers entails risks, including: •delays in the manufacture of our clinical drug supply, registration and validation batches and commercial supply if our third-partymanufacturers give greater priority to the supply of other products over our product candidates or otherwise do not satisfactorily performaccording to the terms of the agreement between us; •equipment malfunctions, power outages or other general disruptions experienced by our third-party manufacturers to their respectiveoperations and other general problems with a multi-step manufacturing process; •the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us; •the possible breach of the manufacturing agreement by the third-party; •the failure of the third-party manufacturer to comply with applicable regulatory requirements; and •the possible misappropriation of our proprietary information, including our trade secrets and know-how.We currently rely on a small number of third-party contract manufacturers for all of our required raw materials, drug substance and finished productfor our preclinical research and clinical trials. We do not have long-term agreements with any of these third parties. We also do not have any currentcontractual relationships for the manufacture of commercial supplies of any of our other product candidates. If any of our existing manufacturers shouldbecome unavailable to us for any reason, we may incur some delay in identifying or qualifying replacements.If any of our product candidates are approved by any regulatory agency, we intend to enter into agreements with third-party contract manufacturersfor the commercial production of those products. This process is difficult and time consuming and we may face competition for access to manufacturingfacilities as there are a limited number of contract manufacturers operating under cGMPs that are capable of manufacturing our product candidates.Consequently, we may not be able to reach agreement with third-party manufacturers on satisfactory terms, which could delay our commercialization.Third-party manufacturers are required to comply with cGMPs and similar regulatory requirements outside the United States. Facilities used by ourthird-party manufacturers must be inspected by the FDA after we submit an NDA and before potential approval of the product candidate. Similar regulationsapply to manufacturers of our product candidates for use or sale in foreign countries. We do not control the manufacturing process and are completelydependent on our third-party manufacturers for compliance with the applicable regulatory requirements for the manufacture of our product candidates. If ourmanufacturers cannot successfully manufacture material that conforms to the strict regulatory requirements of the FDA and any applicable foreign regulatoryauthority, they will not be able to secure the applicable approval for their manufacturing facilities. If these facilities are not approved for commercialmanufacture, we may need to find alternative manufacturing facilities, which could result in delays in obtaining approval for the applicable productcandidate as alternative qualified manufacturing facilities may not be available on a timely basis or at all. In addition, our manufacturers are subject toongoing periodic unannounced inspections by the FDA and corresponding state and foreign agencies for compliance with cGMPs and similar regulatoryrequirements. Failure by any of our manufacturers to comply with applicable cGMPs or other regulatory requirements could result in sanctions being imposedon us or the contract manufacturer, including fines, injunctions, civil penalties, delays, suspensions or withdrawals of approvals, operating restrictions,interruptions in supply and criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates and have amaterial adverse impact on our business, financial condition and results of operations.42 Our current and anticipated future dependence upon others for the manufacture of eravacycline and any other product candidate that we developmay adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitivebasis.If we fail to comply with our obligations in the agreements under which we in-license or acquire development or commercialization rights toproducts or technology from third parties, we could lose commercial rights that are important to our business.We are a party to a license agreement with Harvard that imposes, and we may enter into additional agreements, including license agreements, withother parties in the future that impose, diligence, development and commercialization timelines, milestone payment, royalty, insurance and other obligationson us. For instance, under our license agreement with Harvard, we are obligated to satisfy diligence requirements, including using commercially reasonableefforts to develop and commercialize licensed compounds and to implement a specified development plan, meeting specified development milestones andproviding an update on progress on an annual basis. If we fail to comply with these obligations, our counterparties may have the right to terminate theseagreements, in which event we might not be able to develop, manufacture or market any product that is covered by these agreements, which could materiallyadversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or eliminationof our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose ourrights under these agreements, including our rights to important intellectual property or technology.Risks Related to Our Intellectual PropertyIf we are unable to obtain and maintain sufficient patent protection for our technology or our product candidates, or if the scope of the patentprotection is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our abilityto successfully commercialize our technology and product candidates may be adversely affected.Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect toour proprietary chemistry technology and product candidates. If we do not adequately protect our intellectual property, competitors may be able to use ourtechnologies and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. To protect ourproprietary position, we file patent applications in the United States and abroad related to our novel technologies and product candidates that are importantto our business. The patent application and approval process is expensive and time consuming. We may not be able to file and prosecute all necessary ordesirable patent applications at a reasonable cost or in a timely manner. We may also fail to identify patentable aspects of our research and developmentbefore it is too late to obtain patent protection.Under our license agreement with Harvard, Harvard retains the right to prosecute and maintain specified Harvard patents and patent applications inthe field of tetracycline chemistry, which are exclusively licensed to us under the agreement. Moreover, if we license technology or product candidates fromthird parties in the future, those licensors may retain the right to prosecute, maintain and enforce the patent rights that they license to us with or without ourinvolvement. Because control of prosecution and maintenance rests with Harvard, and prosecution, maintenance and enforcement could rest with futurelicensors, we cannot be certain that these in-licensed patents and applications will be prosecuted, maintained and enforced in a manner consistent with thebest interests of our business. If Harvard fails to prosecute or maintain, or future licensors fail to prosecute, maintain or enforce, those patents necessary forany of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able toprevent competitors from making and selling competing products.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain. No consistent policy regarding the breadth ofclaims allowed in biotechnology and pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. In addition, thedetermination of patent rights with respect to pharmaceutical compounds and technologies commonly involves complex legal and factual questions, whichhas in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights arehighly uncertain. Furthermore, recent changes in patent laws in the United States, including the America Invents Act of 2011, may affect the scope, strengthand enforceability of our patent rights or the nature of proceedings which may be brought by us related to our patent rights.Our pending and future patent applications may not result in patents being issued that protect our technology or product candidates, in whole or inpart, or that effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of thepatent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.43 As a result of the America Invents Act of 2011, the United States transitioned to a first-inventor-to-file system in March 2013, under which,assuming the other requirements for patentability are met, the first inventor to file a patent application is entitled to the patent. However, as a result of the lagin the publication of patent applications following filing in the United States, we are not able to be certain upon filing that we are the first to file for patentprotection for any invention. Moreover, we may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark Office, orbecome involved in opposition, derivation, reexamination, inter partes review or interference proceedings, in the United States or elsewhere, challenging ourpatent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of or invalidateour patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us, or result inour inability to manufacture or commercialize products without infringing third-party patent rights.Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, preventcompetitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned orlicensed patents by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may seek to market genericversions of any approved products by submitting Abbreviated New Drug Applications to the FDA in which they claim that patents owned or licensed by usare invalid, unenforceable and/or not infringed. Alternatively, our competitors may seek approval to market their own products similar to or otherwisecompetitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patentinfringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid and/or unenforceable. Even if wehave valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our businessobjectives.The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may bechallenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patentclaims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializingsimilar or identical technology and products, or limit the duration of the patent protection of our technology and products. In addition, given the amount oftime required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortlyafter such candidates are commercialized.We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consumingand unsuccessful.Competitors may infringe our patents, trademarks, copyrights or other intellectual property, or those of our licensors. To counter infringement orunauthorized use, we may be required to file infringement claims, which can be expensive and time consuming and divert the time and attention of ourmanagement and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against usalleging that we infringe their patents. In addition, in a patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalidor unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, evenif the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other partyfrom using the invention at issue on the grounds that our patents do not cover the invention. An adverse outcome in a litigation or proceeding involving ourpatents could limit our ability to assert our patents against those parties or other competitors, and may curtail or preclude our ability to exclude third partiesfrom making and selling similar or competitive products. Any of these occurrences could adversely affect our competitive business position, businessprospects and financial condition. Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid orunenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we couldultimately be forced to cease use of such trademarks.In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of thesubstantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could becompromised by disclosure during litigation. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursuesuch infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of suchlitigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.44 If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent ordelay us from developing or commercializing our product candidates.Our commercial success depends, in part, on our ability to develop, manufacture, market and sell our product candidates and use our proprietarychemistry technology without infringing the intellectual property and other proprietary rights of third parties. Numerous third-party U.S. and non-U.S. issuedpatents and pending applications exist in the area of antibacterial treatment, including compounds, formulations, treatment methods and synthetic processesthat may be applied towards the synthesis of antibiotics. If any of their patents or patent applications cover our product candidates or technologies, we maynot be free to manufacture or market our product candidates as planned. We are aware of a third-party U.S. patent claiming pharmaceutical compositions oftetracyclines. The third-party U.S. patent could be asserted against us with respect to eravacycline. We believe we have defenses in the event that the thirdparty seeks to assert such patent against us, including the invalidity of the relevant claims of such patent. However, we may not be successful in assertingthese defenses, including proving invalidity, and could be found to infringe the third party’s patent, which would have a material adverse effect on us.There is a substantial amount of intellectual property litigation in the biotechnology and pharmaceutical industries, and we may become party to,or threatened with, litigation or other adversarial proceedings regarding intellectual property rights with respect to our technology or product candidates,including patent infringement litigation with respect to the third-party U.S. patent referred to above, and eravacycline. Other possible adversarial proceedingsinclude interference proceedings before the U.S. Patent and Trademark Office. Third parties may assert infringement claims against us based on existing orfuture intellectual property rights. The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance.The pharmaceutical and biotechnology industries have produced a significant number of patents, and it may not always be clear to industry participants,including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and theinterpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our product candidates, products or methodseither do not infringe the patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity isdifficult. For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validityenjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management andscientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. In addition, we may not havesufficient resources to bring these actions to a successful conclusion.If we are found to infringe a third-party’s intellectual property rights, such as the third-party U.S. patent referred to above, we could be ordered by acourt, to cease developing, manufacturing, using, selling or offering for sale the infringing product. Alternatively, we may conclude that we need to obtain alicense from such third-party in order to use the infringing technology and continue developing, manufacturing or marketing the infringing product orproduct candidate. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain alicense, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In addition, we could be found liable formonetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could preventus from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims thatwe have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.We may be subject to claims that we or our employees have misappropriated the intellectual property of a third-party, or claiming ownership ofwhat we regard as our own intellectual property.Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitorsor potential competitors. Although we try to ensure that our employees do not use the intellectual property and other proprietary information or know-how ofothers in their work for us, we may be subject to claims that we or these employees have used or disclosed such intellectual property or other proprietaryinformation. Litigation may be necessary to defend against these claims.In addition, while we typically require our employees, consultants and contractors who may be involved in the development of intellectualproperty to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who infact develops intellectual property that we regard as our own. Moreover, because we have licensed intellectual property from Harvard, we must rely onHarvard’s practices with regard to the assignment of intellectual property to it. To the extent we or Harvard have failed to obtain such assignments or suchassignments are breached, we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership ofwhat we regard as our intellectual property. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may losevaluable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result insubstantial costs and be a distraction to our management and scientific personnel.45 If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected and ourbusiness would be harmed.In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technologyand other proprietary information, in seeking to develop and maintain a competitive position. We seek to protect these trade secrets, in part, by entering intonon-disclosure and confidentiality agreements with parties who have access to them, such as our consultants, independent contractors, advisors, corporatecollaborators, outside scientific collaborators, contract manufacturers, suppliers and other third parties. We, as well as our licensors, also enter intoconfidentiality and invention or patent assignment agreements with employees and certain consultants. Any party with whom we or Harvard have executedsuch an agreement may breach that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtainadequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by acompetitor, we would have no right to prevent such third-party, or those to whom they communicate such technology or information, from using thattechnology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our businessand competitive position could be harmed.We have not yet completed registration of our trademarks. Failure to secure those registrations could adversely affect our business.Four trademark applications for TETRAPHASE PHARMACEUTICALS, our logo, and combinations of those have been allowed in the UnitedStates, meaning that we can perfect our registrations when we have commenced use in commerce. TETRAPHASE PHARMACEUTICALS is registered in nineother jurisdictions and pending in three others. If we do not secure registrations for our trademarks, we may encounter more difficulty in enforcing themagainst third parties than we otherwise would, which could adversely affect our business. We own pending trademark applications for two proposedproprietary names for the eravacycline product in the United States, but they have not yet been examined and could be rejected and opposed, andregistrations for the proposed proprietary product names may not be obtained, maintained or enforced. We do not yet own applications to register theproprietary product name outside the United States and the availability of the proposed names for registration and use in foreign jurisdictions is not known.In addition, in the United States Patent and Trademark Office and in comparable agencies in many foreign jurisdictions, third parties are given an opportunityto seek to cancel registered trademarks. Cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings.We have also obtained registration for our design work in two jurisdictions, and applications remain pending for those design marks in the United States andone other jurisdiction.In addition, any proprietary name we propose to use with eravacycline or any other product candidate in the United States must be approved by theFDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names,including an evaluation of potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may berequired to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademarklaws, not infringe the existing rights of third parties and be acceptable to the FDA.Risks Related to Regulatory Approval and Other Legal Compliance MattersIf we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize eravacyclineor any other product candidate that we develop, and our ability to generate revenue will be materially impaired.Our product candidates, including eravacycline, and the activities associated with their development and commercialization, including theirdesign, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, marketing, export, sale and distribution, aresubject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable foreign regulatory authorities, withregulations differing from country to country. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the productcandidate. We currently do not have any products approved for sale in any jurisdiction. We have only limited experience in filing and supporting theapplications necessary to gain marketing approvals and expect to rely on third-party contract research organizations to assist us in this process.46 We are not permitted to market our product candidates in the United States until we receive approval of an NDA from the FDA. We have notsubmitted an NDA for any of our product candidates. An NDA must include extensive preclinical and clinical data and supporting information to establishthe product candidate’s safety and efficacy for each desired indication. The NDA must also include significant information regarding the chemistry,manufacturing and controls for the product candidate. Obtaining approval of an NDA is a lengthy, expensive and uncertain process. The FDA review processtypically takes years to complete. The FDA has substantial discretion in the approval process and may refuse to accept for filing any application or maydecide that our data are insufficient for approval and require additional preclinical, clinical or other studies or additional information regarding chemistry,manufacturing and controls for the product candidate. Foreign regulatory authorities have differing requirements for approval of drug candidates with whichwe must comply prior to marketing. Obtaining marketing approval for marketing of a product candidate in one country does not ensure that we will be able toobtain marketing approval in other countries, but the failure to obtain marketing approval in one jurisdiction could negatively impact our ability to obtainmarketing approval in other jurisdictions. Delays in approvals or rejections of marketing applications in the United States or foreign countries may be basedupon many factors, including regulatory requests for additional analyses, reports, data and studies, regulatory questions regarding, or different interpretationsof, data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding productcandidates or related products. The FDA or equivalent foreign regulatory authorities may determine that eravacycline or any other product candidate that wedevelop is not effective, or is only moderately effective, or has undesirable or unintended side effects, toxicities, safety profile or other characteristics thatpreclude marketing approval or prevent or limit commercial use. The FDA may also find during its pre-approval inspection that the facilities identified in ourNDA fail to comply with cGMP requirements, thereby delaying or preventing approval. In addition, any marketing approval we ultimately obtain may belimited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. If we experience delays inobtaining approval or if we fail to obtain approval of eravacycline or any other product candidate that we develop, the commercial prospects for eravacyclineor such other product candidate may be harmed and our ability to generate revenues will be materially impaired.A fast track designation by the FDA does not guarantee approval and may not actually lead to a faster development, regulatory review orapproval process.If a product is intended for the treatment of a serious or life-threatening condition and the product demonstrates the potential to address unmetmedical needs for that condition, the treatment sponsor may apply for FDA fast track designation. The FDA granted eravacycline fast track designation as aqualified infectious disease product in April 2014, granted fast track designation as a qualified infectious disease product for the IV formulation of TP-271 inSeptember 2015, and granted fast track designation as a qualified infectious disease product for the oral formulation of TP-271 in February 2017. Fast trackdesignation does not ensure approval or a faster development, regulatory review or approval process compared to conventional FDA procedures.Additionally, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical developmentprogram.If we are unable to obtain marketing approval in international jurisdictions, we will not be able to market our product candidates abroad.In order to market and sell eravacycline and any other product candidate that we develop in the European Union and many other jurisdictions, wemust obtain separate marketing approvals and comply with numerous and varying regulatory requirements. Approval by the FDA does not ensure approvalby regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval byregulatory authorities in other countries or jurisdictions or by the FDA. The approval procedure varies among countries and can involve additional testing. Inaddition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. The time required to obtain approval maydiffer substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risksassociated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be approved forreimbursement before the product can be approved for sale in that country. We may not obtain approvals from regulatory authorities outside the United Stateson a timely basis or at all.Additionally, on June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, commonly referred to asBrexit. On March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. Since asignificant proportion of the regulatory framework in the United Kingdom is derived from European Union directives and regulations, the referendum couldmaterially impact the regulatory regime with respect to the approval of our product candidates in the United Kingdom or the European Union. Any delay inobtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, would prevent us from commercializing our productcandidates in the United Kingdom and/or the European Union and restrict our ability to generate revenue and achieve and sustain profitability. If any ofthese outcomes occur, we may be forced to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or European Union for our productcandidates, which could significantly and materially harm our business.47 If we receive regulatory approval for any product candidates, including eravacycline, we will be subject to ongoing obligations and continuingregulatory review, which may result in significant additional expense. Our product candidates, including eravacycline, if approved, could be subject torestrictions or withdrawal from the market, and we may be subject to penalties, if we fail to comply with regulatory requirements or if we experienceunanticipated problems with our product candidates, when and if approved.Any product candidate, including eravacycline, for which we obtain marketing approval, will also be subject to ongoing regulatory requirementsfor labeling, manufacturing, packaging, storage, distribution, advertising, promotion, record-keeping and submission of safety and other post-marketinformation. For example, approved products, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, includingensuring that quality control and manufacturing procedures conform to cGMPs. As such, we and our contract manufacturers will be subject to continualreview and periodic inspections to assess compliance with cGMPs. Accordingly, we and others with whom we work must continue to expend time, moneyand effort in all areas of regulatory compliance, including manufacturing, production and quality control. We will also be required to report certain adversereactions and production problems, if any, to the FDA and to comply with requirements concerning advertising and promotion for our products.In addition, even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses forwhich the product may be marketed, may be subject to significant conditions of approval or may impose requirements for costly post-marketing testing andsurveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugsare marketed only for the approved indications and in accordance with the provisions of the approved labeling and regulatory requirements. The FDA alsoimposes stringent restrictions on manufacturers’ communications regarding off-label use and if we do not restrict the marketing of our products only to theirapproved indications, we may be subject to enforcement action for off-label marketing.If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, orproblems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, it may impose restrictionson that product or us. In addition, if any product fails to comply with applicable regulatory requirements, a regulatory agency may: •issue warning or untitled letters; •mandate modifications to promotional materials or require provision of corrective information to healthcare practitioners and patients; •impose restrictions on the product or its manufacturers or manufacturing processes; •impose restrictions on the labeling or marketing of the product; •impose restrictions on product distribution or use; •require post-marketing clinical trials; •require withdrawal of the product from the market; •refuse to approve pending applications or supplements to approved applications that we submit; •require recall of the product; •require entry into a consent decree, which can include imposition of various fines (including restitution or disgorgement of profits orrevenue), reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; •suspend, vary, modify or withdraw marketing approvals; •refuse to permit the import or export of the product; •seize or detain supplies of the product; or •issue injunctions, levy fines or impose other civil and/or criminal penalties.48 Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare lawsand regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and futureearnings.Our future arrangements with third-party payors, healthcare professionals and customers who purchase, recommend or prescribe our productcandidates will be subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financialarrangements and relationships through which we market, sell and distribute any products for which we obtain marketing approval. These laws andregulations include, for example, the false claims and anti-kickback statutes and regulations. At such time as we market, sell and distribute any products forwhich we obtain marketing approval, it is possible that our business activities could be subject to challenge under one or more of these laws and regulations.Restrictions under applicable federal and state healthcare laws and regulations include the following: •the federal Anti-Kickback Statute, among other things, prohibits persons from knowingly and willfully soliciting, offering, receiving orproviding remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase,order or recommendation of, any good or service, for which payment may be made under federally funded healthcare programs such asMedicare and Medicaid; •the federal False Claims Act imposes criminal and civil penalties, which can be enforced by private citizens through civil whistleblowerand qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claimsfor payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federalgovernment; •the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing ascheme to defraud any healthcare benefit program and creates federal criminal laws that prohibit knowingly and willfully falsifying,concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment forhealthcare benefits, items or services; •the federal transparency requirements under the Patient Protection and Affordable Care Act, as amended by the Health Care and EducationReconciliation Act, or collectively, the ACA, requires manufacturers of covered drugs, devices, biologics and medical supplies to report tothe Department of Health and Human Services information related to payments and other transfers of value to physicians and teachinghospitals and physician ownership and investment interests; and •analogous state laws and regulations, such as state anti-kickback and false claims laws that may apply to sales or marketing arrangementsand claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; statelaws that require pharmaceutical companies to implement compliance programs, comply with the pharmaceutical industry’s voluntarycompliance guidelines and the relevant compliance guidance promulgated by the federal government or track and report gifts,compensation and other remuneration provided to physicians and other health care providers; and state and foreign laws that govern theprivacy and security of health information in specified circumstances, many of which differ from each other in significant ways and oftenare not preempted by HIPAA, which complicates compliance efforts.We will be required to spend substantial time and money to ensure that our business arrangements with third parties comply with applicablehealthcare laws and regulations. Even then, governmental authorities may conclude that our business practices do not comply with current or future statutes,regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. Recent healthcare reform legislation has strengthenedthese federal and state healthcare laws. For example, the ACA amends the intent requirement of the federal anti-kickback and criminal healthcare fraudstatutes. A person or entity no longer needs to have actual knowledge of these statutes or a specific intent to violate them. In addition, the ACA provides thatthe government may assert that a claim that includes items or services resulting from a violation of the federal anti-kickback statute constitutes a false orfraudulent claim for purposes of the False Claims Act. If governmental authorities find that our operations violate any of these laws or any othergovernmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion fromgovernment funded healthcare programs, such as Medicare and Medicaid, and we may be required to curtail or restructure our operations. Moreover, weexpect that there will continue to be federal and state laws and regulations, proposed and implemented, that could impact our operations and business. Theextent to which future legislation or regulations, if any, relating to healthcare fraud and abuse laws or enforcement, may be enacted or what effect suchlegislation or regulation would have on our business remains uncertain.49 If we successfully commercialize one of our drug candidates, failure to comply with our reporting and payment obligations under U.S.governmental pricing programs could have a material adverse effect on our business, financial condition and results of operations.If we participate in the Medicaid Drug Rebate Program once we successfully commercialize a drug, we will be required to report certain pricinginformation for our products to the Centers for Medicare & Medicaid Services, the federal agency that administers the Medicaid and Medicare programs. Wemay also be required to report pricing information to the Department of Veterans Affairs. If we become subject to these reporting requirements, we will beliable for errors associated with our submission of pricing data, for failure to report pricing data in a timely manner, and for overcharging government payers,which can result in civil monetary penalties under the Medicaid statute, the federal civil False Claims Act, and other laws and regulations.Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize ourproduct candidates and affect the prices we may obtain.Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems withthe stated goals of containing healthcare costs, improving quality and expanding access to healthcare. In the United States, the pharmaceutical industry hasbeen a particular focus of these efforts and has been significantly affected by major legislative initiatives. We expect to experience pricing pressures inconnection with the sale of any products that we develop, due to the trend toward managed healthcare, the increasing influence of health maintenanceorganizations and additional legislative proposals.In March 2010, the ACA became law in the United States with the goals of broadening access to health insurance, reducing or constraining thegrowth of healthcare spending, enhancing remedies against fraud and abuse, adding new transparency requirements for health care and health insuranceindustries and imposing additional health policy reforms. Further, the new law includes annual fees to be paid by manufacturers for certain brandedprescription drugs, requires manufacturers to participate in a discount program for certain outpatient drugs under Medicare Part D, increases manufacturerrebate responsibilities under the Medicaid Drug Rebate Program for outpatient drugs dispensed to Medicaid recipients, addresses a new methodology bywhich rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for line extensions and for drugs that are inhaled, infused,instilled, implanted or injected and expands oversight and support for the federal government’s comparative effectiveness research of services and products.In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. On August 2, 2011, theBudget Control Act of 2011 created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked withrecommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering thelegislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of up to 2% perfiscal year, which went into effect on April 1, 2013. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 whichreduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitationsperiod for the government to recover overpayments to providers from three to five years. We expect that additional state and federal healthcare reformmeasures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services,which could result in reduced demand for our product candidates or additional pricing pressures.Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities forpharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance orinterpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition,increased scrutiny by the United States Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject usto more stringent product labeling and post-marketing testing and other requirements.Risks Related to Employee Matters and Managing GrowthOur future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivatequalified personnel.Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on the development,regulatory, commercialization and business development expertise of our executive management team, as well as the other principal members of ourmanagement, scientific and clinical team. Although we have formal employment agreements with our executive officers, these agreements do not preventthem from terminating their employment with us at any time. For instance, in December 2017, our former chief medical officer terminated his employmentwith us.50 We do not have formal employment agreements with any of our other employees. If we lose one or more of our executive officers or key employees,our ability to implement our business strategy successfully could be seriously harmed. We may face difficulty attracting and retaining our executive officersand key employees as a consequence of the results of IGNITE3. Furthermore, replacing executive officers and key employees may be difficult and may takean extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gainregulatory approval of and commercialize products successfully. Competition to hire from this limited pool is intense, and we may be unable to hire, train,retain or motivate these additional key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companiesfor similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. Inaddition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development andcommercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting oradvisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, ourability to develop and commercialize drug candidates will be limited.We expect to grow our organization, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.We expect to experience growth in the number of our employees and the scope of our operations, particularly in the areas of drug development,regulatory affairs and sales, marketing and distribution. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities to devote time to managing these growth activities. To manage these growth activities, we must continue to implement and improve ourmanagerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limitedfinancial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able toeffectively manage the expansion of our operations or recruit and train additional qualified personnel. Our inability to effectively manage the expansion ofour operations may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reducedproductivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from otherprojects, such as the development of additional product candidates. If our management is unable to effectively manage our expected growth, our expensesmay increase more than expected, our ability to generate revenues could be reduced and we may not be able to implement our business strategy.The business that we conduct outside the United States may be adversely affected by international risk and uncertainties.Although our operations are based in the United States, we conduct business outside the United States and expect to continue to do so in thefuture. For instance, many of the sites at which our clinical trials are or may be conducted are outside the United States. In addition, we plan to seek approvalsto sell our products in foreign countries. Any business that we conduct outside the United States will be subject to additional risks that may materiallyadversely affect our ability to conduct business in international markets, including: •potentially reduced protection for intellectual property rights; •the potential for so-called parallel importing, which is what happens when a local seller, faced with high or higher local prices, opts toimport goods from a foreign market (with low or lower prices) rather than buying them locally; •unexpected changes in tariffs, trade barriers and regulatory requirements; •economic weakness, including inflation, or political instability in particular foreign economies and markets; •workforce uncertainty in countries where labor unrest is more common than in the United States; •production shortages resulting from any events affecting a product candidate and/or finished drug product supply or manufacturingcapabilities abroad; •business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters, including earthquakes,hurricanes, typhoons, floods and fires; and •failure to comply with Office of Foreign Asset Control rules and regulations and the Foreign Corrupt Practices Act.51 Our internal computer systems, or those of any collaborators, contractors or consultants, may fail or suffer security breaches, whichcould result in a material disruption of our product development programs or overall business operations.Our internal computer infrastructure and those of any collaborators, contractors or consultants are vulnerable to damage from computer viruses,unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such material systemfailure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption ofour development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions.For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantlyincrease our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data orapplications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed andthe further development and commercialization of our product candidates could be delayed or halted.Risks Related to Our Common StockThe price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of ourcommon stock.Our stock price may be volatile. The stock market in general and the market for smaller pharmaceutical and biotechnology companies in particularhave experienced extreme volatility that has often been unrelated to the operating performance of particular companies. For example, our stock traded withina range of a high price of $52.90 per share and a low price of $2.05 per share for the period beginning March 20, 2013, our first day of trading on theNASDAQ Global Select Market, through March 1, 2018. As a result of this volatility, investors may not be able to sell their common stock at or above theprices they paid for it. The market price for our common stock may be influenced by many factors, including: •the filing and approval of marketing applications; •the timing of clinical trials of our product candidates; •results of clinical trials of our product candidates; •regulatory actions by the FDA or equivalent authorities in foreign jurisdictions with respect to eravacycline and any other productcandidate; •failure or discontinuation of any of our development programs; •the success of existing or new competitive products or technologies; •results of clinical trials of product candidates of our competitors; •regulatory or legal developments in the United States and other countries; •developments or disputes concerning patent applications, issued patents or other proprietary rights; •the recruitment or departure of key personnel; •the level of expenses related to any of our product candidates or clinical development programs; •the results of our efforts to develop, in-license or acquire additional product candidates or products; •actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; •announcement or expectation of additional financing efforts; •sales of our common stock by us, our insiders or other stockholders; •variations in our financial results or those of companies that are perceived to be similar to us; •changes in estimates or recommendations by securities analysts, if any, that cover our stock; •changes in the structure of healthcare payment systems; •market conditions in the pharmaceutical and biotechnology sectors;52 •general economic, industry and market conditions; and •the other factors described in this “Risk Factors” section.We have been and may again be subject to class action litigation and have been subject to shareholder derivative litigation due to stock pricevolatility, which could distract our management and could result in substantial costs or large judgments against us.The stock market frequently experiences extreme price and volume fluctuations. We have experienced significant declines in our stock pricefollowing our announcements that our phase 3 clinical trials for eravacycline for the treatment of patients with cUTI did not meet the primary endpoint ofthose trials. In addition, the market prices of securities of companies in the biotechnology and pharmaceutical industry have been extremely volatile andhave experienced fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. These fluctuations couldadversely affect the market price of our common stock. In the past, securities class action litigation has often been brought against companies followingperiods of volatility in the market prices of their securities. In fact, in January 2016 and March 2016, two class action lawsuits were filed against us, our chiefexecutive officer and certain former executives in the United States District Court for the District of Massachusetts. These cases were subsequentlyconsolidated. In November 2017 plaintiffs withdrew a pending appeal in the United States Court of Appeals for the First Circuit. In addition, in May 2016, ashareholder derivative action was filed against our chief executive officer, certain former executive officers, all the members of our current board of directors,a former board member, and against us as nominal defendant, in Massachusetts Superior Court (Suffolk County). This case was subsequently dismissed by thecourt without prejudice due to the plaintiff’s failure to properly perfect service of process. Due to the volatility in our stock price, we may be the target ofsimilar litigation in the future.We may be the subject of future litigation, including as a result of our announcement of the failure of IGNITE3 to meet its co-primary endpoints. Inconnection with any such future litigation, we could incur substantial costs and such costs and any related settlements or judgments may not be covered byinsurance. We could also suffer an adverse impact on our reputation and a diversion of management’s attention and resources, which could cause seriousharm to our business, operating results and financial condition.An active trading market for our common stock may not be sustained.Although we have listed our common stock on The NASDAQ Global Select Market, an active trading market for our common stock may not besustained. In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the price atwhich they acquired the common stock or at the times that they would like to sell. An inactive trading market may also impair our ability to raise capital tocontinue to fund operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price andtrading volume could decline.The trading market for our common stock will depend on the research and reports that securities or industry analysts publish about us or ourbusiness. We do not have any control over these analysts. There can be no assurance that analysts will cover us, or provide favorable coverage. If one or moreanalysts downgrade our stock or change their opinion of our stock, our share price would likely decline. In addition, if one or more analysts cease coverage ofour company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volumeto decline.We have broad discretion in the use of our cash reserves and may not use them effectively.Our management has broad discretion to use our cash reserves and could spend these reserves in ways that do not improve our results of operationsor enhance the value of our common stock. The failure by our management to apply these funds effectively could result in financial losses that could have amaterial adverse effect on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending theiruse, we may invest our cash reserves in a manner that does not produce income or that loses value.53 We have incurred increased costs as a result of operating as a public company, and our management is required to devote substantial time tonew compliance initiatives and corporate governance practices.As a public company we incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-OxleyAct of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The NASDAQ Global Select Market and otherapplicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effectivedisclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial amount of time to thesecompliance initiatives. Moreover, these rules and regulations have increased our legal and financial compliance costs and have made some activities moretime-consuming and costly especially since we are no longer an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012,and are no longer able to take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are“emerging growth companies” and that were applicable to us prior to January 1, 2016.Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act in the future could have a materialadverse effect on our ability to produce accurate financial statements and on our stock price.Section 404 of the Sarbanes-Oxley Act of 2002 requires us, on an annual basis, to review and evaluate our internal controls. To maintaincompliance with Section 404, we are required to document and evaluate our internal control over financial reporting, which has been both costly andchallenging. We will need to continue to dedicate internal resources, continue to engage outside consultants and follow a detailed work plan to continue toassess and document the adequacy of internal control over financial reporting, continue to improve control processes as appropriate, validate through testingthat controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.There is a risk that in the future neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframethat our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in anadverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.We do not anticipate paying any cash dividends on our capital stock in the foreseeable future; accordingly, stockholders must rely on capitalappreciation, if any, for any return on their investment.We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance theoperation, development and growth of our business. The terms of our term loan facility with Silicon Valley Bank and Oxford Finance that we repaidprecluded us from paying dividends, and any future debt agreements may also preclude us from paying dividends. As a result, capital appreciation, if any, ofour common stock will be the sole source of gain for our stockholders for the foreseeable future.Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to ourstockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.Provisions in our corporate charter and our by-laws may discourage, delay or prevent a merger, acquisition or other change in control of us thatstockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisionscould also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of ourcommon stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrateor prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members ofour board of directors. Among other things, these provisions: •establish a classified board of directors such that all members of the board are not elected at one time; •allow the authorized number of our directors to be changed only by resolution of our board of directors; •limit the manner in which stockholders can remove directors from the board; •establish advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on atstockholder meetings; •require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by writtenconsent; •limit who may call a special meeting of stockholder meetings;54 •authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” thatwould work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approvedby our board of directors; and •require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certainprovisions of our charter or by-laws. Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law,which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after thedate of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in aprescribed manner. This could discourage, delay or prevent someone from acquiring us or merging with us, whether or not it is desired by, or beneficial to, ourstockholders.ITEM 1B.Unresolved Staff CommentsNone.ITEM 2.PropertiesWe lease our principal facilities, which consist of approximately 37,438 square feet of office, research and laboratory space located at 480 ArsenalWay, Watertown, Massachusetts. The leases covering this space expire on November 30, 2019. We believe that our existing facilities are sufficient for ourcurrent needs. In the third quarter of 2016, we entered into a sublease with respect to a portion of our principal facilities with an unrelated third party. Theterm of the sublease expires in November 2019.ITEM 3.Legal ProceedingsIn January 2016 and March 2016, two securities class action lawsuits were filed against us, our chief executive officer, our former chief operatingofficer and our former chief financial officer, in the United States District Court for the District of Massachusetts. In May 2016, the court consolidated the twolawsuits and appointed lead plaintiffs and lead counsel. The lead plaintiffs filed a consolidated amended complaint in July 2016 and filed a secondconsolidated amended complaint in August 2016. The second amended complaint was brought on behalf of an alleged class of those who purchased ourcommon stock between March 5, 2015 and September 8, 2015, and alleged claims arising under Sections 10 and 20 of the Exchange Act of 2934, asamended. The complaint generally alleged that the defendants violated the federal securities laws by, among other things, making material misstatements oromissions concerning IGNITE2. The complaint sought, among other relief, unspecified compensatory damages, attorneys’ fees and costs. In October 2016, wefiled a motion to dismiss the second amended complaint in its entirety, which plaintiffs opposed. Our motion to dismiss was granted by the United StatesDistrict Court for the District of Massachusetts in May 2017. In July 2017 plaintiffs appealed this decision to the United States Court of Appeals for the FirstCircuit, or the First Circuit. In November 2017 plaintiffs withdrew their appeal to the First Circuit.ITEM 4.Mine Safety DisclosuresNot applicable. 55 PART II ITEM 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket Price InformationOur common stock began trading on the NASDAQ Global Select Market on March 20, 2013 under the symbol “TTPH”. Prior to that date, there wasno established public trading market for our common stock. The following table sets forth, for the periods indicated, the high and low intraday sales prices ofour common stock as reported by the NASDAQ Global Select Market: High Low 2017 First Quarter $9.93 $3.57 Second Quarter $9.53 $6.41 Third Quarter $8.75 $5.28 Fourth Quarter $7.98 $5.60 High Low 2016 First Quarter $9.98 $3.48 Second Quarter $6.28 $3.12 Third Quarter $4.65 $3.62 Fourth Quarter $5.12 $3.11 HoldersAt March 5, 2018, there were approximately 8 holders of record of our common stock. We believe that the number of beneficial owners of ourcommon stock at that date was substantially greater.DividendsWe have never declared or paid any cash dividends on our common stock. We currently intend to retain earnings, if any, for use in our business anddo not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future dividends, if any, on our common stock will be atthe discretion of our board of directors after taking into account various factors, including our financial condition, operating results, anticipated cash needs,and plans for expansion.Securities Authorized for Issuance under Equity Compensation PlansThe information required by this item will be set forth in the definitive proxy statement we will file in connection with our 2018 Annual Meetingof Stockholders and is incorporated by reference herein.Purchase of Equity SecuritiesWe did not purchase any of our equity securities during the period covered by this Annual Report on Form 10-K.Unregistered Sales of Equity SecuritiesWe did not issue any unregistered securities during the period covered by this Annual Report on Form 10-K.Comparative Stock Performance GraphThe information included under the heading “Comparative Stock Performance Graph” in this Item 5 of Part II of this Annual Report on Form 10-Kshall not be deemed to be “soliciting material” or subject to Regulation 14A or 14C, shall not be deemed “filed” for purposes of Section 18 of the ExchangeAct, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, asamended, or the Exchange Act.56 Set forth below is a graph comparing the total cumulative returns of Tetraphase, the NASDAQ Composite Index and the NASDAQ BiotechnologyIndex. The graph assumes $100 was invested on March 20, 2013 in our common stock and each of the indices and that all dividends, if any, are reinvested. 3/20/13 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 Tetraphase Pharmaceuticals$100.00 $193.14 $567.29 $143.29 $57.57 $90.00 NASDAQ Composite Index$100.00 $128.34 $145.54 $153.88 $165.42 $212.14 NASDAQ Biotechnology Index$100.00 $145.52 $195.14 $217.43 $170.28 $206.14ITEM 6.Selected Financial DataThe following selected consolidated financial data should be read in conjunction with our Consolidated Financial Statements and the Notesthereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K. The selected consolidated financial data in this section are not intended to replace our financial statements and the related notes. Our historical results arenot necessarily indicative of the results that may be expected in the future.The consolidated statement of operations data for each of the three years in the period ended December 31, 2017 and the consolidated balancesheet data at December 31, 2017 and 2016 have been derived from our audited consolidated financial statements for such years, included elsewhere in thisAnnual Report on Form 10-K. The statement of operations data for the years ended December 31, 2014 and 2013 and the consolidated balance sheet data atDecember 31, 2015, 2014 and 2013 have been derived from the audited consolidated financial statements for such years not included in this Annual Reporton Form 10-K.57 Our historical results for any prior period are not necessarily indicative of results to be expected in any future period. Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands, except per share data) Statement of Operations data: Contract and grant revenue $9,666 $5,145 $11,686 $9,098 $10,486 Operating expenses: Research and development 101,706 63,764 73,768 61,932 31,508 General and administrative 23,675 19,211 20,916 12,932 7,168 Total operating expenses 125,381 82,975 94,684 74,864 38,676 Loss from operations (115,715) (77,830) (82,998) (65,766) (28,190)Other income (expense): Other income (expense) 963 350 (191) (976) (1,446)Total other income (expense) 963 350 (191) (976) (1,446)Net loss $(114,752) $(77,480) $(83,189) $(66,742) $(29,636)Net loss per share-basic and diluted $(2.63) $(2.11) $(2.36) $(2.49) $(1.78)Weighted-average number of common shares used in net loss per share-basic and diluted 43,582 36,704 35,261 26,807 16,665 As of December 31, 2017 2016 2015 2014 2013 (in thousands) Balance Sheet Data: Cash and cash equivalents $136,411 $142,086 $205,912 $121,042 $102,712 Working capital 128,921 138,962 203,071 109,321 92,229 Total assets 149,040 151,710 214,917 127,204 105,886 Current liabilities 18,525 11,495 10,697 17,276 13,191 Long-term obligations 105 162 165 1,362 4,887 Accumulated deficit (461,884) (347,132) (269,652) (186,463) (119,721)Total stockholders’ equity $130,410 $140,053 $204,055 $108,566 $87,808 58 ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis of our financial condition and results of operations together with our consolidatedfinancial statements and related notes appearing in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis orset forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and relatedfinancing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “RiskFactors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.OverviewWe are a clinical-stage biopharmaceutical company using our proprietary chemistry technology to create novel antibiotics for serious and life-threatening multidrug-resistant infections. We are developing our lead product candidate, eravacycline, a fully synthetic fluorocycline, as an intravenous, orIV antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant, or MDR, Gram-negative infections in patients, such as those with complicated intra-abdominal infections, or cIAI. We conducted a global phase 3 clinical program for eravacycline called IGNITE (Investigating Gram-Negative Infections Treatedwith Eravacycline).On July 25, 2017, we announced top-line data from our IGNITE4 trial, a global phase 3 randomized, double-blind, double-dummy, multicenter,prospective study assessing the efficacy, safety and pharmacokinetics of twice-daily intravenous, or IV, eravacycline (1.0 mg/kg every 12 hours) comparedwith meropenem (1g every 8 hours) for the treatment of complicated intra-abdominal infections, or cIAI that we conducted in 500 patients. In the trial,eravacycline met the primary endpoint of statistical non-inferiority of clinical response at the test-of-cure, or TOC, visit, under the guidance set by the UnitedStates Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA. Prior to IGNITE4, we conducted IGNITE1, a phase 3 clinicaltrial of twice daily IV eravacycline (1.0 mg/kg every 12 hours) compared with ertapenem (1.0g IV every 24 hours) for the treatment of cIAI. In IGNITE1,eravacycline met the primary endpoint of statistical non-inferiority of clinical response. On January 2, 2018, we announced the submission of a new drug application, or NDA, to the FDA for IV eravacycline for the treatment of cIAI. TheNDA submission includes data from the IGNITE1 and IGNITE4 phase 3 clinical trials. In the third quarter of 2017 we submitted a marketing authorizationapplication, or MAA, to the EMA for IV eravacycline for the treatment of cIAI primarily based upon the results of IGNITE1. In February 2018, the FDAnotified us that it had completed its initial 60-day review of our NDA and August 28, 2018 was set as the Prescription Drug User Fee Act, or PDUFA, goal datefor the FDA’s completion of its review of our NDA.The FDA has granted Qualified Infectious Disease Product (QIDP) and Fast Track designations for IV eravacycline for cIAI.In February 2018, we announced top-line data from our IGNITE3 trial, a global phase 3 randomized, multi-center, double-blind, clinicaltrial evaluating the efficacy and safety of once-daily intravenous, or IV, eravacycline, at a dose of 1.5mg/kg every 24 hours, compared toertapenem, at a dose of 1g every 24 hours, for the treatment of complicated urinary tract infections, or cUTI, that we conducted in 1,205 patientswho were randomized 1:1 to receive eravacycline or ertapenem for a minimum of 5 days, and then were eligible for transition to an appropriateapproved oral agent. In this trial, eravacycline did not meet the co-primary endpoints of responder rate, a combination of clinical cure andmicrobiological success, the microbiological intent-to-treat, or micro-ITT, population at the end-of-IV treatment visit and at the test-of-cure visit (5-10 days post therapy). These endpoints were evaluated using a 10% non-inferiority margin. Given the IGNITE3 results, we are no longer evaluatingIV eravacycline for the treatment of cUTI and have also ceased development of an oral formulation for eravacycline for the treatment of cUTI.Eravacycline is designed to treat a broad range of infections, including infections due to multidrug-resistant bacteria. In in vitro experiments,eravacycline has demonstrated the ability to cover a wide variety of multidrug-resistant Gram-negative, Gram-positive, anaerobic and atypical bacteria,including multidrug-resistant Klebsiella pneumoniae and multi-drug resistant Acinetobacter. Multidrug-resistant Klebsiella pneumoniae is one of thecarbapenem-resistant Enterobacteriaceae (or CREs) listed as an urgent threat and multi-drug resistant Acinetobacter is listed as a serious threat by theCenters for Disease Control and Prevention, or CDC, in a September 2013 report and they are listed as Priority 1; Critical pathogens in the World HealthOrganization’s priority pathogens list for R&D, published in February 2017. CREs were a confirmed area of great concern by the World Health Organizationin an April 2014 global surveillance report. Gram-negative bacteria that are resistant to multiple available antibiotics are increasingly common and a growingthreat to public health. We believe that the ability of eravacycline to cover multidrug-resistant Gram-negative bacteria, as well as multidrug-resistant Gram-positive, anaerobic and atypical bacteria, will enable eravacycline to become the drug of choice for first-line empiric treatment of patients with cIAI.59 In addition, we are developing TP-6076, a fully-synthetic fluorocycline derivative, as a lead candidate under our second-generation program totarget unmet medical needs, including multidrug-resistant Gram-negative bacteria. In June 2017, we announced positive results from a phase 1 randomized,placebo-controlled, double-blind, single-ascending dose study evaluating the safety, tolerability and pharmacokinetics of IV TP-6076. In the study, TP-6076was well tolerated, and there were no serious or severe adverse events, or discontinuations due to an adverse event. There were no clinically significant safetyfindings in any laboratory assessments, vital signs, ECGs or physical examinations. We also are conducting a multiple-ascending study in healthy volunteersof the IV formulation of TP-6076. We commenced business operations in July 2006. Our operations to date have been limited to organizing and staffing our company, businessplanning, raising capital, acquiring and developing our proprietary chemistry technology, identifying potential product candidates and undertakingpreclinical studies and clinical trials of our product candidates. To date, we have not generated any product revenue and have primarily financed ouroperations through public offerings and private placements of our equity securities, debt financings and funding from the United States government. As ofDecember 31, 2017, we had received an aggregate of $553 million in net proceeds from the issuance of equity securities and borrowings under debt facilitiesand an aggregate of $49.9 million from government grants and contracts. As of December 31, 2017, our principal source of liquidity was cash and cashequivalents, which totaled $136.4 million.As of December 31, 2017, we had an accumulated deficit of $461.9 million. Our net losses were $114.8 million, $77.5 million and $83.2 millionfor the years ended December 31, 2017, 2016 and 2015, respectively. We expect that our expenses will decrease in 2018 compared with 2017, as thecompletion of the IGNITE clinical program will offset cost increases associated with conducting pre-commercialization activities for eravacycline and, ifapproved, the launch of eravacycline. If we obtain marketing approval for eravacycline, we do expect to incur significant sales, marketing, distribution andoutsourced manufacturing expenses.We believe that our available funds will be sufficient to support our operations through the first half of 2019, which we believe will allow us tofund the initial launch of IV eravacycline for the treatment of cIAI. We will be required to obtain further funding through public or private equity offerings,debt financings, collaborations and licensing arrangements or other sources to fund our operations including ongoing spending to commercializeeravacycline. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed wouldhave a negative impact on our financial condition and our ability to pursue our business strategy. Moreover, we will need to generate significant revenue toachieve profitability, and we may never do so. It is also possible that we will not achieve the progress that we expect with respect to the eravacycline launch,if approved.Financial overviewContract and Grant RevenueWe have derived all of our revenue to date from funding provided under four U.S. government awards for the development of our compounds aspotential counter measures for the treatment of disease caused by bacterial biothreat pathogens through our collaborator CUBRC Inc., or CUBRC, anindependent, not-for-profit, research corporation that specializes in U.S. government-based contracts and from Combating Antibiotic Resistant BacteriaBiopharmaceutical Accelerator, or CARB-X, an international public-private partnership focused on advancing new antimicrobial products to address thethreat of antibiotic resistance: •We have received funding for our lead product candidate, eravacycline, under an award from the Biomedical Advanced Research andDevelopment Authority, or BARDA, an agency of the U.S. Department of Health and Human Services. In January 2012, BARDA awardedCUBRC an initial five-year contract, which has been extended, that provides for up to a total of $67.3 million in funding for thedevelopment, manufacturing and clinical evaluation of eravacycline for the treatment of disease caused by bacterial biothreat pathogens.We refer to this contract as the BARDA Contract. The funding under the BARDA Contract is also being used for the development,manufacturing and clinical evaluation of eravacycline to treat certain infections caused by life-threatening multidrug-resistant bacteria. Werefer to this contract as the BARDA Contract. •We have received funding for TP-271 under two awards from the National Institute of Allergy and Infectious Diseases, or NIAID, a divisionof National Institutes of Health, for the development, manufacturing and clinical evaluation of TP-271 for respiratory diseases caused bybiothreat and antibiotic-resistant public health pathogens, as well as bacterial pathogens associated with community-acquired bacterialpneumonia: -a grant awarded to CUBRC in July 2011 that provides up to a total of approximately $2.9 million through May 31, 2017,when it expired, which we refer to as the NIAID Grant; and -a contract awarded to CUBRC in September 2011 that provides up to a total of approximately $35.8 million in fundingthrough March 31, 2019, which we refer to as the NIAID Contract.60 We are collaborating with CUBRC on these grants and subcontracts, because when we initially decided to seek government funding, werecognized that we did not have any expertise in bidding for, administrating or managing government-funded contracts. CUBRC serves as the primecontractor under the BARDA Contract, the NIAID Grant and the NIAID Contract, primarily carrying out a program management and administrative role withadditional responsibility for the management of preclinical studies. We serve as lead technical expert on all aspects of these awards and also serve as asubcontractor responsible for management of chemistry, manufacturing and control activities and clinical studies. We derive all of our revenue under thesecollaborations through subcontracts with, and a subaward from, CUBRC, with the flow of funds following the respective activities being conducted by us andby CUBRC. •In connection with the BARDA Contract, in February 2012, we entered into a cost-plus-fixed-fee subcontract with CUBRC which currentlyexpires on September 30, 2018 under which we may receive funding of up to approximately $41.9 million, reflecting the portion of theBARDA Contract funding that may be paid to us for our activities. •In connection with the NIAID Contract, in October 2011, we entered into a cost-plus-fixed-fee subcontract with CUBRC which currentlyexpires on March 31, 2019 under which we may receive funding of up to approximately $16.9 million, reflecting the portion of the NIAIDContract funding that may be paid to us for our activities. •In connection with the NIAID Grant, in November 2011, CUBRC awarded us an initial 55-month, no-fee subaward which was extended andexpired on May 31, 2017 under which we received funding of up to approximately $0.9 million, reflecting the portion of the NIAID Grantfunding that was paid to us for our activities.Although the BARDA Contract and our subcontract with CUBRC under the BARDA Contract have terms which currently expire on September 30,2018, BARDA is entitled to terminate the project for convenience at any time, and is not obligated to provide continued funding beyond current-yearamounts from congressionally approved annual appropriations. To the extent that BARDA ceases to provide funding of the program to CUBRC, CUBRC hasthe right to cease providing funding to us. Committed funding from CUBRC under our BARDA subcontract is up to $41.9 million from the initial contractdate through September 30, 2018, of which $35.7 million had been received through December 31, 2017.Similarly, although the NIAID Contract and our subcontract with CUBRC under the NIAID Contract have terms which currently expire on March31, 2019, NIAID is entitled to terminate the project for convenience at any time, and is not obligated to provide continued funding beyond March 31, 2019.To the extent NIAID ceases to provide funding of the programs to CUBRC, CUBRC has the right to cease providing funding to us. Committed funding fromCUBRC under our subcontract with respect to the NIAID Contract is for up to $16.9 million, from the initial contract date through March 31, 2019, of which$13.2 million had been received through December 31, 2017.In March 2017, the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator, or CARB-X, an international public-privatepartnership focused on advancing new antimicrobial products to address the threat of antibiotic resistance, selected us to receive up to $4.0 million inresearch funding over 18 months for TP-6076. In connection with this funding, we entered into a cost reimbursement Sub-Award Agreement with the Trusteesof Boston University, the administrator of the program. We began recognizing revenue from the Sub-Award Agreement in April 2017. Of the $4.0 million incommitted funding, $44,000 has been received through December 31, 2017. Although the Sub-Award Agreement has a term which currently expires onDecember 31, 2018, the project can be terminated for convenience at any time. We have no products approved for sale. Other than the government funding described above, we do not expect to receive any revenue from anyproduct candidates that we develop, including eravacycline, until we obtain regulatory approval and commercialize such products or until we potentiallyenter into collaborative agreements with third parties for the development and commercialization of such product candidates. We continue to pursuegovernment funding for other preclinical and clinical programs. If our development efforts for any of our product candidates result in clinical success andregulatory approval, or collaboration agreements with third parties, we may generate revenue from those product candidates.We expect that our revenue will be less than our expenses for the foreseeable future and that we will experience continued losses as we continueour development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. Even if we are able togenerate revenue from the sale of one or more products, we may not become profitable.Research and Development ExpensesResearch and development expenses consist primarily of costs incurred for the research and development of our preclinical and clinical candidates,and include: •personnel-related expenses, including salaries, benefits and stock-based compensation expense;61 •expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and consultants thatprovide preclinical, clinical, regulatory and manufacturing services; •payments made under our license agreement with Harvard University; •the cost of acquiring, developing and manufacturing clinical trial materials and lab supplies; •facility, depreciation and other expenses, which include direct and allocated expenses for rent, maintenance of our facilities, insurance andother supplies; and •costs associated with preclinical, regulatory and medical affair activities.We expense research and development costs to operations as incurred. We recognize costs for certain development activities, such as clinical trials,based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information providedto us by our vendors.We track external development expenses and personnel expense on a program-by-program basis and allocate common expenses, such as scientificconsultants and laboratory supplies, to each program based on the personnel resources allocated to such program. Expenses related to facilities, consulting,travel, conferences, stock-based compensation and depreciation are not allocated to a program and are separately classified as other research anddevelopment expenses. The following table identifies research and development expenses on a program-specific basis for our product candidates for the yearsended December 31, 2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 (in thousands) Eravacycline $75,541 $37,430 $48,368 BARDA Contract 5,235 2,394 10,280 NIAID Contract and NIAID Grant 3,131 1,870 890 TP-6076 3,348 5,517 3,232 CARB-X 715 - - Other development programs 1,186 2,196 619 Other research and development 12,550 14,357 10,379 Total research and development $101,706 $63,764 $73,768 Research and development activities are central to our business model. Product candidates in later stages of clinical development generally havehigher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.As of December 31, 2017, we had incurred an aggregate of $256.3 million in research and development expenses related to the development oferavacycline, and $36.3 million in research and development expenses related to the development of eravacycline that were funded under the BARDAContract. We expect that our research and development expenses will decrease as we complete the IGNITE program for eravacycline.Because of the numerous risks and uncertainties associated with product development, however, we cannot determine with certainty the durationand completion costs of current or future clinical trials of eravacycline or our other product candidates. We may never succeed in achieving regulatoryapproval for eravacycline or any of our other product candidates. The duration, costs and timing of clinical trials and development of our product candidateswill depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rate andsignificant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors,including competition, manufacturing capability and commercial viability.62 We have licensed our proprietary chemistry technology from Harvard University on an exclusive worldwide basis under a license agreement thatwe entered into in August 2006. Under our license agreement, we have paid Harvard an aggregate of $6.1 million in upfront license fees and developmentmilestone payments. We have also issued 31,379 shares of our common stock to Harvard under the license agreement. In addition, we have agreed to makepayments to Harvard upon the achievement of specified future development and regulatory milestones totaling up to $15.1 million for each licensed productcandidate ($4.8 million of which has already been paid with respect to eravacycline), and to pay tiered royalties in the single digits based on annualworldwide net sales, if any, of licensed products, our affiliates and our sublicensees. We are also obligated to pay Harvard a specified share of non-royaltysublicensing revenues that we receive from sublicensees for the grant of sublicenses under the license and to reimburse Harvard for specified patentprosecution and maintenance costs. The next milestone payments due under the license agreement with respect to eravacycline are a $3.0 million paymentupon acceptance of our NDA filing by the FDA, which occurred in February 2018, and a payment due under our Everest license agreement.General and Administrative ExpensesGeneral and administrative expenses consist principally of personnel-related costs, including salaries and related costs such as benefits and stock-based compensation for personnel in executive, finance, operational, corporate communications, marketing and human resource functions. Other significantgeneral and administrative expenses include professional fees for legal, patent, auditing and tax services, consulting, and facility costs not otherwiseincluded in research and development expenses.We anticipate that our general and administrative expenses will increase for a number of reasons, including: •support of the anticipated expansion of our research and development activities as we continue the development of our productcandidates; •expansion of infrastructure, including increases in personnel-related costs, consulting, legal, and accounting costs, and directors andofficers insurance premiums; and •if and when we believe a regulatory approval of our first product candidate appears likely, anticipated increases in our personnel-relatedand consulting costs as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of ourproduct candidates.Other IncomeOther income consists primarily of interest income earned on our cash and cash equivalents.Critical Accounting Policies and Significant Judgments and EstimatesOur management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements,which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statementsrequires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingentassets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenuerecognition, accrued clinical expenses, and stock-based compensation. We base our estimates on historical experience, known trends and events and variousother factors that we and our management believe to be reasonable under the circumstances, the results of which form the basis for making judgments aboutthe carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under differentassumptions or conditions.While our significant accounting policies are described in more detail in the notes to our consolidated financial statements appearing elsewhere inthis Annual Report on Form 10-K, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation ofour financial statements.63 Revenue RecognitionWe have derived all of our revenue to date from our subcontracts with CUBRC under the BARDA Contract and the NIAID Contract, our subawardunder the NIAID Grant and our award from CARB-X. We recognize revenue under these best-efforts, cost-reimbursable and cost-plus-fixed-fee arrangementsas we perform services under the arrangements so long as an arrangement has been executed and the fees for these services are fixed or determinable, legallybillable and reasonably assured of collection. Recognized amounts reflect our partial performance under the subcontracts and subaward and equal direct andindirect costs incurred plus fixed fees, where applicable. We do not recognize revenue under these arrangements for amounts related to contract periods wherefunding is not yet committed as amounts above committed funding thresholds would not be considered fixed or determinable or reasonably assured ofcollection. Revenues and expenses under these arrangements are presented gross on our statements of operations and comprehensive loss as we havedetermined we are the primary obligor under these arrangements relative to the research and development services we perform as lead technical expert.Revenue under our subcontracts under both the NIAID Contract and the BARDA Contract are earned under a cost-plus-fixed-fee arrangement inwhich we are reimbursed for direct costs incurred plus allowable indirect costs and a fixed-fee earned. Billings under these contracts are based on approvedprovisional indirect billing rates, which permit recovery of fringe benefits, allowable overhead and general and administrative expenses and a fixed fee.Revenue under our subaward under the NIAID Grant and the CARB-X Award are earned under a cost-reimbursable arrangement in which we arereimbursed for direct costs incurred plus allowable indirect costs. Billings under the NIAID Grant and CARB-X Award are based on approved provisionalindirect billing rates, which permit recovery of fringe benefits and allowable general and administrative expenses.Accrued Research and Development ExpensesAs part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing opencontracts and purchase orders, communicating with our personnel to identify services that have been performed for us and estimating the level of serviceperformed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of ourservice providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses asof each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of ourestimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paidto: •contract research organizations in connection with the conduct of our clinical trials; •contract manufacturing organizations with respect to the manufacture of drug supply for clinical trials and manufacture of drugsubstance and finished product; and •vendors and consultants in connection with preclinical development activities.We base our expenses related to clinical studies on our estimates of the services completed and efforts expended pursuant to contracts withmultiple contract research organizations that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject tonegotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors willexceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such asthe successful enrollment of subjects and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which serviceswill be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of theperformance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Although we do not expect our estimatesto be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status andtiming of services performed we may report amounts that are too high or too low in any particular period. To date, there have been no material differencesfrom our estimates to the amount actually incurred.Stock-Based CompensationWe apply the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718,Compensation-Stock Compensation, or ASC 718, to account for all stock-based compensation. We recognize compensation costs related to stock options andrestricted stock units granted to employees based on the estimated fair value of the awards on the date of grant. Stock compensation related to non-employeeawards is remeasured at each reporting period until the awards are vested.64 Determining the amount of stock-based compensation to be recorded requires us to develop estimates of the fair value of stock-based awards as oftheir grant date for awards granted to employees and as of their measurement date for awards granted to non-employees. For awards granted to employees, werecognize stock-based compensation expense ratably over the requisite service period, which in most cases is the vesting period of the award. For awardsgranted to non-employees, we recognize stock-based compensation expense over the requisite service period using the accelerated attribution method.Calculating the fair value of stock-based awards requires that we make subjective assumptions.We use the Black-Scholes option pricing model to value our stock option awards. Use of this valuation methodology requires that we makeassumptions as to the volatility of our common stock, the expected term of our stock options, the risk free interest rate for a period that approximates theexpected term of our stock options and our expected dividend yield. Since we completed our IPO on March 25, 2013, we have not had sufficient historicaldata to support a calculation of volatility and expected life. As such, we have used a weighted-average volatility considering our own volatility and thevolatilities of a representative group of publicly traded companies. For purposes of identifying similar entities, we selected a group of publicly traded lifescience/biotechnology companies based on their disease focus, stage of development, number of compounds in clinical trials and number of years as apublicly-traded company. We use the simplified method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107,Share-Based Payment as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term of stockoptions granted to employees. For non-employee grants, we use an expected term equal to the remaining contractual term of the award. We utilize a dividendyield of zero based on the fact that we have never paid cash dividends and have no current intention of paying cash dividends. The risk-free interest rate usedfor each grant is based on the U.S. Treasury yield curve in effect at the time of measurement for instruments with a similar expected term.In May 2017, the Financial Accounting Standards Board, or FASB issued Accounting Standards Update, or ASU, No. 2017-09, which providesguidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718.The new standard will be effective on January 1, 2018. We are currently evaluating the potential impact that this standard may have on our financial position,statements of operations and cash flows.Results of OperationsComparison of Years Ended December 31, 2017 and 2016The following tables summarize the results of our operations for each of the years ended December 31, 2017 and 2016, together with the changes inthose items in dollars and as a percentage: Years EndedDecember 31, Increase/ 2017 2016 (decrease) % (in thousands) Revenues $9,666 $5,145 $4,521 88%Operating expenses: Research and development 101,706 63,764 37,942 60%General and administrative 23,675 19,211 4,464 23%Total operating expenses 125,381 82,975 42,406 51%Loss from operations (115,715) (77,830) (37,885) 49%Other income (expense) 963 350 613 175%Net loss $(114,752) $(77,480) $(37,272) 48% 65 Revenue from U.S. Government Contracts and GrantsThe following table sets forth our contract and grant revenue for the years ended December 31, 2017 and 2016: Years EndedDecember 31, Increase/ Revenue 2017 2016 (decrease) % (in thousands) BARDA Contract $5,463 $2,879 $2,584 90%NIAID Contract 3,509 2,164 1,345 62%CARB-X Award 685 — 685 — NIAID Grant 9 102 (93) (91)% $9,666 $5,145 $4,521 88%Contract and grant revenue was $9.7 million for the year ended December 31, 2017 compared to $5.1 million for the year ended December 31,2016, an increase of $4.5 million, or 88%. This increase was primarily due to changes in the timing and scope of activities under our subcontracts withrespect to the BARDA and NIAID Contracts conducted during the year ended December 31, 2017 as compared to the year ended December 31, 2016 and theaddition of amounts received under the CARB-X Award.Research and Development ExpensesResearch and development expenses were $101.7 million for the year ended December 31, 2017 compared to $63.8 million for the year endedDecember 31, 2016, an increase of $37.9 million, or 60%. The increase was primarily due to costs associated with conducting our IGNITE3 and IGNITE4phase 3 clinical trials and an increase in regulatory costs associated with eravacycline related to our MAA and NDA filing activities.General and Administrative ExpensesGeneral and administrative expenses for the year ended December 31, 2017 were $23.7 million compared to $19.2 million for the year endedDecember 31, 2016, an increase of $4.5 million, or 23%. This increase was primarily due to an increase in pre-launch commercial and business developmentexpenses and headcount related costs.Other IncomeOther income consisted of interest income for the year ended December 31, 2017 was $1.0 million compared to $0.3 for the year ended December31, 2016, driven by the larger cash balance from our follow-on public offering and sales under our “at-the-market” offering program in 2017. Comparison of Years Ended December 31, 2016 and 2015The following tables summarize the results of our operations for each of the years ended December 31, 2016 and 2015, together with the changes inthose items in dollars and as a percentage: Years EndedDecember 31, Increase/ 2016 2015 (decrease) % (in thousands) Revenues $5,145 $11,686 $(6,541) (56)%Operating expenses: Research and development 63,764 73,768 (10,004) (14)%General and administrative 19,211 20,916 (1,705) (8)%Total operating expenses 82,975 94,684 (11,709) (12)%Loss from operations (77,830) (82,998) 5,168 (6)%Other income (expense) 350 (191) 541 (283)%Net loss $(77,480) $(83,189) $5,709 (7)%66 Revenue from U.S. Government Contracts and GrantsThe following table sets forth our contract and grant revenue for the years ended December 31, 2016 and 2015: Years EndedDecember 31, Increase/ Revenue 2016 2015 (decrease) % (in thousands) BARDA Contract $2,879 $10,773 $(7,894) (73)%NIAID Contract 2,164 756 1,408 186%NIAID Grant 102 157 (55) (35)% $5,145 $11,686 $(6,541) (56)% Contract and grant revenue was $5.1 million for the year ended December 31, 2016 compared to $11.7 million for the year ended December 31,2015, a decrease of $6.6 million, or 56%. This decrease was primarily due to changes in the timing and scope of activities conducted under our subcontractwith respect to the BARDA Contract during the year ended December 31, 2016 as compared to the year ended December 31, 2015, offset in part by the timingand scope of activities conducted under our subcontract with respect to the NIAID Contract.Research and Development ExpensesResearch and development expenses were $63.8 million for the year ended December 31, 2016 compared to $73.8 million for the year endedDecember 31, 2015, a decrease of approximately $10.0 million, or 14%. This decrease was primarily due to a decrease in clinical trial costs associated withthe completion of IGNITE2, a decrease in certain pre-clinical registration activities for eravacycline and a decrease in drug manufacturing costs under ourBARDA sub-contract. These decreases were offset in part by costs associated with the initiation of IGNITE2 and IGNITE4, an increase in personnel-relatedcosts due to additional headcount and an increase in stock-based compensation expense resulting from additional headcount and our annual stock optionawards and restricted stock units granted to employees during the first quarter of 2016.General and Administrative ExpensesGeneral and administrative expenses for the year ended December 31, 2016 were $19.2 million compared to $20.9 million for the year endedDecember 31, 2015, a decrease of $1.7 million, or 8%. This decrease was primarily due to a decrease in market research and pre-commercialization expenses.This decrease was offset by an increase in stock-based compensation primarily due a non-employee stock-based compensation credit during 2015 and anincrease in legal fees.Other Income (Expense)Other income for the year ended December 31, 2016 consisted of interest income of $0.3 million as compared to $42,000 for the year endedDecember 31, 2015. The increase was driven by implementation of a new cash sweep account and improved overall yields on our money market funds. Otherexpense for the year ended December 31, 2015 consisted of interest expense of $0.2 million related to our term loan facility with Silicon Valley Bank andOxford Finance. These facilities were paid in full on March 31, 2015 and therefore there was no interest expense for the year ended December 31, 2016. Liquidity and Capital ResourcesWe have incurred losses since our inception and anticipate that we will continue to incur losses for at least the next several years. We expect thatour total expenses to decrease but remain significant in 2018 and, as a result, we will need additional capital to fund our operations, which we may obtainfrom additional financings, research funding, collaborations, contract and grant revenue or other sources.Since our inception, we have funded our operations principally through the receipt of funds from public offerings and private placements of equitysecurities, debt financings and contract research funding and research grants from the United States government.As of December 31, 2017, we had cash and cash equivalents of approximately $136.4 million. We invest cash in excess of immediate requirementsin accordance with our investment policy, primarily with a view to liquidity and capital preservation. As of December 31, 2017, our funds were held in cashand money market funds.67 On March 17, 2015, we completed the sale of 4,945,000 shares of common stock in a follow-on public offering at a price to the public of $35.00per share, which number of shares includes the underwriters’ exercise in full of their option to purchase additional shares. This offering resulted in netproceeds to us of $162.2 million after deducting underwriting discounts and commissions of $10.4 million and offering costs of $0.5 million.On January 17, 2017, we entered into a Controlled Equity Offering Sales Agreement, or sales agreement, with Cantor Fitzgerald & Co., as salesagent, or Cantor. On July 7, 2017, we entered into an amendment to the sales agreement, or the amended sales agreement. In accordance with the terms of thesales agreement, we may offer and sell through Cantor, from time to time, shares of our common stock up to an aggregate offering price of $80,000,000through an “at-the-market” offering program. As of December 31, 2017, we had sold 4,157,873 shares under the Agreement at an average price of $7.78 pershare and we had received aggregate cash proceeds of $31.1 million, after deducting the sales commissions and offering expenses. Under the SalesAgreement, Cantor may sell shares of our common stock by methods deemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly on The NASDAQ Global Select Market or on any other existing trading market for ourcommon stock. We are not obligated to make any sales of shares of our common stock under the Sales Agreement. We or Cantor may suspend or terminate theoffering of shares of our common stock upon notice to the other party and subject to other conditions. We will pay Cantor a commission rate equal to 3.0% ofthe gross proceeds per share sold.On August 2, 2017, we sold 10,000,000 shares of common stock in an underwritten public offering at an offering price to the public of $6.50 pershare, resulting in net proceeds to us of $60.7 million after deducting underwriting discounts and commissions of $3.9 million and offering costs of $0.4million. In connection with the offering, we granted the underwriters an option to purchase up to an additional 1,500,000 shares on the same terms andconditions as the offering, pursuant to which the underwriters exercised an option to purchase 107,000 additional shares on August 25, 2017 resulting inadditional net proceeds to us of approximately $0.7 million after deducting underwriting discounts and commissions.The following table summarizes our sources and uses of cash for each of the periods set forth below: Years Ended December 31, 2017 2016 2015 (in thousands) Net cash used in operating activities $(98,050) $(63,766) $(76,707)Net cash used in investing activities (771) (393) (838)Net cash provided by financing activities 93,146 333 162,415 Net increase (decrease) in cash and cash equivalents $(5,675) $(63,826) $84,870 During the years ended December 31, 2017, 2016 and 2015, our operating activities used net cash of $98.1 million, $63.8 million and $76.7million, respectively. Net cash used by operating activities for the year ended December 31, 2017 increased by $34.3 million compared to the year endedDecember 31, 2016. The increase is primarily due to an increase in expenses related to our eravacycline Phase 3 clinical studies and higher drugmanufacturing and nonclinical costs in support of our NDA-related and pre-commercialization activities for eravacycline. Net cash used in operatingactivities for the year ended December 31, 2016 decreased by $12.9 million compared to the year ended December 31, 2015. The decrease is primarily due toa net decrease in expenses related to our eravacycline Phase 3 clinical studies and lower drug manufacturing and nonclinical costs in support of our NDA-related and pre-commercialization activities for eravacycline. During the years ended December 31, 2017, 2016 and 2015, our investing activities used net cash of $0.8 million, $0.4 million and $0.8 million,respectively. The net cash used in investing activities during these periods resulted from purchases of property, plant and equipment to facilitate ourincreased research and development activities and increased headcount.During the years ended December 31, 2017, 2016 and 2015 our net cash provided by financing activities was $93.1 million, $0.3 million and$162.4 million, respectively. The net cash provided by financing activities during the year ended December 31, 2017 was primarily due to sales of commonstock under our amended sales agreement with Cantor Fitzgerald and our August 2017 follow-on public offering. The net cash provided by financingactivities during the year ended December 31, 2016 primarily reflected proceeds from the issuance of stock under our stock plans. The net cash provided byfinancing activities during the year ended December 31, 2015 primarily reflected proceeds from our March 2015 follow-on public offering of $162.2 million,as well as proceeds from the exercise of stock options of $4.9 million, offset in part by repayment of the remaining indebtedness under our term loan facilitywith Silicon Valley Bank and Oxford Finance of $4.6 million.68 Operating Capital RequirementsWe expect to incur significant operating losses for at least the next several years as we continue development of eravacycline, seek marketingapproval for eravacycline, manufacture drug product for our clinical and pre-clinical trials, conduct pre-commercialization and launch-related activities foreravacycline, conduct our phase 1 clinical trial of TP-271in healthy volunteers, and our phase 1 clinical trial of TP-6076 in healthy volunteers and satisfy ourobligations under our license agreement with Harvard University. We may not be able to complete the development and initiate commercialization oferavacycline or our other product candidates if, among other things, our preclinical research and clinical trials with respect to our other product candidatesare not successful, our manufacturing efforts are not successful, the FDA or the EMA does not approve eravacycline or our other product candidates when weexpect, or at all.We believe that our available funds will be sufficient to support our operations through the first half of 2019, which we believe will allow us tofund the initial launch of IV eravacycline for the treatment of cIAI. We will be required to obtain further funding through public or private equity offerings,debt financings, collaborations and licensing arrangements or other sources to fund our operations including ongoing spending to commercializeeravacycline.We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our availablecapital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization ofpharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend onmany factors, including, but not limited to: •the outcome, timing and costs of seeking regulatory approvals; •costs related to the anticipated commercial launch of eravacycline; •revenue received from commercial sales of eravacycline, subject to receipt of marketing approval; •the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our other product candidates and potentialproduct candidates; •the amount of funding that we receive under our subcontracts under the BARDA and NIAID Contracts, and the activities funded underthe BARDA Contract, the NIAID Contract and our agreement with CARB-X; •the number and characteristics of product candidates that we pursue; •the costs of commercialization activities for other product candidates if we receive marketing approval, including the timing and costs ofestablishing product sales, marketing, distribution and manufacturing capabilities; •the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish, as we did withEverest Medicines; •the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing,prosecution, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments andpatent prosecution fees that we are obligated to pay to Harvard pursuant to our license agreement; •the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights anddefending against intellectual property related claims; and •the extent to which we in-license or acquire other products and technologies.69 We expect that we will need to obtain substantial additional funding in order to commercialize eravacycline. To the extent that we raise additionalcapital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may bematerially diluted and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existingstockholders. In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that includerestrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, thatcould adversely impact our ability to conduct our business. If we are unable to raise capital when needed or on attractive terms, we could be forced tosignificantly delay, scale back or discontinue the development or commercialization of eravacycline or other product candidates, seek collaborators at anearlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, and relinquish or license, potentially onunfavorable terms, our rights to eravacycline or other product candidates that we otherwise would seek to develop or commercialize ourselves.Contractual Obligations and CommitmentsThe following table summarizes our outstanding contractual obligations as of payment due date by period at December 31, 2017: Payment due by period Contractual Obligations Total Less than1 Year 1 -3 Years 3-5 Years More than5 Years (in thousands) Operating leases (1) $3,402 $1,752 $1,650 $- $- Harvard milestone payment (2) 7,750 7,750 - - - Total contractual cash obligations $11,152 $9,502 $1,650 $- $- (1)On June 18, 2015, we amended our existing operating lease to expand our leased premises under that lease to a total of 37,438 square feet, and we alsoextended our lease term through November 30, 2019. In third quarter of 2016, we entered into a sublease with respect to a portion of our principalfacilities, which consist of office, research and laboratory space located at 480 Arsenal Way, Watertown, Massachusetts, with an unrelated thirdparty. The term of the sublease expires in November 2019, with the sublessee obligated to pay rent to us that approximates the rent we are currentlypaying to our landlord with respect to such portion of the facility.(2)Consists of milestone payments that would become due to Harvard of (i) $3.0 million upon acceptance by the FDA of an NDA filing for eravacycline,which occurred in February 2018, (ii) $1.8 million upon approval by the EMA of MAA filing for eravacycline, and (iii) $3.0 million upon approval bythe FDA of our NDA filing for eravacycline. We cannot determine the exact timing of payment of these milestones, or if they would ever become dueat all.We are contractually obligated under our license agreement with Harvard University to make payments to Harvard upon the achievement ofspecified future development and regulatory milestones totaling up to $15.1 million for each licensed product candidate $4.8 million of which has alreadybeen paid with respect to eravacycline), and to pay tiered royalties in the single digits based on annual worldwide net sales, if any, of licensed products by us,our affiliates and sublicensees. We are also obligated to pay Harvard a specified share of non-royalty sublicensing revenue that we receive from sublicenseesfor the grant of sublicenses under the license and to reimburse Harvard for specified patent prosecution and maintenance costs. Many of these potentialpayments are contingent upon the occurrence of certain future events and, given the nature of those events, it is unclear when, if ever, we may be required topay such amounts or what the total amount of such payments will be. Except for the milestone payments referenced in the contractual obligations table anddescribed in the footnote above, the table does not include any other potential milestone or royalty payments to Harvard.We have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as achange in control or termination without cause, occur.In the course of normal business operations, we also have agreements with contract service providers to assist in the performance of our researchand development and manufacturing activities. We can elect to discontinue the work under these agreements at any time. We could also enter into additionalcollaborative research, contract research, manufacturing, and supplier agreements in the future, which may require up-front payments and even long-termcommitments of cash.70 Off-Balance Sheet ArrangementsWe did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SECrules.71 ITEM 7A.Quantitative and Qualitative Disclosures About Market RiskWe are exposed to market risk related to changes in interest rates. Our cash equivalents consist of money market funds at December 31, 2017 and2016. The investments in these financial instruments are made in accordance with an investment policy approved by our board of directors which specifiesthe categories, allocations and ratings of securities we may consider for investment. The primary objective of our investment activities is to preserve principalwhile at the same time maximizing the income we receive without significantly increasing risk. Some of the financial instruments that we invest in could besubject to market risk. This means that a change in prevailing interest rates may cause the value of the instruments to fluctuate. For example, if we purchase asecurity that was issued with a fixed interest rate and the prevailing interest rate later rises, the value of that security will probably decline. To minimize thisrisk, we intend to maintain a portfolio which may include cash, cash equivalents and investment securities available-for-sale in a variety of securities whichmay include money market funds, government and non-government debt securities and commercial paper, all with various maturity dates. Based on ourcurrent investment portfolio, we do not believe that our results of operations or our financial condition would be materially impacted by an immediatechange of 10% in interest rates.We do not hold or issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes. Further, wedo not believe our cash equivalents and investment securities have significant risk of default or illiquidity. We made this determination based on discussionswith our investment advisors and a review of our holdings. While we believe our cash equivalents and investment securities do not contain excessive risk, wecannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. All of our investments arerecorded at fair value. 72 ITEM 8.Financial Statements and Supplementary Data TETRAPHASE PHARMACEUTICALS, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm74Consolidated Balance Sheets as of December 31, 2017 and 201675Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2017, 2016 and 201576Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2017, 2016 and 201577Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 201578Notes to Consolidated Financial Statements79 73 Report of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Tetraphase Pharmaceuticals, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Tetraphase Pharmaceuticals, Inc. (the Company) as of December 31, 2017 and 2016, therelated consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period endedDecember 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company at December 31, 2017 and 2016, and the results of its operations andits cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 6, 2018 expressed an unqualifiedopinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Companyin accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2007.Boston, MassachusettsMarch 6, 2018 74 Tetraphase Pharmaceuticals, Inc.Consolidated Balance Sheets(In thousands, except par value amounts) December 31,2017 December 31,2016 Assets Current assets: Cash and cash equivalents $136,411 $142,086 Accounts receivable 4,653 1,789 Prepaid expenses and other current assets 6,382 6,582 Total current assets 147,446 150,457 Property and equipment, net 1,395 1,054 Restricted cash 199 199 Total assets $149,040 $151,710 Liabilities and stockholders’ equity Current liabilities: Accounts payable $5,306 $2,555 Accrued expenses 12,559 7,685 Deferred revenue 660 1,255 Total current liabilities 18,525 11,495 Other long term liabilities 105 162 Commitments and contingencies (Note 10) Stockholders' equity: Preferred stock, par value $0.001 per share; 5,000 shares authorized; no shares issued and outstanding — — Common stock, par value $0.001 per share; 125,000 shares authorized; 51,458 and 36,942 shares issued and outstanding at December 31, 2017 and 2016, respectively 51 37 Additional paid-in capital 592,243 487,148 Accumulated deficit (461,884) (347,132)Total stockholders’ equity 130,410 140,053 Total liabilities and stockholders’ equity $149,040 $151,710 See accompanying notes to consolidated financial statements. 75 Tetraphase Pharmaceuticals, Inc.Consolidated Statements of Operations and Comprehensive Loss(In thousands, except per share data) Year Ended December 31, 2017 2016 2015 Revenues $9,666 $5,145 $11,686 Operating expenses: Research and development 101,706 63,764 73,768 General and administrative 23,675 19,211 20,916 Total operating expenses 125,381 82,975 94,684 Loss from operations (115,715) (77,830) (82,998)Other income (expense): Other income (expense) 963 350 (191)Other income (expense), net 963 350 (191)Net loss $(114,752) $(77,480) $(83,189)Net loss per share-basic and diluted $(2.63) $(2.11) $(2.36)Weighted-average number of common shares used in net loss per share-basic and diluted 43,582 36,704 35,261 Comprehensive loss $(114,752) $(77,480) $(83,189) See accompanying notes to consolidated financial statements. 76 Tetraphase Pharmaceuticals, Inc.Consolidated Statements of Stockholders’ Equity(In thousands) Common Shares AdditionalPaid-In Accumulated TotalStockholders’Equity Shares Amount Capital Deficit (Deficit) Balance at December 31, 2014 30,806 31 294,998 (186,463) 108,566 Issuance of common stock under stock plans 818 1 4,671 — 4,672 Issuance of common stock from follow-on public offering (net of underwriters discounts and issuance costs) 4,945 5 162,146 — 162,151 Shares issued in connection with employee stock purchase plan 16 — 239 — 239 Stock-based compensation expense — — 11,616 — 11,616 Net loss — — — (83,189) (83,189)Balance at December 31, 2015 36,585 37 473,670 (269,652) 204,055 Issuance of common stock under stock plans 298 — 146 — 146 Shares issued in connection with employee stock purchase plan 59 — 187 — 187 Stock-based compensation expense — — 13,145 — 13,145 Net loss — — — (77,480) (77,480)Balance at December 31, 2016 36,942 37 $487,148 $(347,132) $140,053 Issuance of common stock under stock plans 173 — 289 — 289 Issuance of common stock from follow-on public offering less underwriters discounts and issuance costs 10,107 10 61,384 — 61,394 Issuance of common stock under "at-the-market" equity offering sales agreement, less issuance costs 4,158 4 31,138 — 31,142 Issuance of common stock under employee stock purchase plan 78 — 321 — 321 Stock-based compensation expense — — 11,963 — 11,963 Net loss — — — (114,752) (114,752)Balance at December 31, 2017 51,458 51 $592,243 $(461,884) $130,410See accompanying notes to consolidated financial statements. 77 Tetraphase Pharmaceuticals, Inc.Consolidated Statements of Cash Flows(In thousands) Year Ended December 31, 2017 2016 2015 Operating activities Net loss $(114,752) $(77,480) $(83,189)Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 431 282 193 Amortization of deferred financing costs and debt discount — — 94 Accretion of final interest payment on term loans — — 45 Stock-based compensation expense 11,963 13,145 11,616 Loss from disposal of property and equipment — — 2 Changes in operating assets and liabilities: Accounts receivable (2,864) 2,362 (693)Prepaid expenses and other assets 200 (2,870) (1,514)Accounts payable 2,751 (302) (1,249)Accrued expenses and other liabilities 4,816 751 (2,663)Deferred revenue (595) 346 651 Net cash used in operating activities (98,050) (63,766) (76,707)Investing activities Purchases of property and equipment (771) (393) (838)Net cash used in investing activities (771) (393) (838)Financing activities Proceeds from sale of common stock, net of underwriter discounts and issuance costs 92,536 — 162,151 Repayment of term loan payable — — (4,646)Proceeds from issuance of stock under stock plans 610 333 4,910 Net cash provided by financing activities 93,146 333 162,415 Net increase (decrease) in cash and cash equivalents (5,675) (63,826) 84,870 Cash and cash equivalents at beginning of period 142,086 205,912 121,042 Cash and cash equivalents at end of period $136,411 $142,086 $205,912 Supplemental cash flow information Cash paid for interest $- $- $363 See accompanying notes to consolidated financial statements. 78 Tetraphase Pharmaceuticals, Inc.Notes to Consolidated Financial Statements (1) Organization and OperationsThe CompanyTetraphase Pharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company using its proprietary chemistry technology tocreate novel antibiotics for serious and life-threatening multidrug-resistant infections. The Company is developing its lead product candidate, eravacycline, afully synthetic fluorocycline, as an intravenous, or IV, antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections,including multidrug-resistant, or MDR, Gram-negative infections.The Company has conducted a global phase 3 clinical program for eravacycline called IGNITE (Investigating Gram-Negative Infections Treatedwith Eravacycline).In January 2018, the Company announced that it had submitted a new drug application, or NDA, for IV eravacycline for the treatment ofcomplicated intra-abdominal infections, or cIAI, to the U.S. FDA based on the positive results from two of its phase 3 clinical trials (IGNITE1 and IGNITE4).In February 2018, the Company announced that the FDA had notified it that the FDA had completed its initial 60-day review of the NDA and August 28,2018 was set as the Prescription Drug User Fee Act, or PDUFA, goal date for the FDA’s completion of its review of the NDA for eravacycline. In the thirdquarter of 2017, the Company submitted a marketing authorization application, or MAA, to the EMA for IV eravacycline for the treatment of cIAI primarilybased upon the results of IGNITE1.In addition to eravacycline, the Company is pursuing development of TP-271, a fully synthetic fluorocycline being developed for respiratorydisease caused by bacterial biothreat pathogens, and TP-6076, a fully synthetic fluorocycline, targeted at unmet medical needs, including multidrug-resistantGram-negative bacteria. Both these programs are in phase 1. The Company is no longer developing eravacycline (IV or oral formulations) for the treatment ofcomplicated urinary tract infections as a result of the clinical outcomes of IGNITE2 and IGNITE3.The Company has incurred annual net operating losses in every year since its inception. As of December 31, 2017, the Company had incurredlosses since inception of $461.9 million. The Company has not generated any product revenues and has financed its operations primarily through publicofferings and private placements of its equity securities, debt financings and funding from the United States government.There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate product revenue or revenuesfrom collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds onacceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition.(2) Summary of Significant Accounting PoliciesSegment InformationOperating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chiefoperating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operationsand manages its business in one operating segment, which is the business of developing and commercializing its proprietary chemistry technology to createnovel antibiotics for serious and life-threatening infections, including multidrug-resistant infections.Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles (”GAAP”) requires management to makeestimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, theCompany’s management evaluates its estimates, including estimates related to clinical trial accruals, stock-based compensation expense, contract and grantrevenues, and expenses. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes tobe reasonable under the circumstances. Actual results may differ from those estimates or assumptions.79 Concentrations of Credit Risk and Off-Balance Sheet RiskFinancial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, restricted cash andaccounts receivable from CUBRC Inc. (“CUBRC”), an independent, not-for-profit, research corporation that specializes in U.S. government-based contracts,and the Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator, or CARB-X, an international public-private partnership focused onadvancing new antimicrobial products to address the threat of antibiotic resistance. The Company maintains its cash and cash equivalent balances in the formof cash and money market accounts with financial institutions that management believes are creditworthy. The Company’s investment policy includesguidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimize its exposure toconcentration of credit risk. The Company has no financial instruments with off-balance-sheet risk of loss. The company has a strong track record ofcollection on its accounts receivable from CUBRC. The company’s agreement with CARB-X has been in place since 2017.Principles of ConsolidationThe condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significantintercompany balances and transactions have been eliminated in consolidation.Cash and Cash EquivalentsThe Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. Cashand cash equivalents at December 31, 2017 and 2016 consisted of cash and money market funds.Fair Value MeasurementsThe Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and accruedliabilities. Fair value measurements are classified and disclosed in one of the following three categories:Level 1 — Quoted prices in active markets for identical assets or liabilities.Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quotedprices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the fullterm of the assets or liabilities.Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.Financial instruments measured at fair value as of December 31, 2017 and 2016 are classified below based on the three fair value hierarchy tiersdescribed above (in thousands): Fair Value Measurements atReporting Date Using Balance Level 1 Level 2 Level 3 December 31, 2017 Cash and money market funds $136,411 $136,411 $— $— December 31, 2016 Cash and money market funds $142,086 $142,086 $— $— The Company measures cash equivalents at fair value on a recurring basis. The fair value of cash equivalents is determined based on “Level 1”inputs, which consist of quoted prices in active markets for identical assets.Accounts ReceivableAccounts receivable at December 31, 2017 and 2016 represent amounts due from two parties: (1) CUBRC, under the Company’s subcontracts withrespect to the National Institutes of Health’s National Institute of Allergy and Infectious Diseases (“NIAID”) division contract awarded for the development ofTP-271 (“NIAID Contract”) and the Biomedical Advanced Research and Development Authority (“BARDA”), an agency of the U.S. Department of Healthand Human Services and under the Company’s subaward under a separate grant from the NIAID (“NIAID Grant”); and (2) CARB-X. The Company’s practiceis to bill CUBRC and CARB-X the amounts for which the Company has been invoiced by third parties in the case of contract research or subcontractor costsor for internal costs incurred. Expenses directly associated with the Company’s NIAID and BARDA Contracts, NIAID Grant and80 CARB-X award that have been accrued at the end of the reporting period are not billed to the prime contractor until third-party invoices have been receivedor until internal costs have been paid. Unbilled accounts receivable, included in accounts receivable in the accompanying balance sheets, were $2.4 millionand $0.4 million at December 31, 2017 and 2016, respectively.Property and Equipment, NetProperty and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are recognized using thestraight-line method over the estimated useful lives of the respective assets, which is generally three to five years. Leasehold improvements are amortizedover the shorter of the lease term or the estimated useful economic lives of the related assets.Restricted CashAt December 31, 2017 and 2016, the Company had $199,000 in restricted cash deposits with a bank, of which $159,000 is collateral for a letter ofcredit issued to the landlord of the Company’s leased facility. If the Company defaults on its rental obligations, $159,000 will be payable to the landlord. Inaddition, the Company has $40,000 in restricted cash to secure the Company’s corporate credit card issued through the same bank.Revenue RecognitionThe Company’s revenue has been derived from its subcontracts with CUBRC under the BARDA Contract, and the NIAID Contract, its subawardunder the NIAID Grant and its cost reimbursement Sub-Award Agreement with the Trustees of Boston University, the administrator of the CARB-X program(Note 3). The Company recognizes revenue under these best-efforts, cost-reimbursable and cost-plus-fixed-fee subcontracts and subaward as the Companyperforms services under the subcontracts and subaward so long as a subcontract and subaward has been executed and the fees for these services are fixed ordeterminable, legally billable and reasonably assured of collection. Recognized amounts reflect the Company’s partial performance under the subcontractsand subaward and equal direct and indirect costs incurred plus fixed fees, where applicable. The Company does not recognize revenue under thesearrangements for amounts related to contract periods where funding is not yet committed as amounts above committed funding thresholds would not beconsidered fixed or determinable or reasonably assured of collection. Revenues and expenses under these arrangements are presented gross on the condensedconsolidated statements of operations and comprehensive loss as the Company has determined it is the primary obligor under these arrangements relative tothe research and development services it performs as lead technical expert.Revenue under the Company’s subcontracts under both the NIAID Contract and the BARDA Contract and under the CARB-X Aware are earnedunder a cost-plus-fixed-fee arrangement in which the Company is reimbursed for direct costs incurred plus allowable indirect costs and a fixed-fee earned.Billings under these arrangements are based on approved provisional indirect billing rates, which permit recovery of allowable fringe benefits, allowableoverhead and general and administrative expenses and a fixed fee.Revenue under the Company’s subaward under the NIAID Grant was earned under a cost-reimbursable arrangement in which the Company wasreimbursed for direct costs incurred plus allowable indirect costs. Billings under the NIAID Grant are based on approved provisional indirect billing rates,which permit recovery of fringe benefits and allowable general and administrative expenses. Research and Development ExpensesResearch and development costs are charged to expense as incurred and include, but are not limited to: •personnel-related expenses, including salaries, benefits, and stock-based compensation expense; •expenses incurred under agreements with contract research organizations, contract manufacturing organizations and consultants thatprovide preclinical, clinical, regulatory and manufacturing services; •payments made under the Company’s license agreement with Harvard University; •the cost of acquiring, developing and manufacturing clinical trial materials and lab supplies; •facility, depreciation and other expenses, which include direct and allocated expenses for rent, maintenance of the Company’s facilities,insurance and other supplies; and •costs associated with preclinical, regulatory and medical affair activities.81 Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specifictasks using data such as patient enrollment, clinical site activations, or information provided to the Company by its vendors on their actual costs incurred.Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected inthe financial statements as prepaid or accrued research and development. In certain circumstances, the Company is required to make nonrefundable advancepayments to vendors for goods or services that will be received in the future for use in research and development activities. In such circumstances, thenonrefundable advance payments are deferred and capitalized, even when there is no alternative future use for the research and development, until relatedgoods or services are provided.Comprehensive LossComprehensive loss consists of net income or loss and changes in equity during a period from transactions and other events and circumstancesgenerated from non-owner sources. The Company’s net loss equals comprehensive loss for all periods presented.Income TaxesThe Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined basedon the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and lawsthat are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assetsunless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. The Company has evaluated availableevidence and concluded that the Company may not realize the benefit of its deferred tax assets; therefore a valuation allowance has been established for thefull amount of the deferred tax assets. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense.The Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 34% to 21%,requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes oncertain foreign sourced earnings. On December 22, 2017, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118,Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as“provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete itsaccounting for the change in tax law.At December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, as described below, we havemade a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. For the year ended December 31, 2017, werecognized no transition tax. In all cases, we will continue to make and refine our calculations as additional analysis is completed. In addition, our estimatesmay also be affected as we gain a more thorough understanding of the tax law.Stock-Based CompensationThe Company determines stock-based compensation at the grant date using the Black-Scholes option pricing model to estimate fair value foremployee equity awards. The Company recognizes the value of the award as an expense on a straight-line basis over the requisite service period using theestimated fair market value of the stock and accounts for forfeitures as they occur. For employee awards with performance conditions, the Company assesseswhether the condition is probable of achievement, in which case, the fair value of the award is recognized over the requisite service period. The Companyrecords stock-based compensation expense for payments issued to non-employees based on the fair value of the awards using the Black-Scholes optionpricing model. Stock-based compensation payments issued to non-employees are revalued at each reporting period and as the equity instruments vest and arerecognized as expense using the accelerated attribution method over the related service period.Going Concern AssessmentAccounting Standards Update (“ASU”) No. 2014-15, Presentation of Financial Statements - Going Concern, requires management to evaluate thecompany’s ability to continue as a going concern one year beyond the filing date of the given financial statements. This evaluation requires management toperform two steps. First, management must evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continueas a going concern. Second, if management concludes that substantial doubt is raised, management is required to consider whether it has plans in place toalleviate that doubt. Disclosures in the notes to the financial statements are required if management concludes that substantial doubt exists or that its plansalleviate the substantial doubt that was raised.82 Based on a detailed cash forecast incorporating current development activities and related spending plans, the Company expects its cash to lastmore than one year beyond the date that the financial statements were issued. Based on this analysis, no additional disclosures were required.Recent Accounting Pronouncements IssuedIn May 2014, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606),which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company torecognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for thosegoods or services. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt thestandard as of the original effective date. The FASB has subsequently issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principalversus Agent Considerations (Reporting Revenue Gross versus Net); ASU 2016-10, Revenue from Contracts with Customers (Topic 606): IdentifyingPerformance Obligations and Licensing; ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and PracticalExpedients; and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company is in theprocess of completing its evaluation of the potential impact that these updates may have on its financial position, results of operations and cash flows,specifically the impact on its revenue recognized via its open contracts with the BARDA, NIAID and CARB-X. While its evaluation is not yet complete, theCompany does not currently expect a significant change to its accounting for these contracts. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets andliabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standardwill be effective for the Company on January 1, 2019. The Company is currently evaluating the potential impact that this standard may have on its financialposition, results of operations and cash flows.In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as eitherequity or liabilities, forfeiture rates, and classification on the statement of cash flows. The new guidance is effective for fiscal years beginning afterDecember 15, 2016, including interim periods within those annual reporting periods. The Company adopted ASU No. 2016-09 as of January 1, 2017. As aresult of adopting ASU No. 2016-09, the Company elected to recognize share-based award forfeitures only as they occur rather than by applying an estimatedforfeiture rate as previously required. ASU No. 2016-09 requires that this change be applied using a modified-retrospective transition method by means of acumulative-effect adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is adopted. The Company did not make anadjustment to retained earnings as the amount was immaterial to the financial statements.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and CashPayments (“ASU 2016-15”). This new standard provides guidance to ensure consistency in how transactions are reflected in the statement of cash flows. ASU2016-15 will be effective for the Company for annual periods beginning after December 15, 2017. The Company is currently evaluating the potential impactthat this standard may have on its statements of cash flows.In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash (“ASU 2016-18”). ASU 2016-18 clarifies how entities should presentrestricted cash and restricted cash equivalents in the statement of cash flows. The guidance will be applied retrospectively and will be effective for theCompany for annual and interim periods beginning after December 15, 2017. The Company is currently evaluating the potential impact that this standardmay have on its financial position, statements of operations and cash flows.In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU2017-09”). The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to applymodification accounting in Topic 718. The new standard will be effective for the Company on January 1, 2018. The Company is currently evaluating thepotential impact that this standard may have on its financial position, statements of operations and cash flows.Subsequent EventsEverest Medicines License AgreementIn February 2018, the Company entered into a license agreement (the “License Agreement”) with Everest Medicines Limited (“Everest Medicines”), whereby the Company granted Everest Medicines an exclusive license to develop and commercialize83 eravacycline, for the treatment of complicated intra-abdominal infections and other indications, in mainland China, Taiwan, Hong Kong, Macau, SouthKorea and Singapore (the “Territory”).Under the terms of the License Agreement, the Company is eligible to receive from Everest Medicines an upfront cash payment of $7.0 million tobe paid within 15 business days of the effective date of the License Agreement, and up to an aggregate of $16.5 million in clinical development andregulatory milestone payments and up to $20.0 million annually, provided that certain sales thresholds are met. There can be no guarantee that any suchmilestones or sales thresholds will in fact be met. The Company is obligated to make certain payments to Harvard University based on amounts received fromEverest Medicines under the License Agreement pursuant to the existing license agreement by and between the Company and The President and Fellows ofHarvard College, dated August 3, 2006, and as amended to date.The Company will also be entitled to receive double-digit tiered royalties on sales in the Territory, if any, of products containing eravacycline.Royalties are payable with respect to each jurisdiction in the Territory until the latest to occur of: (i) the last-to-expire of specified patent rights in suchjurisdiction in the Territory; (ii) expiration of marketing or regulatory exclusivity in such jurisdiction in the Territory; or (iii) ten (10) years after the firstcommercial sale of a product in such jurisdiction in the Territory. In addition, royalties payable under the License Agreement will be subject to reduction onaccount of generic competition and after patent expiry in a jurisdiction if required by applicable law, with any such reductions capped at certain percentagesof the amounts otherwise payable during the applicable royalty payment period.Under the terms and conditions of the License Agreement, Everest Medicines will be solely responsible for the development andcommercialization of licensed products in the Territory.PDUFA DateIn February 2018, the Company announced that the FDA had notified it that the FDA had completed its initial 60-day review of the NDA andAugust 28, 2018 was set as the PDUFA goal date for the FDA’s completion of its review of the NDA for eravacycline for treatment of cIAI.Net Loss per Common ShareBasic net loss per share is calculated by dividing the net loss by the weighted average number of shares of Common Stock outstanding for theperiod, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average numberof common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, warrants, stockoptions, and restricted stock units are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share whentheir effect is dilutive.The amounts in the table below were excluded from the calculation of diluted weighted-average shares outstanding, prior to the use of the treasurystock method, due to their anti-dilutive effect: Year Ended December 31, 2017 2016 2015 Warrants - 1,103 1,103 Outstanding stock options 5,997,794 4,066,411 3,833,806 Unvested restricted stock units 282,034 254,378 308,875 Total 6,279,828 4,321,892 4,143,784 (3) Significant Agreements and ContractsLicense AgreementIn August 2006, the Company entered into a license agreement for certain intellectual property with Harvard University (the “University”). Underthe license agreement, as of December 31, 2017, the Company has paid the University an aggregate of $6.1 million in upfront license fees and developmentmilestone payments, and has issued 31,379 shares of common stock to the University.For each product covered by the license agreement, the Company is obligated to make certain payments totaling up to approximately$15.1 million upon achievement of certain development and regulatory milestones and to pay additional royalties on net sales of such product. InJanuary 2007 and April 2010, the Company and the University amended the license agreement to include certain additional intellectual property. TheCompany paid an additional $25,000 to the University with each amendment. In February84 2011, the license agreement was further amended to include additional intellectual property in the license granted by the University without the payment ofany additional consideration. The license agreement was further amended in December 2017 to change certain payments due to Harvard. A milestonepayment of $1.8 million was made to Harvard in 2017 following submission of the MAA for eravacycline with the EMA.Government Grant and ContractsBARDA Contract for EravacyclineThe Company has received funding for its lead product candidate, eravacycline, under an award from to CUBRC from BARDA. In January 2012,BARDA awarded a five-year contract that provides for up to a total of $67.3 million in funding for the development, manufacturing and clinical evaluation oferavacycline for the treatment of disease caused by bacterial biothreat pathogens. The funding under the BARDA Contract is also being used for thedevelopment, manufacturing and clinical evaluation of eravacycline to treat certain infections caused by life-threatening multidrug-resistant bacteria.In connection with the BARDA Contract, in February 2012, the Company entered into a cost-plus-fixed-fee subcontract with CUBRC whichcurrently expires on December 31, 2018 under which the Company may receive funding of up to approximately $41.9 million, reflecting the portion of theBARDA Contract funding that may be paid to the Company for its activities.Although the BARDA Contract and the Company’s subcontract with CUBRC under the BARDA Contract have terms which currently expire onMay 10, 2018, BARDA is entitled to terminate the project for convenience at any time, and is not obligated to provide continued funding beyond current-year amounts from Congressionally approved annual appropriations. To the extent that BARDA ceases to provide funding of the program to CUBRC,CUBRC has the right to cease providing funding to the Company. Committed funding from CUBRC under the Company’s BARDA subcontract is up to$41.9 million through December 31, 2018, the current contract end date, as a result of the exercise of several options by BARDA under the BARDA Contract.Total funds of $35.7 million had been received by the Company through December 31, 2017 under this contract. During the years ended December 31, 2017,2016 and 2015, the Company recognized revenue of $5.5 million, $2.9 million and $10.8 million, respectively, from the Company’s subcontract under theBARDA Contract.NIAID Grant and Contract for TP-271The Company has received funding for its preclinical compound TP-271 under two awards to CUBRC from NIAID for the development,manufacturing, and clinical evaluation of TP-271 for respiratory diseases caused by biothreat and antibiotic-resistant public health pathogens, as well asbacterial pathogens associated with community-acquired bacterial pneumonia: •the NIAID Grant awarded in July 2011 that provided up to a total of approximately $2.9 million over five years; and •the NIAID Contract awarded in September 2011 that provides up to a total of approximately $35.8 million in funding over five years.In connection with the NIAID Grant, in November 2011, CUBRC awarded the Company a no-fee subaward of approximately $0.9 million,reflecting the portion of the NIAID Grant funding that may be paid to the Company for its activities.In connection with the NIAID Contract, in October 2011, the Company entered into a cost-plus-fixed-fee subcontract with CUBRC which currentlyexpires on March 31, 2019 under which the Company may receive funding of up to approximately $16.9 million, reflecting the portion of the NIAIDContract funding that may be paid to the Company for its activities.Although the NIAID Contract and the Company’s subcontract with CUBRC under the NIAID Contract have terms which currently expire on March31, 2019, and the Company’s subaward under the NIAID Grant has a term which expired on May 31, 2017, NIAID is entitled to terminate the project forconvenience at any time, and is not obligated to provide continued funding beyond the respective expiration dates. To the extent that NIAID ceases toprovide funding of the programs to CUBRC, CUBRC has the right to cease providing funding to the Company. As of December 31, 2017, committed fundingfrom CUBRC under the Company’s subcontract with respect to the NIAID Contract is $16.9 million, of which $13.2 million had been received throughDecember 31, 2017. Through December 31, 2017, the Company had received all committed funding of $0.9 million from CUBRC under the Company’ssubaward with respect to the NIAID Grant.During the years ended December 31, 2017, 2016 and 2015, the Company recognized revenue of $3.5 million, $2.2 million, and $0.8 million,respectively, from the Company’s subcontract under the NIAID Contract. During the years ended December 31, 2017, 2016 and 2015, the Companyrecognized revenue of $9,000, $102,000 and $157,000, respectively, from the Company’s subaward under the NIAID Grant.85 CARB-X Award for TP-6076In March 2017, CARB-X selected the Company to receive up to $4.0 million in research funding over eighteen months for TP-6076. In connectionwith this funding, the Company entered into a cost reimbursement Sub-Award Agreement (the “Sub-Award Agreement”) with the Trustees of BostonUniversity, the administrator of the program. The Company began recognizing revenue from the Sub-Award Agreement in April 2017. During the year endedDecember 31, 2017, the Company recognized revenue of $0.7 million under this Sub-Award Agreement. This Sub-Award Agreement will fund certainactivities through the end of 2018. This Sub-Award Agreement can be terminated for convenience at any time, subject to 30 days prior written notice. (4) Property and EquipmentProperty and equipment at December 31, 2017 and 2016 consisted of the following (in thousands): Estimated December 31, Useful LifeIn Years 2017 2016 Laboratory equipment 5 $3,101 $2,358 Furniture and fixtures 5 509 509 Office and computer equipment 3 208 232 Leasehold improvements 923 915 Property and equipment, gross 4,741 4,014 Less accumulated depreciation and amortization (3,346) (2,960)Property and equipment, net $1,395 $1,054 Depreciation and amortization expense for the years ended December 31, 2017, 2016 and 2015 was $431,000, $282,000 and $193,000,respectively. (5) Accrued ExpensesAccrued expenses at December 31, 2017 and 2016 consisted of the following (in thousands): December 31,2017 December 31,2016 Salaries and benefits $4,137 $2,498 Clinical trial related 3,401 1,129 Drug supply and development 2,298 2,698 Professional fees 1,911 965 Other 812 395 Total $12,559 $7,685 (6) Stockholders’ Equity2015 Follow-on Public OfferingIn March 2015, the Company sold 4,945,000 shares of common stock in a follow-on public offering at a price to the public of $35.00 per share,resulting in net proceeds to the Company of $162.2 million after deducting underwriting discounts and commissions of $10.4 million and offering costs of$0.5 million.In January 2017, the Company entered into a Controlled Equity Offering Sales Agreement (the “Sales Agreement”), with Cantor Fitzgerald & Co.as sales agent (“Cantor”). In July 2017, the Company entered into an amendment to the Sales Agreement to increase the maximum aggregate offering price ofthe shares of common stock that it may issue and sell from time to time under the Sales Agreement from $40,000,000 to $80,000,000.Under the Sales Agreement, as amended (the “Amended Sales Agreement”), Cantor may sell shares of the Company’s common stock by methodsdeemed to be an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including sales made directly onThe NASDAQ Global Select Market or on any other existing trading market for the Company’s common stock.86 The Company is not obligated to make any sales of shares of its common stock under the Amended Sales Agreement. The Company or Cantor maysuspend or terminate the offering of shares of the Company’s common stock upon notice to the other party and subject to other conditions. The Companypays Cantor a commission rate equal to 3.0% of the gross proceeds per share sold.As of December 31, 2017, the Company had sold an aggregate of 4,157,873 shares of common stock under the Sales Agreement, at an averageselling price of approximately $7.78 per share for aggregate gross proceeds of $32.4 million and net proceeds of $31.1 million after deducting the salescommissions and offering expenses. As of March 4, 2018, $47.6 million of common stock remained available to be sold under the Amended Sales Agreement,subject to certain conditions specified therein.On August 2, 2017, the Company sold 10,000,000 shares of common stock in an underwritten public offering at an offering price to the public of$6.50 per share, resulting in net proceeds to the Company of $60.7 million after deducting underwriting discounts and commissions of $3.9 million andoffering costs of $0.4 million. In connection with the offering, the Company granted the underwriters an option to purchase up to an additional 1,500,000shares on the same terms and conditions as the offering, pursuant to which the underwriters exercised an option to purchase 107,000 additional shares onAugust 25, 2017, resulting in additional net proceeds to the Company of approximately $0.7 million after deducting underwriting discounts andcommissions. (7) Stock-based CompensationIn February 2013, the Company’s board of directors and stockholders approved, effective upon the closing of the IPO, the 2013 Stock IncentivePlan (the “2013 Plan”). Under the 2013 Plan, the Company may grant incentive stock options, nonstatutory stock options, stock appreciation rights,restricted stock, restricted stock units and other stock-based awards for the purchase of that number of shares of Common Stock equal to the sum of(i) 1,688,777 shares of Common Stock, (ii) 258,265 shares of Common Stock that were reserved for issuance under the 2006 Plan that remained available forissuance under the 2006 Plan upon the closing of the IPO, (iii) any shares of Common Stock subject to awards under the 2006 Plan which awards expire,terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company without having been fully exercised or resulting in any CommonStock being issued. In addition, the number of shares of Common Stock that may be issued under the 2013 Plan is subject to automatic annual increases, tobe added on January 1 of each year from January 1, 2014 through and including January 1, 2023, equal to the number of shares that is the lesser of(a) 3,000,000, (b) 4% of the then outstanding shares of Common Stock or (c) an amount determined by the Company’s board of directors. In January 2015,the number of shares authorized for issuance under the 2013 Plan increased by 1,232,232 shares. In January 2016, the number of shares authorized forissuance under the 2013 Plan increased by 1,463,391 shares. In January 2017, the number of shares authorized for issuance under the 2013 Plan increased by1,477,677 shares. As of December 31, 2017, 890,011 shares were available for future issuance under the 2013 Plan. In January 2018, the number of sharesauthorized for issuance under the 2013 Plan increased by 2,058,300 shares.Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the 2013Plan. Options granted by the Company typically vest over a four year period. Certain of the options are subject to acceleration of vesting in the event ofcertain change of control transactions. The options are exercisable from the date of grant for a period of ten years. For options granted prior to the Company’sIPO, the exercise price equaled the estimated fair value of the Common Stock as determined by the board of directors on the date of grant. For options grantedsubsequent to the Company’s IPO, the exercise price equaled the closing price of the Company’s stock on the NASDAQ Global Select Market on the date ofgrant.Stock option activity at December 31, 2017 and changes during the year then ended are presented in the table and narrative below (in thousands,except share and per share data): Shares Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm(years) AggregateIntrinsicValue Options outstanding at December 31, 2016 4,066,411 $18.42 7.62 $687 Granted 2,532,250 4.50 Exercised (88,319) 3.27 Canceled (512,548) 11.84 Options outstanding at December 31, 2017 5,997,794 $13.33 7.14 $6,065 Options exercisable at December 31, 2017 3,142,636 $16.41 5.70 $2,274 87 The aggregate intrinsic value in the table above represents the difference between the Company’s closing common stock price on the last tradingday during the year ended December 31, 2017 and the exercise price of the options, multiplied by the number of in-the-money options. The total intrinsicvalue of options exercised in the years ended December 31, 2017, 2016, and 2015 was $0.2 million, $0.3 million and $27.0 million, respectively. As ofDecember 31, 2017, there was $16.1 million of total unrecognized stock-based compensation cost related to employee and non-employee unvested stockoptions granted under the 2006 Plan and the 2013 Plan. The Company expects to recognize that cost over a remaining weighted-average period of 2.5 years.Since the Company completed its IPO on March 25, 2013, it has not had sufficient historical data to support a calculation of volatility andexpected life. As such, the Company has used a weighted-average volatility considering the Company’s own volatility and the volatilities of a representativegroup of publicly traded companies. For purposes of identifying similar entities, the Company selected a group of publicly traded life science/biotechnologycompanies based on their disease focus, stage of development, number of compounds in clinical trials and number of years as a publicly-traded company. Therisk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, commensurate with the expected life assumption. The expectedlife of stock options granted represents the weighted-average period of time that stock options granted are expected to be outstanding determined using thesimplified method for employee grants. For non-employee grants, the expected life is equal to the remaining contractual term. The expected life is applied tothe stock option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among itsemployee population.The Company estimates the fair value of each employee and director stock option award on the grant date using the Black-Scholes option-pricingmodel based on the following assumptions: Year Ended December 31, 2017 2016 2015 Volatility factor 89.24%-90.56% 85.77%-87.82% 56.49%-85.34% Expected life (in years) 5.31-6.11 5.31-6.21 5.31-6.11 Risk-free interest rate 1.78%-2.18% 1.25%-2.10% 1.35%-1.94% Dividend yield 0% 0% 0% Compensation cost for stock options and restricted stock units granted to employees is based on the estimated grant-date fair value and isrecognized over the vesting period of the applicable option on a straight-line basis. Stock-based compensation expense related to stock options and restrictedstock units granted to employees was $12.0 million, $13.1 million, and $11.6 million during the years ended December 31, 2017, 2016, and 2015,respectively.Using the Black-Scholes option-pricing model, the weighted-average grant date fair values of options granted to employees for the years endedDecember 31, 2017, 2016 and 2015 was $4.50, $7.53 and $22.78, respectively.Stock-based compensation expense recognized in the Company’s consolidated statements of operations during the periods presented was asfollows (in thousands): Year EndedDecember 31, 2017 2016 2015 Research and development $5,768 $6,661 $5,906 General and administrative 6,195 6,484 5,710 Total (includes employee and non-employee stock compensation) $11,963 $13,145 $11,616 Year EndedDecember 31, 2017 2016 2015 Stock options $11,156 $11,230 $10,865 Restricted stock units 686 1,757 596 Employee stock purchase plan 121 158 155 Total (includes employee and non-employee stock compensation) $11,963 $13,145 $11,616 88 Restricted Stock UnitsIn January 2016, the Company granted additional restricted stock units to employees. These restricted stock units vest in annual increments overthree years, subject to continued employment with the Company and had a grant date fair value of $8.47 per share, which was the closing price of theCompany’s common stock on the date of grant. In January 2017, the Company issued restricted stock units with service and performance conditions to certain employees, none of which vestedduring the twelve months ended December 31, 2017. Vesting of these awards is contingent on the occurrence of certain milestone events and fulfillment ofany remaining service condition. As a result, the related compensation cost is recognized as an expense when achievement of the milestone is consideredprobable over the remaining requisite service period.The following table summarizes the restricted stock activity for the year ended December 31, 2017: Shares Grant DateFair Value Unvested at December 31, 2016 254,378 $8.47 Granted 175,000 3.83 Cancelled (62,572) 6.25 Vested/Released (84,772) 8.47 Unvested at December 31, 2017 282,034 $6.09As of December 31, 2017, there was $1.0 million of total unrecognized stock-based compensation expense related to restricted stock units grantedunder the Plan. The expense is expected to be recognized over a weighted-average period of 1.6 years. (8) Employee Stock Purchase PlanOn February 27, 2014, upon the recommendation of the Company’s compensation committee, the Company’s board of directors adopted, subjectto stockholder approval, the 2014 Employee Stock Purchase Plan (the “ESPP”) pursuant to which the Company may sell up to an aggregate of 300,000 sharesof Common Stock. The ESPP was approved by the Company’s stockholders on June 12, 2014. The ESPP allows eligible employees to purchase commonstock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each period during the term of theESPP. The offering periods are six months each from May to November and from November to May of each calendar year. Pursuant to the ESPP, the Companysold a total of 77,604 shares of common stock during the year ended December 31, 2017 under the ESPP at purchase prices of $3.43, and $5.10, respectively,which represented 85% of the closing price of the Company’s common stock on May 12, 2017, and November 14, 2017, respectively. Pursuant to the ESPP,the Company sold a total of 58,702 shares of common stock during the year ended December 31, 2016 under the ESPP at purchase prices of $2.95, and $3.32,respectively, which represented 85% of the closing price of the Company’s common stock on May 13, 2016, and November 14, 2016, respectively. Pursuantto the ESPP, the Company sold a total of 16,422 shares of common stock during the year ended December 31, 2015 under the ESPP at purchase prices of$19.29 and $9.30, respectively, which represented 85% of the closing price of the Company’s common stock on May 14, 2015 and November 14, 2015,respectively. The Company records stock-based compensation expense under the ESPP based on the fair value of the purchase rights using the Black-Scholesoption pricing model. The total stock-based compensation expense recorded as a result of the ESPP was $121,000, $158,000, and $156,000 during the yearsended December 31, 2017, 2016 and 2015, respectively. (9) Income TaxesThe Company accounts for income taxes under ASC 740, Accounting for Income Taxes. Deferred income tax assets and liabilities are determinedbased upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be ineffect when the differences are expected to reverse.Loss before income tax (benefit) provision consists of the following (in thousands): Year endedDecember 31, 2017 2016 2015 United States $(94,748) $(62,536) $(64,037)Foreign (20,004) (14,944) (19,152)Total loss before income taxes $(114,752) $(77,480) $(83,189)89 For the years ended December 31, 2017, 2016 and 2015 the Company did not have a current or deferred income tax expense or benefit.A reconciliation of the Federal statutory tax rate of 34% to the Company’s effective income tax rate follows: Year endedDecember 31, 2017 2016 2015 Statutory tax rate (34.00)% (34.00)% (34.00)%State taxes, net of Federal benefits (4.37)% (4.19)% (4.02)%Permanent differences 1.18% 1.19% 0.71%Credits (0.96)% (1.47)% (1.65)%Change in valuation allowance (11.04)% 29.78% 30.74%Foreign rate differential 5.93% 6.56% 7.03%Federal Rate Change - Tax Reform 43.26% — — Other — 2.13% 1.19%Effective tax rate —% —% —%On December 22, 2017, the Tax Cuts and Jobs Act ("the Act") was enacted in the United States. The Act reduces the U.S. federal corporate tax ratefrom 34% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and createsnew taxes on certain foreign sourced earnings. At December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act,including the effects on our existing deferred tax balances and the one-time transition tax. For the year ended December 31, 2017, we recognized notransition tax and have not recorded any additional taxes on the outside basis difference of our foreign subsidiary as our investment in the foreign subsidiaryis essentially permanent in duration. Determining the amount of unrecognized deferred tax liability is not practicable. We are still in the process of analyzingthe impact of the Act on our indefinite reinvestment assertion. As a result of the Act, we remeasured certain deferred tax assets and liabilities based on the rates at which they are anticipated to reverse in thefuture, which is generally 21%. This resulted in a decrease to our gross deferred tax assets and a corresponding decrease in our valuation allowance of in theamount of $49.7 million. Any items reported are done so using provisional amounts until the initial accounting required by the Act is complete. Additional time andresources are needed to ensure the correct implementation of the Act. As of December 31, 2017 the Company had federal net operating loss carryforwards of approximately $384.7 million and state net operating losscarryforwards of $350.5 million, which are available to reduce future taxable income. The Company adopted ASU 2016-09, Improvements to EmployeeShare-Based Payment Accounting, during the quarter ended March 31, 2017, upon which the net operating loss carryforward deferred tax assets wasincreased by the excess tax benefits of $10.5 million (tax-effected) with a corresponding increase to the Company’s valuation allowance.The Company also had federal tax credits of $7.0 million and state tax credits of $2.6 million, which may be used to offset future tax liabilities.The net operating loss (NOL) and tax credit carryforwards will expire at various dates through 2037. The NOL and tax credit carryforwards are subject toreview and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subjectto an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of50%, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of taxattributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the valueof the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Companyhas not, as yet, conducted a study of research and development (“R&D”) credit carryforwards. This study may result in an adjustment to the Company’s R&Dcredit carryforwards.90 The principal components of the Company’s deferred tax assets are as follows (in thousands): Year endedDecember 31, 2017 2016 Deferred tax assets: Net operating loss carry forwards $102,942 $106,560 Equity-based compensation 7,073 6,937 Other temporary differences 1,169 1,235 Research and development credit and carry forwards 9,079 7,682 Deferred tax assets 120,263 122,414 Less valuation allowance (120,263) (122,414)Net deferred tax assets $— $— ASC 740 requires a valuation allowance to reduce the deferred tax assets reported, if based on the weight of available evidence, it is more likelythan not that some portion or all of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, theCompany has recorded a valuation allowance against its deferred tax assets at December 31, 2017 and 2016, respectively, because the Company’smanagement has determined that is it more likely than not that these assets will not be realized. The $2.2 million decrease in the valuation allowance in 2017primarily relates to the federal rate reduction from 34% to 21% as a result of the Tax Act, partially offset by the net loss incurred by the Company in 2017 andthe impact of the adoption of ASU 2016-09.ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statement by prescribing the minimumrecognition threshold and measurement of a tax position taken or expected to be taken in a tax return. The Company had gross tax-effected unrecognized taxbenefits of $1.1 million and $1.0 million at December 31, 2017 and 2016, respectively. Unrecognized tax benefits represent tax positions for which reserveshave been established. A full valuation allowance has been provided against the Company’s deferred tax assets, so that the effect of any unrecognized taxbenefits would simply be to reduce the gross amount of the deferred tax asset and the corresponding valuation allowance. The Company anticipates that theamount of unrecognized tax benefits recorded will not change in the next twelve months.As of December 31, 2017 and 2016, the Company had no accrued interest or penalties related to uncertain tax positions.The aggregate changes in gross unrecognized tax benefits during the years ended December 31, 2017, 2016, and 2015 were as follows (inthousands): Year endedDecember 31, 2017 2016 2015 Balance at beginning of year $967 $822 — Increases for tax positions taken during current period 152 145 249 Increases for tax positions taken in prior periods — — 573 Decreases for tax positions taken during current period (12) — — Decreases for tax positions taken in prior periods — — — Balance at end of year $1,107 $967 $822The Company is currently open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions for the taxyears ended 2014 through 2016. Carryforward tax attributes generated in years past may still be adjusted upon future examination if they have or will be usedin a future period. The Company is currently not under examination by the Internal Revenue Service or any other jurisdictions for any tax years. (10) Commitments and ContingenciesLease CommitmentsOn March 24, 2015, the Company amended its existing operating lease to expand its existing premises by an additional 13,711 square feet ofoffice and laboratory space for a total of 29,610 square feet. The effective date of this amendment was April 1,91 2015. On March 31, 2015, the Company canceled an existing sublease entered into in September 2014 covering 15,174 square feet of office and laboratoryspace.On June 18, 2015, the Company further amended its existing operating lease to expand its leased premises by an additional 7,828 square feet ofoffice and laboratory space for a total of 37,438 square feet. The lease for the additional office and laboratory space was effective as of August 1, 2015. Inconnection with the amendment, the lease term was extended from November 30, 2016 to November 30, 2019.In the third quarter of 2016, the Company entered into a sublease with respect to a portion of its principal facilities with an unrelated thirdparty. The term of the sublease expires in November 2019, with the sublessee obligated to pay rent to the Company that approximates the rent the Companyis currently paying to its landlord with respect to such portion of its facility.As of December 31, 2017, the aggregate minimum future rent payments under the lease agreement, net of the sublease agreement, are as follows (inthousands): December 31,2017 2018 1,752 2019 1,650 Total minimum lease payments $3,402The Company recorded $1.4 million, $1.6 million and $1.7 million in rent expense for the years ended December 31, 2017, 2016 and 2015,respectively.LitigationIn January 2016 and March 2016, two securities class action lawsuits were filed against the Company, the Company’s chief executive officer, theCompany’s former chief operating officer and the Company’s former chief financial officer, in the United States District Court for the District ofMassachusetts. In May 2016, the court consolidated the two lawsuits and appointed lead plaintiffs and lead counsel. The lead plaintiffs filed a consolidatedamended complaint in July 2016 and filed a second consolidated amended complaint in August 2016. The second amended complaint was brought on behalfof an alleged class of those who purchased the Company’s common stock between March 5, 2015 and September 8, 2015, and alleged claims arising underSections 10 and 20 of the Exchange Act of 2934, as amended. The complaint generally alleged that the defendants violated the federal securities laws by,among other things, making material misstatements or omissions concerning IGNITE2. The complaint sought, among other relief, unspecified compensatorydamages, attorneys’ fees and costs. In October 2016, the Company filed a motion to dismiss the second amended complaint in its entirety, which plaintiffsopposed. The Company’s motion to dismiss was granted by the United States District Court for the District of Massachusetts in May 2017. In July 2017plaintiffs appealed this decision to the United States Court of Appeals for the First Circuit, or the First Circuit. In November 2017 plaintiffs withdrew theirappeal to the First Circuit. (11) Employee Benefit PlanIn 2007, the Company established the Tetraphase Pharmaceuticals, Inc. 401(k) Plan (the “401(k) Plan”) for its employees, which is designed to bequalified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k)Plan limits. During 2014, the Company began to make matching contributions of 50% of the first 6% of employee contributions. The Company madematching contributions of $354,000, $311,000, and $261,000 for the years ended December 31, 2017, 2016, and 2015, respectively. 92 (12) Quarterly Results (Unaudited) Three Months Ended March 31,2017 June 30,2017 September30,2017 December 31,2017 (in thousands, except per share data) (unaudited) Revenue $1,485 $1,586 $4,067 $2,528 Operating expenses 31,080 33,578 34,377 26,346 Loss from operations (29,595) (31,992) (30,310) (23,818)Other income (expense), net 137 181 302 343 Net loss $(29,458) $(31,811) $(30,008) $(23,475)Net loss per share—basic and diluted $(0.79) $(0.83) $(0.63) $(0.46) Three Months Ended March 31,2016 June 30,2016 September30,2016 December 31,2016 (in thousands, except per share data) (unaudited) Revenue $1,962 $1,243 $850 $1,090 Operating expenses 18,776 18,505 22,048 23,646 Loss from operations (16,814) (17,262) (21,198) (22,556)Other expense, net 73 94 88 95 Net loss $(16,741) $(17,168) $(21,110) $(22,461)Net loss per share—basic and diluted $(0.46) $(0.47) $(0.58) $(0.61) ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.ITEM 9A.Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures as of December 31, 2017. In designing and evaluating our disclosure controls and procedures, management recognized that anycontrols and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and ourmanagement necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, ourChief Executive Officer and Chief Financial Officer concluded that as of December 31, 2017, our disclosure controls and procedures were (1) designed toensure that material information relating to us is made known to our management including our principal executive officer and principal financial officer byothers, particularly during the period in which this Annual Report on Form 10-K was prepared and (2) effective, in that they provide reasonable assurance thatinformation required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms.The certifications of our principal executive officer and principal financial officer attached as Exhibits 31.1 and 31.2 to this report include, inparagraph 4 of such certifications, information concerning our disclosure controls and procedures and internal controls over financial reporting.Internal Control Over Financial Reporting (a)Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financialreporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, thecompany’s principal executive and principal financial officers and effected by the93 company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies andprocedures that: •Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assetsof the company; •Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and •Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’sassets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systemsdetermined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degreeof compliance with the policies or procedures may deteriorate.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment,management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—IntegratedFramework (2013 framework) (COSO). Based on its assessment, management believes that, as of December 31, 2017, our internal control over financialreporting is effective at the reasonable assurance level.Ernst and Young LLP, our independent registered public accounting firm has audited the consolidated financial statements included in thisAnnual Report on Form 10-K and, as part of the audit, has issued a report on the effectiveness of our internal control over financial reporting as of December31, 2017, which report is included herein.94 (b)Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Tetraphase Pharmaceuticals, Inc. Opinion on Internal Control over Financial Reporting We have audited Tetraphase Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2017, based on criteria established inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSOcriteria). In our opinion, Tetraphase Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financialreporting as of December 31, 2017, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss, stockholders’equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and our report dated March 6, 2018 expressedan unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ Ernst & Young LLPBoston, MassachusettsMarch 6, 201895 (c)Changes in Internal Control Over Financial Accounting There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2017 that havematerially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.Other InformationNone. 96 PART III ITEM 10.Directors, Executive Officers and Corporate GovernanceThe information required by this Item 10 will be contained in the sections entitled “Election of Directors” and “Section 16(a) Beneficial OwnershipReporting Compliance” appearing in the definitive proxy statement we will file in connection with our 2018 Annual Meeting of Stockholders and isincorporated by reference herein. The information required by this item concerning our code of ethics is set forth in the section entitled “Code of BusinessConduct and Ethics” appearing in the definitive proxy statement we will file in connection with our 2018 Annual Meeting of Stockholders and isincorporated by reference herein. The information required by this item relating to executive officers is set forth in the section entitled “Executive Officers”appearing in the definitive proxy statement we will file in connection with our 2018 Annual Meeting of Stockholders and is incorporated by reference herein.ITEM 11.Executive CompensationThe information required by this Item 11 will be contained in the sections entitled “Executive and Director Compensation,” “CompensationCommittee Interlocks and Insider Participation” and “Compensation Committee Report” appearing in the definitive proxy statement we will file inconnection with our 2018 Annual Meeting of Stockholders and is incorporated by reference herein.ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item 12 will be contained in the sections entitled “Ownership of Our Common Stock” and “Executive andDirector Compensation—Equity Compensation Plan Information” appearing in the definitive proxy statement we will file in connection with our 2018Annual Meeting of Stockholders and is incorporated by reference herein.ITEM 13.Certain Relationships and Related Person Transactions, and Director IndependenceThe information required by this Item 13 will be contained in the sections entitled “Certain Relationships and Related Person Transactions”appearing in the definitive proxy statement we will file in connection with our 2018 Annual Meeting of Stockholders and is incorporated by reference herein.ITEM 14.Principal Accounting Fees and ServicesThe information required by this Item 14 will be contained in the section entitled “Corporate Governance—Principal Accountant Fees andServices” appearing in the definitive proxy statement we will file in connection with our 2018 Annual Meeting of Stockholders and is incorporated byreference herein. 97 PART IV ITEM 15.Exhibits and Financial Statement Schedules(a)Documents filed as part of Form 10-K. (1)Financial StatementsReport of Independent Registered Public Accounting FirmConsolidated Balance SheetsConsolidated Statements of Operations and Comprehensive LossConsolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)Consolidated Statements of Cash FlowsNotes to Consolidated Financial Statements (2)SchedulesSchedules have been omitted as all required information has been disclosed in the financial statements and related footnotes. (3)ExhibitsThe Exhibits listed in the Exhibit Index are filed as a part of this Form 10-K.ITEM 16.Form 10-K SummaryNone. 98 EXHIBIT INDEX Incorporated by Reference fromExhibitNumber Description Registrant’sForm File No.Date Filedwith theSEC ExhibitNumber 3.1 Restated Certificate of Incorporation of the Registrant 10-Q 001-358375/13/13 3.1 3.2 Amended and Restated Bylaws of the Registrant 10-Q 001-358375/13/13 3.2 4.1 Specimen certificate evidencing shares of common stock S-1/A 333-1865743/5/13 4.1 10.1# 2006 Stock Incentive Plan, as amended S-1 333-1865742/11/13 10.5 10.2# Form of Incentive Stock Option Agreement under 2006 Stock Incentive Plan S-1 333-1865742/11/13 10.6 10.3# Form of Nonstatutory Stock Option Agreement under 2006 Stock Incentive Plan S-1 333-1865742/11/13 10.7 10.4# 2013 Stock Incentive Plan S-1/A 333-1865743/5/13 10.8 10.5# Form of Incentive Stock Option Agreement under 2013 Stock Incentive Plan S-1/A 333-1865743/5/13 10.9 10.6# Form of Nonstatutory Stock Option Agreement under 2013 Stock Incentive Plan S-1/A 333-1865743/5/13 10.10 10.7# Form of Restricted Stock Agreement under 2013 Incentive Plan 10-K 001-358373/13/17 10.7 10.8# 2014 Employee Stock Purchase Plan 10-Q 001-358378/12/14 10.1 10.9# Form of Nonstatutory Option Agreement for Inducement Grants 10-Q 001-358375/7/2015 10.3 10.10# Offer letter, dated as of December 4, 2007, by and between the Registrant andGuy Macdonald, as amended S-1 333-1865742/11/13 10.11 10.11# Second Amendment to Offer Letter, dated as of March 5, 2014, by and betweenthe Registrant and Guy Macdonald 10-Q 001-358375/12/14 10.2 10.12# Offer letter, dated as of June 11, 2015, by and between the Registrant andJacques Dumas, as amended 10-K 001-358373/13/17 10.12 10.13#* Offer letter, dated as of December 27, 2017, by and between the Registrant andLarry Tsai 10.14# Offer Letter, dated September 21, 2017, by and between the Registrant andKamalam Unninayar 10-Q 001-3583711/1/17 10.2 10.15# Offer letter, dated as of February 16, 2015, by and between the Registrant andMaria Stahl 10-Q 001-358375/7/15 10.2 99  Incorporated by Reference fromExhibitNumber Description Registrant’sForm File No.Date Filedwith theSEC ExhibitNumber 10.16# Form of Indemnification Agreement entered into between the Registrant andeach of its directors and executive officers S-1/A 333-1865743/5/13 10.27 10.17 Lease Agreement, dated as of November 16, 2006, by and between theRegistrant and ARE-480 Arsenal Street, LLC, as amended on September 9,2011, March 15, 2012, September 18, 2012, November 20, 2013, March 24,2015 and June 18, 2015 10-Q 001-358378/6/15 10.1 10.18 Amendment, dated September 4, 2014, to Lease Agreement, dated as ofNovember 16, 2006, by and between the Registrant and ARE-480 ArsenalStreet, LLC, as amended 10-Q 001-3583711/10/14 10.1 10.19 Amendment, dated March 24, 2015, to Lease Agreement, dated as of November16, 2006, by and between the Registrant and ARE-480 Arsenal Street, LLC, asamended 10-Q 001-358375/7/2015 10.1 10.20 Amendment, dated June 18, 2015, to Lease Agreement, dated as of November16, 2006, by and between the Registrant and ARE-480 Arsenal Street, LLC, asamended 10-Q 001-358378/6/2015 10.1 10.21† License Agreement, dated as of August 3, 2006, by and between the Registrantand the President and Fellows of Harvard College, as amended S-1 333-1865742/11/13 10.20 10.22*† Amendment, dated as of December 5, 2017, by and between the Registrant andthe President and Fellows of Harvard College, as amended 10.23† Subcontract Agreement, dated as of February 1, 2012, by and between theRegistrant and CUBRC, Inc. S-1 333-1865742/11/13 10.21 10.24† Subcontract Agreement, dated as of September 30, 2011, by and between theRegistrant and CUBRC, Inc. S-1 333-1865742/11/13 10.22 10.25# Offer letter, dated as of June 20, 2015, by and between the Registrant andChristopher Watt 10-K 001-358372/25/16 10.17 10.26† Master Manufacturing Services Agreement, dated June 14, 2017, by andbetween the Registrant and Patheon UK Limited 10-Q 001-358378/2/17 10.1 10.27† Commercial Supply Agreement, dated October 16, 2017, by and between theRegistrant and Finorga SAS 10-Q 001-3583711/1/17 10.1 10.28*† License Agreement, dated February 20, 2018, by and between the Registrantand Everest Medicines Limited 10.29# Offer letter, dated as of December 22, 2010, by and between the Registrant andPatrick T. Horn S-1 333-1865742/11/13 10.13 10.30# Amendment to the Offer letter, dated March 5, 2014, by and between theRegistrant and Patrick Horn 10-Q 001-358375/12/14 10.4 100  Incorporated by Reference fromExhibitNumber Description Registrant’sForm File No.Date Filedwith theSEC ExhibitNumber 10.31#* Offer letter, dated as of March 1, 2018, by and between the Registrant and LarryEdwards 21.1* Subsidiaries of the Registrant 23.1* Consent of Ernst & Young LLP 31.1* Chief Executive Officer—Certification pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002 31.2* Principal Financial Officer—Certification pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002 32.1* Chief Executive Officer—Certification pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Principal Financial Officer—Certification pursuant to Rule 13a-14(a) of theSecurities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document *Filed herewith.#Indicates management contract or compensatory plan or arrangement.†Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and ExchangeCommission. 101  SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized. TETRAPHASE PHARMACEUTICALS, INC. Date: March 6, 2018By: /s/ Guy Macdonald Guy MacdonaldPresident & Chief Executive Officer(Principal Executive Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date /s/ Guy Macdonald Director, President and Chief Executive Officer March 6, 2018Guy Macdonald (Principal Executive Officer) /s/ Kamalam Unninayar Chief Financial Officer March 6, 2018Kamalam Unninayar (Principal Financial and Accounting Officer) /s/ L. Patrick Gage Chairman March 6, 2018L. Patrick Gage, Ph.D. /s/ Garen Bohlin Director March 6, 2018Garen Bohlin /s/ Jeffrey A. Chodakewitz Director March 6, 2018Jeffrey A. Chodakewitz /s/ John G. Freund Director March 6, 2018John G. Freund /s/ Geraldine Henwood Director March 6, 2018Geraldine Henwood /s/ Nancy Wysenski Director March 6, 2018Nancy Wysenski 102 Tetraphase Pharmaceuticals, Inc.480 Arsenal Street, Suite 110Watertown, MA 02472 Exhibit 10.13 December 21, 2017Larry Tsai[address][address] Dear Larry:On behalf of Tetraphase Pharmaceuticals, Inc. (the "Company"), I am very pleased to present you with this amended and restated offerletter in connection with our offer to promote you to the position of Chief Medical Officer. The purpose of this letter is to summarizethe terms of your continued employment with the Company in this new appointment, should you accept our offer. 1.Employment. Effective December 29, 2017 (the “Effective Date”), you will be employed to serve on a full-time basis in theposition of Chief Medical Officer, reporting directly to me as President and Chief Executive Officer, TetraphasePharmaceuticals, Inc. As Chief Medical Officer, you will have such duties and responsibilities as are customary for suchposition and such other duties and responsibilities as may be assigned to you by the Company. You agree to continue todevote your full business time, best efforts, skill, knowledge, attention, and energies to the advancement of the Company'sbusiness and interests and to the performance of your duties and responsibilities as an employee of the Company. 2.Base Compensation. As of the Effective Date, your base salary will be increased to the rate of $15,577 per bi-weekly payperiod (equivalent to an annualized rate of $405,000), less all applicable federal, state, and local taxes and withholdings, suchbase salary to be paid in installments in accordance with the Company’s standard payroll practices. Such base salary may beadjusted from time to time in accordance with normal business practices and in the sole discretion of the Company. 3.Bonus. If the Board of Directors approves an annual bonus for fiscal year 2018 or any fiscal year thereafter, you may beeligible for a discretionary retention and performance bonus award of up to 40% of your annualized base salary in such year(the “Target Bonus”). The bonus award, if any, will be based on both individual and corporate performance and will bedetermined by the Board of Directors of the Company in its sole discretion. In any event, in order to be eligible for and toearn a bonus, if any, you must be an active employee of the Company on the date such bonus is distributed, as it also servesas an incentive to remain employed by the Company. Any bonus that the Board determines to be payable for a fiscal yearwill be paid before March 15th of the next fiscal year. 4.Benefits. You will continue to participate in any and all benefit programs that the Company establishes and makes availableto its employees from time to time, provided that you are eligible under (and subject to all provisions of) the plan documentsgoverning those programs. Such benefits may include: participation in group medical and dental insurance programs, termlife insurance, long-term disability insurance and participation in the Company's 401(k) plan. The  benefits made available by the Company, and the rules, terms, and conditions for participation in such benefit programs, maybe changed by the Company at any time and from time to time without advance notice (other than as required by suchprograms or under law). With respect to vacation time, you will begin to accrue vacation at 1.67 days/month or theequivalent of a maximum of 4 weeks per calendar year. Vacation may be taken at such times as may be approved by theCompany. Your accrual and use of vacation time will also be subject to any and all vacation policies and procedures that theCompany establishes from time to time. 5.Stock Incentive Program. You will continue to be eligible to participate in the Company's stock incentive program. Inconnection with your acceptance of this promotion and subject to approval by the Company's Board of Directors, theCompany will grant to you an option to purchase 150,000 shares of the Company's Common Stock (subject to adjustment forstock splits, combinations, or other recapitalizations) which will vest (i.e., become exercisable) 6.25% of the shares everythree-months, subject to your continued employment by the Company. The option exercise price will be equal to the fairmarket value of one share of Common Stock on the date of grant of the option as determined by the Company's Board ofDirectors. In addition, if you accept this offer of promotion to Chief Medical Officer and also subject to approval of theBoard of Directors, the Company will grant you 40,000 Performance Based Restricted Stock Units (PRSUs). The optiongrant and the PRSUs will be issued pursuant to the Company’s 2013 Stock Incentive Plan, the stock option agreementcovering the option and the Performance Based Restricted Stock Unit agreement covering the PRSUs. 6.At-Will Employment. This letter shall not be construed as an agreement, either express or implied, to continue to employyou for any stated term, and shall in no way alter the Company’s policy of employment at will, under which both you and theCompany remain free to terminate the employment relationship at any time, for any reason, with or without cause, and withor without notice. Although your job duties, title, compensation and benefits, as well as the Company's personnel policiesand procedures, may change from time to time, the "at-will" nature of your employment may only be changed by a writtenagreement signed by you and the principal executive officer of the Company, which expressly states the intention to modifythe at-will nature of your employment. Similarly, nothing in this letter shall be construed as an agreement, either express orimplied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company,except to the extent explicitly set forth in Section 7 hereof. 7.Severance Benefits. Notwithstanding your status as an at-will employee, in the event that the Company (or, as may beapplicable, an acquiring or succeeding company) terminates your employment without “Cause,” or you terminate youremployment with the Company (or, as may be applicable, an acquiring or succeeding company) for “Good Reason” (eachterm as defined in Exhibit A and in either case a “Qualifying Termination”), you will be eligible for the benefits outlined ineither sub-section A or subsection B (the “Severance Benefits”), subject to the terms set forth in this letter agreement:(A)If a Qualifying Termination occurs prior to or more than twelve months following a Change in Control Event (as definedin Exhibit A), the Company will provide to you as severance pay an amount equal to twelve (12) months of your then-currentbase salary (subject to all applicable federal, state and local taxes and withholdings and payable over a twelve -month- 2 -  period in accordance with the Company’s regular payroll practices). In addition, should you timely elect and be eligible tocontinue receiving group medical coverage pursuant to applicable “COBRA” law, and so long as the Company can providesuch benefit without violating the nondiscrimination requirements of applicable law, the Company will, until the earlier of (x)the date that is twelve (12) months following your termination date and (y) the date you (or, as applicable, your beneficiaries)become eligible for coverage through a new employer, continue to pay the share of the premium for such coverage that ispaid by the Company for active and similarly-situated employees who receive the same type of coverage (provided that theCompany will not pay more each month than the monthly amount it was paying for your coverage when your employmentended). The remaining balance of any premium costs shall timely be paid by you on a monthly basis (or such other basis asis required by the Company) for as long as, and to the extent that, you remain eligible for COBRA continuation. (B)If a Qualifying Termination occurs upon or during the twelve month period commencing upon a Change inControl Event, the Company will provide to you as severance pay an amount equal to the sum of (i) twelve (12) months ofyour then-current base salary (subject to all applicable federal, state and local taxes and withholdings and payable over atwelve -month period in accordance with the Company’s regular payroll practices) and (ii) an amount equal to 100% of yourthen-current annual Target Bonus (subject to all applicable federal, state and local taxes and withholdings and payable in alump sum). In addition, should you timely elect and be eligible to continue receiving group medical coverage pursuant toapplicable “COBRA” law, and so long as the Company can provide such benefit without violating the nondiscriminationrequirements of applicable law, the Company will, until the earlier of (x) the date that is twelve (12) months following yourtermination date and (y) the date you (or, as applicable, your beneficiaries) become eligible for coverage through a newemployer, continue to pay the share of the premium for such coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage (provided that the Company will not pay more each month thanthe monthly amount it was paying for your coverage when your employment ended). The remaining balance of anypremium costs shall timely be paid by you on a monthly basis (or such other basis as is required by the Company) for as longas, and to the extent that, you remain eligible for COBRA continuation. Further, the vesting of all stock options held by youon the date of termination shall be accelerated, such that such stock options shall become 100% fully vested and exercisable.Your receipt of severance pay and benefits as set forth in this Section 7 is conditioned upon your full compliance with theNon-Solicitation Agreement (as defined in Section 8 below), your timely execution of a separation and release of claimsagreement prepared by and satisfactory to the Company (which will include, at a minimum, a release by you of all releasableclaims, non-disparagement and cooperation obligations, and reaffirmation of your continuing obligations under the Non-Solicitation Agreement) (the “Release”), and any applicable revocation period with respect to the Release expiring withoutrevocation within 60 days (or such shorter period as may be directed by the Company) following your termination date. Ifthe Release has been executed and any applicable revocation period has expired prior to the 60th day following yourtermination, then the severance payments and benefits shall commence (or in the case of any lump sum payment, be paid) onthe first regular pay date after any applicable revocation period has expired (but no earlier than the 30th day following yourtermination date); provided, however, that if the 60th day following your termination occurs in the calendar year followingthe- 3 -  calendar year during which your termination occurs, then the severance payments shall commence (or in the case of any lumpsum payment, be paid) no earlier than January 1 of such subsequent calendar year. The provision of severance pay andbenefits hereunder shall be subject to the terms and conditions set forth in Section 11 hereto. In the event you breach yourobligations under the Release or the Non-Solicitation Agreement, you will have no right to receive, and the Company shallnot provide to you, any severance pay or benefits following the date of such breach. Such cessation of payments and benefitsshall be in addition to, and not in lieu of, any and all other remedies, whether at law or in equity, available to the Companyfor such breach. 8.Non-Solicitation, Non-Disclosure and Developments Agreement. As a condition of your continued employment andpromotion, you reaffirm your obligations under the Non-Solicitation, Non-Disclosure and Developments Agreement (the“Non-Solicitation Agreement”) which you previously signed in connection with your employment, a copy of which isenclosed with this letter. 9.Company Policies and Procedures. As an employee of the Company, you remain required to comply with all Companypolicies and procedures. Violations of the Company's policies may lead to immediate termination of youremployment. Further, the Company's premises, including all workspaces, furniture, documents, and other tangible materials,and all information technology resources of the Company (including computers, data and other electronic files, and allinternet and email) remain subject to oversight and inspection by the Company at any time. Company employees shouldhave no expectation of privacy with regard to any Company premises, materials, resources, or information. 10.Other Agreements and Governing Law. You represent that you are not bound by any employment contract, restrictivecovenant or other restriction preventing you from continuing employment with or carrying out your responsibilities for theCompany hereunder, or which is in any way inconsistent with the terms of this letter. Please note that this amended andrestated offer letter is your formal offer of continued employment and supersedes any and all prior or contemporaneousagreements, discussions and understandings, whether written or oral, relating to the subject matter of this letter or youremployment with the Company, including without limitation the previous offer letter between you and the Company datedMarch 14, 2014. The resolution of any disputes under this letter will be governed by Massachusetts law. 11.Section 409A of the Code. Subject to the provisions in this Section 11, any severance payments or benefits under this letter will begin only upon the dateof your “separation from service” (determined as set forth below) which occurs on or after the date of termination of youremployment. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be providedto you under this letter.(a) It is intended that each installment of the severance payments and benefits provided under this letter shall be treated as aseparate “payment” for purposes of Section 409A of the Internal Revenue Code and the guidance issued thereunder(“Section 409A”). Neither you nor the Company will have the right to accelerate or defer the delivery of any such paymentsor benefits except to the extent specifically permitted or required by Section 409A.- 4 -  (b) The determination of whether and when your separation from service from the Company has occurred shall be made andin a manner consistent with and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely forpurposes of this paragraph, “Company” shall include all persons with whom the Company would be considered a singleemployer under Section 414(b) and 414(c) of the Internal Revenue Code.(c) If, as of the date of your separation from service from the Company, you are not a “specified employee” (within themeaning of Section 409A), then each installment of the severance payments and benefits provided under this letter shall bemade on the dates and terms set forth in this letter.(d) If, as of the date of your separation from service from the Company, you are a “specified employee” (within the meaningof Section 409A), then:(i) Each installment of the severance payments and benefits due under this letter that, in accordance with the dates and termsset forth herein, will in all circumstances, regardless of when your separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of TreasuryRegulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid on the datesand terms set forth in this letter; and(ii) Each installment of the severance payments and benefits due under this letter that is not described in Section 11(d)(i) andthat would, absent this subsection, be paid within the six-month period following your separation from service from theCompany shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, yourdeath), with any such installments that are required to be delayed being accumulated during the six-month period and paid ina lump sum on the date that is six months and one day following your separation from service and any subsequentinstallments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the precedingprovisions of this sentence shall not apply to any installment of payments or benefits if and to the maximum extent that thatsuch installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation byreason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntaryseparation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following the taxable year in which the separationfrom service occurs.(e) All reimbursements and in-kind benefits provided under this letter shall be made or provided in accordance with therequirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A,including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during your lifetime (orduring a shorter period of time specified in your offer letter), (ii) the amount of expenses eligible for reimbursement during acalendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of aneligible expense will be made on or before the last day of the calendar year following the year in which the expense isincurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.(f) Notwithstanding anything herein to the contrary, the Company makes no representation or warranty and shall have noliability to you or to any other person if the payments and benefits- 5 -  provided in this letter are determined to constitute deferred compensation subject to Section 409A but that do not satisfy anexemption from, or the conditions of, that section. If you agree with the terms of your continued employment in connection with your appointment to the position of ChiefMedical Officer, as set forth herein, please sign the enclosed duplicate of this letter in the space provided below and return it tome. This offer is effective through December 28, 2017. If you do not accept this offer by such date, it will be deemed revoked. On behalf of Tetraphase Pharmaceuticals, Inc.Guy MacdonaldPresident and Chief Executive Officer The foregoing correctly sets forth the terms of my continued at-will employment by the Company. I am not relying on anyrepresentations pertaining to my employment other than those set forth above. /s/ Larry Tsai Larry TsaiDate: December 27, 2017 - 6 -  EXHIBIT ADefinitionsFor the purposes of this amended and restated offer letter:(1) “Cause” shall mean: (a) a good faith finding by the Board of Directors of the Company in its sole discretion that you have(i) failed or refused to substantially perform your assigned duties for the Company, or failed or refused to comply in any materialrespect with the Company’s material policies or procedures, which failure or violation is not cured (provided that the Company deemsthat such failure or violation is curable) within 20 days following written notice from the Company to you specifying the duties notperformed or the nature of the violation, (ii) engaged in dishonesty, gross negligence or misconduct, or (iii) breached any employmentagreement, confidentiality agreement, non-solicitation agreement, or other agreement entered into between you and the Company; or(b) your conviction of, or the entry of a pleading of guilty or nolo contendere by you to, any crime involving dishonesty or moralturpitude or any felony.(2) “Change in Control Event” shall mean(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Actof 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after suchacquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more ofthe combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitionsshall not constitute a Change in Control Event: (i) any acquisition directly from the Company (excluding an acquisition pursuant to theexercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or votingsecurities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly fromthe Company or an underwriter or agent of the Company), or (ii) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any corporation controlled by the Company; or(b) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Companyor a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediatelyfollowing such Business Combination all or substantially all of the individuals and entities who were the beneficial owners of theOutstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, morethan 50% of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors,respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, acorporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly orthrough one or more subsidiaries) in substantially the same proportions as their ownership of the Outstanding Company VotingSecurities immediately prior to such Business Combination:provided that, where required to avoid additional taxation under Section 409A, the event that occurs must also be a “change in theownership or effective control of a corporation, or a change in the- 7 -  ownership of a substantial portion of the assets of a corporation” as defined in Treasury Regulation Section 1.409A-3(i)(5). (3) “Good Reason” shall occur if a Cause event has not occurred or has not been cured, to the extent curable, and if (x) youprovide written notice to the Company of the event or change you consider to constitute “Good Reason” within 30 calendar daysfollowing its occurrence, (y) you provide the Company with a period of at least 30 calendar days to cure the event or change, and (z)the “Good Reason” persists following the cure period, and you actually resign within 60 calendar days following the event or change.An event or change constituting “Good Reason” shall be limited to any of the following that occur without your prior written consent:(a) a material diminution of your duties, authority or responsibilities, provided, however, that the assignment of different duties to youby the Company involving a reasonably comparable level of responsibility shall not, by itself, constitute “Good Reason,” andprovided, further, that a change in your duties, authority or responsibilities solely as a result of the Company’s acquisition by or mergerwith another entity, if you continue to have a comparatively senior role relative to the Company or its successor following such event,shall not, by itself, constitute “Good Reason”; (b) a material diminution in your base compensation, or (c) the relocation of the principalplace at which you provide services to the Company by at least 50 miles and to a location such that your daily commuting distance isincreased. - 8 - Exhibit 10.22 Confidential Materials omitted and filed separately with theSecurities and Exchange Commission. Double asterisks denote omissions. Fourth Amendment to License AgreementThis Fourth Amendment to License Agreement (this “Fourth Amendment”) is entered into as of this 5th day of December, 2017(the “Fourth Amendment Effective Date”), by and between Tetraphase Pharmaceuticals, Inc., a Delaware corporation, with itsprincipal place of business at 480 Arsenal Street, Suite 110, Watertown, MA 02472 (“Licensee”) and President and Fellows ofHarvard College, Richard A. and Susan F. Smith Campus Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, MA 02138(“Harvard”).WHEREAS, the parties entered into a License Agreement as of August 3, 2006 (as previously amended, the “LicenseAgreement”), pursuant to which Harvard granted to Licensee an exclusive license under Harvard Patent Rights and Harvard’s interestin Joint Patent Rights (as such terms are defined in the License Agreement);WHEREAS, on January 31, 2007, the parties amended the License Agreement (the “First Amendment”) to include a new patentapplication [**] under Harvard Patent Rights;WHEREAS, on April 6, 2010, the parties amended the License Agreement (the “Second Amendment”) to include the AdditionalPatent Application (as defined in the Second Amendment) under Harvard Patent Rights;WHEREAS, the parties agreed in a letter dated June 2, 2010 to include [**] for all purposes of the License Agreement asAdditional Patent Rights (as defined in the Second Amendment);WHEREAS, on February 18, 2011, the parties amended the License Agreement (the “Third Amendment”) to include [**] underAdditional Patent Rights; andWHEREAS, the parties wish to amend Licensee’s payment obligations under the License Agreement to assist Licensee in itsefforts to enter into one or more partnerships for the development and/or commercialization of products based on the Harvard PatentRights;NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1.Capitalized terms used in this Fourth Amendment that are not defined herein shall have the meanings set forth in the LicenseAgreement. 2.Section 1.3 of the License Agreement is replaced in its entirety with the following:1.3. “Combination Product” shall mean a pharmaceutical preparation that includes one or more Non-CoveredComponents in addition to one or more Covered Components. All references to Licensed Product or Royalty Product, asapplicable, in this Agreement shall be deemed to include Combination Product.  3.Section 1.4 of the License Agreement is replaced in its entirety with the following:1.4. “Covered Component” shall mean any compound (or part thereof) the production, making, use, sale or importation ofwhich (a) falls within the scope of a Valid Claim or (b) would infringe any claim (other than any claim that has at any timebeen rejected by any patent examiner) made at any time in any patent or patent application within the Licensed Patent Rightsas if such claim were as of such time a Valid Claim. 4.Section 1.13 of the License Agreement is hereby replaced in its entirety with the following:1.13. “Infringed Patent” shall mean an issued and unexpired patent (a) that has not been abandoned, held invalid,revoked, held or rendered unenforceable or lost through interference and (b) the claims of which would be infringed byLicensee’s practice of the Harvard Patent Rights and/or Joint Patent Rights in the making, using, offering for sale, selling orimportation of Licensed Products or Royalty Products, as applicable. 5.Section 1.22 of the License Agreement is replaced in its entirety with the following:1.22. “Net Sales” shall mean the gross amount billed or invoiced by or on behalf ofLicensee, its Affiliates and Sublicensees (in each case, the “Invoicing Entity”) on sales, leases or other transfers of LicensedProducts or Royalty Products, as applicable, less the following to the extent applicable on such sales, leases or other transfersof Licensed Products or Royalty Products, as applicable, and not previously deducted from the gross invoice price: (a)customary trade, quantity, and cash discounts to the extent actually allowed and taken; (b) amounts actually repaid orcredited by reason of rejection or return of any previously sold, leased or otherwise transferred Licensed Products or RoyaltyProducts, as applicable, and uncollectible portions of billed or invoiced amounts with respect to any previously sold, leasedor otherwise transferred Licensed Products or Royalty Products, as applicable; (c) rebates, chargebacks, retroactive pricereductions, allowances and fees actually paid or credited to customers, wholesalers, distributors, third party payors,governmental agencies, administrators and contractees with respect to Licensed Products or Royalty Products, as applicable,sold, leased or otherwise transferred; (d) transportation, freight and insurance charges that are paid by or on behalf of theInvoicing Entity; and (e) to the extent separately stated on purchase orders, invoices, or other documents of sale, any sales,value added or similar taxes, custom duties or other similar governmental charges levied directly on the production, sale,transportation, delivery, or use of a Licensed Product or Royalty Product, as applicable, that are paid by or on behalf of theInvoicing Entity, but not including any tax levied with respect to income; provided that: (i) in any transfers of Licensed Products or Royalty Products, as applicable, among an Invoicing Entity,Affiliates of such Invoicing Entity and Sublicensees, not for the purpose of resale by any such Affiliate or Sublicensee, NetSales shall be equal to the fair market value of the Licensed Products or Royalty Products, as applicable, so transferred,assuming an arm’s length transaction made in the ordinary course of business; and  (ii) in the event that an Invoicing Party receives non-monetary consideration for any Licensed Productsor Royalty Products, as applicable, or in the case of transactions not at arm’s length with a non-Affiliate of such InvoicingEntity that is not a Sublicensee, Net Sales shall be calculated based on the fair market value of such consideration ortransaction, assuming an arm’s length transaction made in the ordinary course of business. Sales of Licensed Products or Royalty Products, as applicable, by an Invoicing Party to an Affiliate of suchInvoicing Party or to a Sublicensee for resale by such Affiliate or Sublicensee shall not be deemed Net Sales and Net Salesshall be determined based on the gross amount invoiced or billed by such Affiliate or Sublicensee on resale to anindependent third party purchaser. In the event that a Licensed Product or Royalty Product, as applicable, is sold in any country in the form of aCombination Product, Net Sales of such Combination Product will be adjusted by multiplying actual Net Sales of suchCombination Product (i.e., Net Sales as determined above without regard to this paragraph) in such country by the fractionA/(A+B), where A is the average invoice price in such country, of a Licensed Product or Royalty Product, as applicable,containing the same strength of Covered Component(s) that is included in such Combination Product sold without the Non-Covered Components, if sold separately in such country, and B is the average invoice price of the Non-CoveredComponent(s) that is included in such Combination Product in such country, if sold separately in such country. If, in aspecific country, either the Covered Component(s) or the Non-Covered Component(s) is not sold separately, the relativevalue of the Covered Component(s) and the Non-Covered Component(s) in the Combination Product shall be negotiated inand agreed upon in good faith by the parties in order to determine the appropriate ratio for calculating Net Sales with respectto such Combination Product in such country. 6.Section 1.30 of the License Agreement is replaced in its entirety with the following: 1.30. “Sublicense” shall mean: (a) any right granted, license given, or agreement entered into by Licensee to or with anyother person or entity (or by a Sublicensee to or with a further Sublicensee permitted by Section 4.2.2.4) under or withrespect to or permitting any use of any of the Licensed Patent Rights, or otherwise permitting the development, manufacture,marketing, distribution, use and/or sale of Licensed Products or Royalty Products; (b) any option or other right granted byLicensee to any other person or entity (or by a Sublicensee to a further Sublicensee permitted by Section 4.2.2.4) to negotiatefor or receive any of the rights described under clause (a); or (c) any standstill or similar obligation undertaken by Licenseetoward any other person or entity (or by a Sublicensee toward a further Sublicensee permitted by Section 4.2.2.4) not togrant any of the rights described in clause (a) or (b) to any third party; in each case regardless of whether such grant of rights,license given or agreement entered into is referred to or is described as a sublicense. For clarity, “Sublicense” does notinclude any implied license that may be deemed to be granted as part of a sale of a Licensed Product.  7.A new Section 1.34 is hereby added to the License Agreement as follows:1.34. “Licensee Valid Claim” shall mean: (a) a claim of an issued and unexpired patent owned by Licensee, excluding anyJoint Patent Rights, that has not been (i) held permanently revoked, unenforceable, unpatentable or invalid by a decision of acourt or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (ii)rendered unenforceable through disclaimer or otherwise, (iii) abandoned, or (iv) lost through an interference proceeding; or(b) a pending claim of a pending patent application owned by Licensee (in a particular country), excluding any Joint PatentRights, that (i) has been asserted and continues to be prosecuted in good faith, (ii) has not been abandoned or finally rejectedwithout the possibility of appeal or refiling and (iii) has not remained un-issued for a period of five or more years from thedate of issuance of the first substantive patent office action considering the patentability of such claim by the applicablepatent office in such country. 8.A new Section 1.35 is hereby added to the License Agreement as follows:1.35. “Royalty Product” shall mean any product that contains, as an active pharmaceutical ingredient, (a) eravacycline,TP-271 or TP-6076 or (b) any compound, other than eravacycline, TP-271 or TP-6076, the composition or synthesis ofwhich would infringe any claim (other than any claim that has at any time been rejected by any patent examiner) made atany time in any patent or patent application within the Licensed Patent Rights as if such claim were as of such time a ValidClaim. For the avoidance of doubt, each Royalty Product shall also be deemed a Licensed Product for so long as (and onlyfor so long as) the manufacture, use, offer for sale, sale or importation of such Royalty Product would infringe a ValidClaim. 9.A new Section 1.36 is hereby added to the License Agreement as follows:1.36. “First Commercial Sale” shall mean the first sale for end use or consumption of a product in a country after thegranting of all approvals from the relevant Regulatory Authority(ies) necessary to market and sell such product in suchcountry. 10.Section 6.4.1 of the License Agreement is replaced in its entirety with the following:6.4.1.Royalties. 6.4.1.1. As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amount equal tothe following percentages of any Net Sales of Licensed Products, and Royalty Products that are not Licensed Products, inthe United States and its districts, territories and possessions (the “US Territory”), made by Licensee and/or its Affiliates orSublicensees:(a)[**] percent ([**]%) of Net Sales made on Licensed Products; and(b)[**] percent ([**]%) of Net Sales made on Royalty Products that are not Licensed Products.  6.4.1.2. As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amount equal tothe following percentages of (y) Net Sales of Licensed Products in each country outside of the US Territory (the “Ex-USTerritory”) made by Licensee and/or its Affiliates (but not Sublicensees):(a)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Licensed Products up to [**]U.S. Dollars ($[**]);(b)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Licensed Products in excess of[**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]);(c)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Licensed Products in excess of[**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]); and(d)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Licensed Products in excess of[**] U.S. Dollars ($[**]).6.4.1.3. As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amount equal tothe following percentages of (y) Net Sales of Royalty Products that are not Licensed Products in each country in the Ex-USTerritory made by Licensee and/or its Affiliates (but not Sublicensees): (a)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Royalty Products that are notLicensed Products up to [**] U.S. Dollars ($[**]);(b)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Royalty Products that are notLicensed Products in excess of [**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]);(c)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Royalty Products that are notLicensed Products in excess of [**] U.S. Dollars ($[**]) up to [**] U.S. Dollars ($[**]); and(d)[**] percent ([**]%) of that portion of calendar year annual Net Sales of Royalty Products that are notLicensed Products in excess of [**] U.S. Dollars ($[**]).6.4.1.4. With respect to each Royalty Product (other than Licensed Products) containing eravacycline, royaltieswill be payable under Sections 6.4.1.1(b) and 6.4.1.3, as applicable, until the date fifteen (15) years after the FirstCommercial Sale of the first Royalty Product in the first country, after which no royalties shall be due on Net Sales ofRoyalty Products containing eravacycline. With respect to each Royalty Product (other than Licensed Products) containingany compound other than eravacycline (and not containing eravacycline), royalties will be payable under Sections 6.4.1.1(b)and 6.4.1.3, as applicable, on a country-by-country basis until the fifth anniversary of the expiration of the last LicenseeValid Claim that covers the composition of the first Royalty Product containing such compound in such country, after whichno royalties shall be due on Net Sales of such Royalty Product in such country. With respect to each Licensed Product,  including each Royalty Product that is also a Licensed Product, royalties will be payable under Sections 6.4.1.1(a) and6.4.1.2 on a country-by-country basis for so long as the making, using or selling of such Licensed Product is covered by aValid Claim in the country in which such Licensed Product is made, used or sold, after which no royalties shall be due onsuch Licensed Product (except, if such Licensed Product is also a Royalty Product, to the extent set forth in the first twosentences of this Section 6.4.1.4). For clarity, no milestones will be due under Section 6.3 with respect to any RoyaltyProduct that is not a Licensed Product.6.4.1.5. The parties acknowledge that the consideration terms and structure set forth in this Section 6.4.1 (a) wereagreed upon for convenience purposes with the intent of compensating Harvard for the rights granted under this Agreement,including with respect to the Licensed Patent Rights and other valuable intellectual property licensed and/or transferred toLicensee, and the key role such rights and intellectual property will have in the activities of Licensee and its ability to enterinto strategic relationships and (b) represent the fair market value of such rights as determined and agreed upon by theparties. For clarity, the terms of this Section 6.4.1 with respect to any Royalty Product shall survive the termination of thisAgreement if such termination occurs prior to the end of the applicable royalty period for such Royalty Product. 11.Section 6.4.2 of the License Agreement is hereby deleted in its entirety. 12.Section 6.5 of the License Agreement is replaced in its entirety with the following:6.5.Sublicense Income. 6.5.1As partial consideration for the license granted hereunder, Licensee shall pay Harvard (a) [**] percent([**]%) of all Non-Royalty Sublicense Income, in connection with any Sublicense granted with rights to make and/or sellLicensed Products and/or Royalty Products solely in the Ex-US Territory, and (b) [**] percent ([**]%) of payments or otherconsideration that Licensee or any of its Affiliates receives in connection with a Sublicense that are royalties based on sales,leases or other transfers of Licensed Products or Royalty Products by or on behalf of Sublicensees in the Ex-US Territory(“Ex-US Sublicensee Royalties”).6.5.2As partial consideration for the license granted hereunder, Licensee shall pay Harvard an amountequal to the following percentages of Non-Royalty Sublicense Income received in connection with any Sublicense grantedthat includes rights to make and/or sell Licensed Products and/or Royalty Products in the US Territory, whether or not rightsare granted in any ex-US Territory:(a)if Licensee grants such Sublicense prior to the filing of an IND with respect to any Licensed Product orRoyalty Product that is the subject of such Sublicense, Licensee shall pay Harvard an amount equal to [**] percent ([**]%)of all Non-Royalty Sublicense Income received in connection with such Sublicense;  (b)if Licensee grants such Sublicense after filing of an IND but prior to the Initiation of a Phase II ClinicalTrial with respect to any Licensed Product or Royalty Product that is the subject of such Sublicense, Licensee shall payHarvard an amount equal to [**] percent ([**]%) of all Non-Royalty Sublicense Income received in connection with suchSublicense; and(c)if Licensee grants a Sublicense after the Initiation of a Phase II Clinical Trial with respect to anyLicensed Product or Royalty Product that is the subject of such Sublicense, Licensee shall pay Harvard an amount equal to[**] percent ([**]%) of all Non-Royalty Sublicense Income received in connection with such Sublicense.6.5.3Notwithstanding anything to the contrary in this Agreement, if Licensee or any of its Affiliatesreceives a payment constituting Non-Royalty Sublicense Income that is directly attributable to the occurrence of a milestoneevent described in Section 6.3 or a circumstance substantially equivalent to such milestone event and Licensee has paid or isobligated to pay to Harvard its due share of such Non-Royalty Sublicense Income under this Section 6.5, any amounts paidunder Section 6.3 with respect to such milestone may be deducted from Non-Royalty Sublicense Income on which Licenseemust pay fees to Harvard under this Section 6.5.6.5.4Licensee’s obligations under this Section 6.5 with respect to any Sublicense that includes rights tomake and/or sell any Royalty Product shall expire on the expiration of Licensee’s royalty payment obligations under Section6.4.1 with respect to such Royalty Product. Licensee’s obligations under this Section 6.5 with respect to any Sublicense thatincludes rights to make and/or sell any Licensed Product that is not a Royalty Product shall expire on expiration ofLicensee’s royalty payment obligations under Section 6.4.1 with respect to such Licensed Product. 13.Section 7.1 of the License Agreement is replaced in its entirety with the following: 7.1.Reports and Payments. 7.1.1.Reports. Within [**] days after the conclusion of each Calendar Quarter commencing with the firstCalendar Quarter in which Net Sales are generated or Non-Royalty Sublicense Income or Ex-US Sublicensee Royaltiesreceived, Licensee shall deliver to Harvard a report containing the following information (in each instance, with a LicensedProduct-by-Licensed Product or Royalty Product-by-Royalty Product, as applicable, breakdown): (a)the number of units of Licensed Products or Royalty Products, as applicable, sold by Licensee and itsAffiliates in the US Territory and Ex-US Territory, and by Sublicensees in the US Territory, for the applicable CalendarQuarter; (b)the gross amount billed for Licensed Products or Royalty Products, as applicable, sold by Licensee andits Affiliates in the US Territory and Ex-US Territory, and by Sublicensees in the US Territory, during the applicableCalendar Quarter;  (c)a calculation of Net Sales by Licensee and its Affiliates in the US Territory and Ex-US Territory, andby Sublicensees in the US Territory, for the applicable Calendar Quarter, including an itemized listing of applicabledeductions; and (d)the total amount payable to Harvard in U.S. Dollars on Net Sales by Licensee and its Affiliates in theUS Territory and Ex-US Territory, and by Sublicensees in the US Territory, for the applicable Calendar Quarter, togetherwith the exchange rates used for conversion. In addition, Licensee shall include in each such report a statement of all Non-Royalty Sublicense Income and Ex-US Sublicensee Royalties and the amounts payable to Harvard in respect thereto for the applicable Calendar Quarter. Eachsuch report shall be certified on behalf of Licensee as true, correct and complete in all material respects by Licensee’s ChiefFinancial Officer or an executive level officer with comparable authority. If no amounts are due to Harvard for anyCalendar Quarter, the report shall so state.7.1.2.Payment for Net Sales. Within [**] days after the end of each Calendar Quarter, Licensee shallpay Harvard all amounts due with respect to Net Sales, Non-Royalty Sublicense Income and Ex-US Sublicensee Royaltiesfor the applicable Calendar Quarter. 14.Section 7.3 of the License Agreement is replaced in its entirety with the following:7.3.Records. Licensee shall maintain, and shall cause its Affiliates and, with respect to the US Territory,Sublicensees to maintain, complete and accurate records of Licensed Products and Royalty Products that are made, used orsold under this Agreement, any amounts payable to Harvard in relation to such Licensed Products and Royalty Products andall Non-Royalty Sublicense Income and Ex-US Sublicensee Royalties received by Licensee and its Affiliates, which recordsshall contain sufficient information to permit Harvard to confirm the accuracy of any reports or notifications delivered toHarvard under Section 7.1. Licensee, its Affiliates and/or its Sublicensees, as applicable, shall retain such records relating toa given Calendar Quarter for at least [**] years after the conclusion of that Calendar Quarter, during which time Harvardshall have the right, at its expense, to cause an independent, certified public accountant to inspect such records during normalbusiness hours for the sole purpose of verifying any reports and payments delivered under this Agreement. Such accountantshall enter into a confidentiality agreement reasonably satisfactory to Licensee and shall not disclose to Harvard anyinformation other than information relating to the accuracy of reports and payments delivered under this Agreement. Theparties shall reconcile any underpayment or overpayment within [**] days after the accountant delivers the results of theaudit. In the event that any audit performed under this Section 7.3 reveals an underpayment in excess of five percent (5%) inany calendar year, the audited entity shall bear the full cost of such audit. Harvard may exercise its rights under this Section7.3 [**] per audited entity and only with reasonable prior notice to the audited entity. 15.Section 11.1 of the License Agreement is replaced in its entirety with the following:  11.1.Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated asprovided in this Article 11, shall continue in full force and effect (a) on a Licensed Product-by-Licensed Product andcountry-by-country basis until expiration of the last to expire Valid Claim of the Harvard Patent Rights and Joint PatentRights and (b) on a Royalty Product-by-Royalty Product and country-by-country basis until expiration of Licensee’s royaltypayment obligations with respect to such Royalty Product in such country under this Agreement; provided, however, that,once the making, using or selling of any Licensed Product or Royalty Product in any country is not covered by a ValidClaim within the Licensed Patent Rights or a Licensee Valid Claim, as the case may be, the license granted by Harvard toLicensee under Section 4.1 with respect to such Licensed Product or Royalty Product, as applicable, in such country will beperpetual, irrevocable, freely sublicensable and freely transferrable. 16.Section 11.4 of the License Agreement is replaced in its entirety with the following: 11.4.Survival. The parties’ respective rights, obligations and duties under Articles 7 and 10 and under this Article11, as well as any rights, obligations and duties which by their nature extend beyond the expiration or termination of thisAgreement, shall survive any expiration or termination of this Agreement. In addition, Licensee’s obligations under Section6.5 with respect to any Sublicense granted prior to termination of the Agreement that includes rights to make and/or sell anyRoyalty Product shall survive termination of this Agreement and shall continue in full force and effect until the expiration ofLicensee’s royalty payment obligations under Section 6.4.1 with respect to such Royalty Product. Harvard’s obligationsunder Section 12.15 shall survive expiration or termination of this Agreement. The terms of Section 6.4.1 shall survivetermination of this Agreement. 17.All other terms and conditions of the License Agreement shall remain unchanged and in full force and effect.IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to be executed by their duly authorized representativesas of the date first written above. President and Fellows of Harvard College Tetraphase Pharmaceuticals, Inc. By: /s/ Isaac T. Kohlberg By: /s/ Guy Macdonald Name: Isaac T. Kohlberg Name: Guy Macdonald Title: Sr. Associate Provost, Title: CEO Chief Technology Development Officer, Office of Technology Development Harvard University   Exhibit 10.28 Confidential Materials omitted and filed separately with theSecurities and Exchange Commission. Double asterisks denote omissions. CONFIDENTIALLICENSE AGREEMENTBY AND BETWEENTETRAPHASE PHARMACEUTICALS, INC.ANDEVEREST MEDICINES LIMITED CONFIDENTIALTABLE OF CONTENTSARTICLE I.DEFINITIONS 1 ARTICLE II. LICENSES; EXCLUSIVITY 16 Section 2.01 Grants of Licenses 16Section 2.02 Rights to Sublicense or Subcontract 17Section 2.03 No Other Rights and Retained Rights 17Section 2.04 Knowledge Transfer 18Section 2.05 In-License Agreements 19Section 2.06 Exclusivity 19Section 2.07 Diligence 21Section 2.08 Field or Licensed Product Expansion 21Section 2.09 ROFN 22 ARTICLE III. GOVERNANCE 23 Section 3.01 General 23Section 3.02 Joint Steering Committee 23Section 3.03 Joint Development Committee 24Section 3.04 Joint Commercialization Committee 25Section 3.05 Membership 25Section 3.06 Meetings 26Section 3.07 Committee Decision Making 26Section 3.08 Executive Officers; Disputes 26Section 3.09 Final Decision-Making Authority 26Section 3.10 Limitations on Decision-Making 27Section 3.11 Scope of Governance 28Section 3.12 Alliance Managers 28 ARTICLE IV. DEVELOPMENT 29 Section 4.01 Development in the Field in the Territory 29Section 4.02 Development Reports 29Section 4.03 Standards of Conduct 30Section 4.04 Records 30Section 4.05 Development Costs 30 ARTICLE V. REGULATORY 31 Section 5.01 Regulatory Filings 31 iCONFIDENTIALARTICLE VI. COMMERCIALIZATION 32 Section 6.01 General 32Section 6.02 Promotional Materials 32Section 6.03 Commercialization Reports 32Section 6.04 Commercialization Efforts 32Section 6.05 Standards of Conduct 32Section 6.06 Trademarks 33 ARTICLE VII. MANUFACTURE AND SUPPLY 34 Section 7.01 Supply Obligations 34Section 7.02 Supply Agreements 34 ARTICLE VIII. PAYMENTS 35 Section 8.01 Upfront Payment 35Section 8.02 Development Milestone Payment 35Section 8.03 Sales Milestone Payments 35Section 8.04 Royalties 36Section 8.05 Royalty Payments and Reports 37Section 8.06 Financial Responsibility for In-License Agreements 38Section 8.07 Accounting 38Section 8.08 Currency Conversion 38Section 8.09 Methods of Payment 39Section 8.10 Taxes 39Section 8.11 Late Payments 39 ARTICLE IX. OWNERSHIP OF INTELLECTUAL PROPERTY 40 Section 9.01 Tetraphase Intellectual Property 40Section 9.02 Licensee Intellectual Property 40Section 9.03 Joint Technology 40Section 9.04 Prosecution of Patent Rights 40Section 9.05 Enforcement and Defense 41Section 9.06 Defense of Third Party Infringement and Misappropriation Claims 43Section 9.07 Patent Term Extensions 44Section 9.08 Trademarks 44Section 9.09 Recordal 44 ARTICLE X. DATA SECURITY AND ADVERSE DRUG EVENTS AND REPORTS 44 Section 10.01 Data Security 44Section 10.02 Complaints 44Section 10.03 Adverse Drug Events 45 iiCONFIDENTIALARTICLE XI. REPRESENTATIONS, WARRANTIES, AND COVENANTS 45 Section 11.01 Mutual Representations and Warranties 45Section 11.02 Mutual Covenants 46Section 11.03 Additional Tetraphase Warranties 46Section 11.04 Additional Licensee Warranties and Covenants 48Section 11.05 Additional Tetraphase Warranty and Covenant 48Section 11.06 Anti-Corruption 48Section 11.07 Disclaimer 49Section 11.08 Limitation of Liability 49 ARTICLE XII. CONFIDENTIALITY 50 Section 12.01 Generally 50Section 12.02 Exceptions 50Section 12.03 Permitted Disclosures 51Section 12.04 Publicity 51Section 12.05 Publications 52Section 12.06 Injunctive Relief 52 ARTICLE XIII. INDEMNIFICATION 52 Section 13.01 Indemnification by Tetraphase 52Section 13.02 Indemnification by Licensee 53Section 13.03 Procedure 53Section 13.04 Insurance 53Section 13.05 Indemnification of Harvard 54 ARTICLE XIV. TERM AND TERMINATION 54 Section 14.01 Term 54Section 14.02 Termination for Patent Right Challenge 54Section 14.03 Termination for Breach 54Section 14.04 [Intentionally Left Blank]. 55Section 14.05 Termination for Bankruptcy and Rights in Bankruptcy 55Section 14.06 Automatic Termination of In-Licensed Rights 56Section 14.07 Effect of Termination 57Section 14.08 Survival; Accrued Rights 58 ARTICLE XV. DISPUTE RESOLUTION; GOVERNING LAW 59 Section 15.01 Arbitration 59Section 15.02 Choice of Law 60Section 15.03 Language 60 iiiCONFIDENTIALARTICLE XVI. MISCELLANEOUS 60 Section 16.01 Assignment 60Section 16.02 Acquisitions 60Section 16.03 Force Majeure 61Section 16.04 Entire Agreement 61Section 16.05 Severability 61Section 16.06 Notices 61Section 16.07 Agency 62Section 16.08 No Waiver 63Section 16.09 Cumulative Remedies 63Section 16.10 No Third Party Beneficiary Rights 63Section 16.11 Use of Harvard Name 63Section 16.12 Performance by Affiliates, Sublicensees or Subcontractors 63Section 16.13 Counterparts 63 LIST OF EXHIBITSExhibit A – List of Tetraphase Patent Rights Existing as of the Effective DateExhibit B – Development Plan FrameworkExhibit C – Development PlanExhibit D – Personnel RatesExhibit E – List of In-License Agreements Existing as of the Effective DateLIST OF SCHEDULESSchedule 1.45 – EravacyclineSchedule 1.77 – TP-6076Schedule 2.04 – Specified Tetraphase Know-How iv LICENSE AGREEMENTTHIS LICENSE AGREEMENT (this “Agreement”) is made and entered into as of February 20, 2018 (“EffectiveDate”) between Tetraphase Pharmaceuticals, Inc., a corporation organized and existing under the laws of Delaware with a principalplace of business at 480 Arsenal Street, Suite 110, Watertown, MA 02472 (“Tetraphase”), and Everest Medicines Limited, anexempted company organized and existing under the laws of Cayman Islands, with a principal place of business at Suite 4508, 45F,Tower 2, Plaza 66, 1266 Nanjing Xi Lu, Shanghai 200040, China (“Licensee”).Tetraphase and Licensee may be referred to herein individually as a “Party” and collectively as the “Parties”.RECITALSWHEREAS, Tetraphase is the owner of, or otherwise controls, the Tetraphase Technology in the Territory (each as definedbelow);WHEREAS, Licensee has expertise in the development of biopharmaceutical products and has regulatory and commercialcapabilities in the Territory, and is interested in obtaining an exclusive license to Develop and Commercialize the Licensed Products inthe Territory, and a right to negotiate for the right to Manufacture the Licensed Products in the Territory (each as defined below); andWHEREAS, the Parties desire to collaborate to Develop, Manufacture and Commercialize the Licensed Products in theTerritory;NOW THEREFORE, the Parties agree as follows:ARTICLE I.DEFINITIONSSection 1.01 “Accounting Standards” means, with respect to (a) Licensee or any of its Affiliates or sublicensees,U.S. GAAP, consistently applied, or (b) Tetraphase or any of its Affiliates or licensees, generally accepted accounting principlesapplicable to such entity, consistently applied. Section 1.02“Affiliate” means, with respect to an entity, any corporation or other business entity controlled by,controlling, or under common control with such entity, with “control” meaning (a) direct or indirect beneficial ownership of at leastfifty percent (50%) of the voting stock of, or at least a fifty percent (50%) interest in the income of, the applicable entity (or such lesserpercentage that is the maximum allowed to be owned by a foreign entity in a particular jurisdiction and is sufficient to grant the holderof such voting stock or interest the power to direct the management and policies of such entity) or (b) possession, directly or indirectly,of the power to direct the management and policies of an entity, whether through ownership of voting securities, by contract relating tovoting rights or corporate governance or otherwise.1 Section 1.03“API” means active pharmaceutical ingredient.Section 1.04“API Bulk Drug Substance” means the Licensed Compound in bulk form manufactured for use as anAPI.Section 1.05“Business Day” means a day other than (a) a Saturday or a Sunday or (b) a day on which bankinginstitutions in Boston, Massachusetts, or in Beijing, China are authorized or required by Law to remain closed.Section 1.06“CFDA” means the China Food and Drug Administration, including its divisions and the Center forDrug Evaluation, and local counterparts thereto, and any successor agency or authority thereto having substantially the same function.Section 1.07“cIAI” means complicated intra-abdominal infection.Section 1.08“Commercialization” or “Commercialize” means, with respect to a pharmaceutical product, any andall activities directed to the marketing, promotion, importation, distribution, pricing, Reimbursement Approval, offering for sale, or saleof such pharmaceutical product, and interacting with Regulatory Authorities regarding the foregoing. Commercialization shall excludeResearch and Manufacturing.Section 1.09“Commercialization Plan” means the annual plan for Commercialization of Licensed Products in theField in the Territory and the activities to be conducted by Licensee relating thereto, including detailed plans for sales and marketingafter launch, sales and marketing budgets and sales forecasts and target numbers regarding reach and frequency of sales performance,which plan Licensee shall ensure is at all times consistent with the terms and conditions of this Agreement and all In-LicenseAgreements.Section 1.10“Commercially Reasonable Efforts” means, with respect to the Development, Manufacture orCommercialization of any Licensed Product, those efforts and resources, including reasonably necessary personnel, equivalent to theefforts that a similarly situated biopharmaceutical company would typically devote to a product owned by it of similar market potential,profit potential and strategic value and at a comparable stage in development or product life to such Licensed Product, as applicable,based on conditions then prevailing and taking into account issues of safety and efficacy, product profile, difficulty in developing suchLicensed Product, as applicable, competitiveness of alternative Third Party products in the marketplace, the patent or other proprietaryposition of such Licensed Product, as applicable, the regulatory structure involved and the potential profitability of such LicensedProduct, as applicable, but not taking into account any payment obligations under this Agreement.Section 1.11“Competing Product” means any product that is in the tetracycline class and intended to treat anyindication that is, at the relevant time, in the Field, but excluding (a) the Licensed Compound, (b) the Licensed Product, and (c) TP-6076. Section 1.12“Confidential Information” means, subject to Section 12.02(a)-(d), Know-How and any technical,scientific, trade, research, manufacturing, business, financial, marketing, product, supplier, intellectual property or other informationthat may be disclosed by one Party or any of its Affiliates to the other Party or any of its Affiliates, regardless of whether2 such information is specifically designated as confidential and regardless of whether such information is in written, oral, electronic, orother form. Notwithstanding the foregoing, subject to Section 12.02(a)-(d), all information that (a) was disclosed prior to the EffectiveDate by or on behalf of either Party or any of its Affiliates under, and subject to, the Confidentiality Agreement by and betweenTetraphase and Licensee, dated August 18, 2017 (“Confidentiality Agreement”), (b) is “Proprietary Information” as defined in theConfidentiality Agreement, and (c) is not subject to Section 5(a), 5(b), 5(c) or 5(d) of the Confidentiality Agreement as of the EffectiveDate (as defined in this Agreement), shall be deemed “Confidential Information” hereunder. Section 1.13“Controlled” means, subject to Section 16.02 (Acquisitions), with respect to a Party or any of itsAffiliates, and any Know-How, Patent Right, Regulatory Documents or other intellectual property right, that such Party or Affiliate, asthe case may be, has the ability (other than pursuant to a license granted to such Party or Affiliate, as the case may be, under thisAgreement) to grant to the other Party a license or sublicense to, or other right with respect to, such Know-How, Patent Right,Regulatory Documents or other intellectual property right without violating the terms of any pre-existing agreement or other pre-existing arrangement with any Third Party; provided, however, that, if a Party or any of its Affiliates obtains rights to any Know-How,Patent Rights, Regulatory Documents or other intellectual property rights through any license agreement that is not an In-LicenseAgreement, such Party or Affiliate shall only be deemed to “Control” such Know-How, Patent Rights or other intellectual propertyrights, as applicable, for purposes of this Agreement, (a) to the extent such license agreement does not conflict with any provision ofthis Agreement and (b) to the extent such license agreement conflicts with this Agreement or includes additional obligations not setforth in this Agreement, the other Party agrees in writing to be bound by all applicable obligations set forth in such license agreement(including the obligation to pay royalties, milestones, sublicense income and the pro rata share of the other costs associated with suchlicense agreement to the extent that such costs apply to any activity by or on behalf of such other Party (or any of its Affiliates or(sub)licensees) under this Agreement).Section 1.14“Cost of Goods Sold” or “COGS” means, with respect to a particular Licensed Product, theManufacturing cost for such Licensed Product, which (a) to the extent such Licensed Product is Manufactured by Tetraphase or itsAffiliates, shall approximate a reasonable definition of cost of goods sold for such Licensed Product with no markup and shall befurther specified in the Supply Agreement and (b) to the extent such Licensed Product is Manufactured by a Third Party, the actual,documented out-of-pocket costs paid to such Third Party for the Manufacture of such Licensed Product. Section 1.15“Cover”, “Covering” or “Covered” means, with respect to a product, composition, technology,process or method and a Patent Right, that, in the absence of ownership of, or a license granted under, a claim in such Patent Right, themanufacture, use, offer for sale, sale or importation of such product or composition or the practice of such technology, process ormethod would infringe such claim (or, in the case of a claim of a pending patent application, would infringe such claim if it were toissue as a claim of an issued patent).Section 1.16[Intentionally Left Blank].3 Section 1.17“Development” means all (a) clinical development and regulatory activities regarding a pharmaceuticalcompound or product, as the case may be, including (i) clinical trials of such pharmaceutical compound or product; (ii) preparation,submission, review, and development of data or information for the purpose of submission to a Regulatory Authority to obtainauthorization to conduct clinical trials or obtain Regulatory Approval of such pharmaceutical product; and (iii) Medical Affairs withrespect to such pharmaceutical compound or product, and (b) with respect to the activities of Licensee, solely (i) to the extent agreedupon within the JSC or required by a relevant Regulatory Authority in the Territory to obtain or maintain a Regulatory Approvalcontemplated by this Agreement, and (ii) on a non-exclusive basis unless otherwise agreed by the Parties, non-clinical or pre-clinicalactivities conducted in support of the foregoing, the Development Plan, the Launch Plan or the Commercialization Plan. Developmentshall include clinical trials initiated following receipt of Regulatory Approval, but shall exclude Research (except as set forth in clause(b)), Manufacturing and Commercialization.Section 1.18“Development Plan” means the plan setting out activities to be undertaken in Developing the LicensedProducts in the Field in the Territory, together with timelines for such activities, including the proposed clinical trials and regulatoryplans, as well as outlining the key elements involved in obtaining Regulatory Approval of the Licensed Products in the Field in theTerritory, as may be amended from time to time in accordance with Section 4.01 (Development in the Field in the Territory), whichplan (a) Licensee shall ensure is at all times consistent with the terms and conditions of this Agreement and all In-License Agreements,(b) Licensee shall ensure is focused on efficiently obtaining Regulatory Approval for Licensed Products in each Jurisdiction in theTerritory, while taking into consideration potential impacts on the Development or Commercialization of any Eravacycline Productoutside of the Territory or Field and (c) shall include in reasonable detail (i) all Development activities reasonably anticipated to beundertaken by the Licensee Entities, (ii) the endpoints for all clinical trials contemplated by such plan, (iii) which clinical trial isintended to be a pivotal trial and (iv) all regulatory activities and interactions anticipated to be conducted by the Licensee Entities insupport of Regulatory Approval of the Licensed Products in the Field in the Territory, including all planned Regulatory Filings to besubmitted in connection with such approvals. Section 1.19“Dollars” or “$” means the legal tender of the U.S.Section 1.20“Drug Approval Application” means a New Drug Application as defined in the FD&C Act, or anequivalent application filed with any Regulatory Authority in any country other than the United States.Section 1.21“Eravacycline Materials” means API Bulk Drug Substance, intermediates required to ManufactureFinished Drug Product, and Finished Drug Product.Section 1.22“Eravacycline Product” means any pharmaceutical product that has the Licensed Compound as atleast one API.Section 1.23“Existing Regulatory Documents” means Regulatory Documents Controlled by Tetraphase or any ofits Affiliates as of the Effective Date.4 Section 1.24“FDA” means the U.S. Food and Drug Administration or any successor agency thereto.Section 1.25“FD&C Act” means the U.S. Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., asamended from time to time.Section 1.26“Field” means (a) the treatment of (i) cIAI and (ii) any indication other than cIAI for which anyTetraphase Entity files a Drug Approval Application for any Licensed Product in the United States or anywhere else outside theTerritory and (b) any other human indication agreed by the Parties pursuant to Section 2.08 (Field or Licensed ProductExpansion). Section 1.27“Finished Drug Product” means the finished product formulation of a Licensed Product, containingAPI Bulk Drug Substance, filled into unit packages for final labeling and packaging, and as finally labeled and packaged in a formready for administration.Section 1.28“First Commercial Sale” means, for each Licensed Product in the Field in a Jurisdiction, the first salefor end use or consumption of such Licensed Product in the Field in such Jurisdiction by any Licensee Entity (or, followingtermination, solely for purposes of the “Royalty Term” definition set forth in Section 2.01(c), any Tetraphase Entity) after the grantingof Regulatory Approval for such Licensed Product in the Field in such Jurisdiction by the relevant Regulatory Authorities. Sales priorto receipt of Regulatory Approval for such Licensed Product, such as so-called “treatment IND sales,” “named patient sales,” and“compassionate use sales,” shall not be construed as a First Commercial Sale.Section 1.29“Generic Product” means, with respect to a given Licensed Product in a Jurisdiction, anypharmaceutical preparation that (a) contains Licensed Compound as its sole active pharmaceutical ingredient, (b) is marketed for sale insuch Jurisdiction by a Third Party (other than a Licensee Entity) that is not authorized directly or indirectly by any Licensee Entity, and(c) receives Regulatory Approval for sale in such Jurisdiction in reliance, based in whole or in part, on the prior Regulatory Approval(or on safety or efficacy data submitted in support of such prior Regulatory Approval) of such Licensed Product as determined by theapplicable Regulatory Authority or is approved for sale in reliance, in whole or in part, on the existing drug standard already approvedby the applicable Regulatory Authority (unless a Licensee Entity authorizes the applicable Third Party to access, use or reference, suchRegulatory Approval, data or drug standard). Section 1.30“Good Clinical Practices” or “GCP” means the then-current good clinical practice standards,practices, and procedures promulgated or endorsed by any applicable Regulatory Authority as set forth in the guidelines imposed bysuch Regulatory Authority, as may be updated from time to time.Section 1.31“Good Laboratory Practices” or “GLP” means the then-current good laboratory practice standards,practices, and procedures promulgated or endorsed by any applicable Regulatory Authority as set forth in the guidelines imposed bysuch Regulatory Authority, as may be updated from time to time.5 Section 1.32“Governmental Authority” means any federal, national, multinational, state, provincial, country, cityor local government or any court, arbitrational tribunal, administrative agency or commission or government authority acting under theauthority of any federal, national, multinational, state, provincial, country, city or local government.Section 1.33“Harvard Agreement” means the License Agreement by and between Tetraphase and the Presidentand Fellows of Harvard College (“Harvard”), dated as of August 3, 2006, as amended from time to time.Section 1.34“In-License Agreement” means (a) the Harvard Agreement or (b) any other agreement betweenTetraphase or any of its Affiliates, on the one hand, and one or more Third Parties, on the other hand, pursuant to which Tetraphase orany of its Affiliates acquires Control of any Know-How or Patent Rights that are Tetraphase Know-How or Tetraphase Patent Rightsthat the Parties mutually agree in writing is an In-License Agreement.Section 1.35“IND” means an Investigational New Drug application for submission to the FDA or any equivalentcounterpart application in any country other than the United States, including all supplements and amendments thereto.Section 1.36“Invention” means any invention, process, method, composition of matter, article of manufacture,discovery or finding that is conceived or reduced to practice (whether or not patentable).Section 1.37“Joint Invention” means any Invention that is jointly conceived or reduced to practice during the Termby any employee, agent or contractor of Tetraphase or any of its Affiliates, on the one hand, and any employee, agent or contractor ofLicensee or any of its Affiliates, on the other hand.Section 1.38“Joint Know-How” means any Know-How that is identified, conceived, reduced to practice,discovered, authored or developed jointly by any employee, agent or contractor of Tetraphase or any of its Affiliates, on the one hand,and any employee, agent or contractor of Licensee or any of its Affiliates, on the other handSection 1.39“Joint Patent Rights” means all Patent Rights claiming Joint Inventions or Covering Joint Know-How.Section 1.40“Joint Technology” means Joint Know-How and Joint Patent Rights.Section 1.41“Jurisdiction” means each of the following: mainland China, Taiwan, Hong Kong, Macau, SouthKorea or Singapore.Section 1.42“Know-How” means Inventions, discoveries, trade secrets, information, experience, data, formulas,procedures, technology and results (whether or not patentable), including discoveries, formulae, practices, methods, knowledge, know-how, processes, experience and test data (including physical, chemical, biological, toxicological, pharmacological, clinical andveterinary data), dosage regimens, control assays, product specifications, analytical and quality control data, and marketing, pricing,distribution cost and sales data or descriptions; but excluding Patent Rights.6 Section 1.43“Launch Plan” means the strategic plan for the Licensed Products in the Field in the Territory thatdetails the activities to be conducted prior to launch, plans for launch, and activities to be conducted after launch.Section 1.44“Law” means any law, statute, rule, regulation, order, judgment, standard or ordinance of anyGovernmental Authority.Section 1.45“Licensed Compound” means the compound identified on Schedule 1.45, and any metabolite, salt,ester, hydrate, solvate, isomer, enantiomer, free acid form, free base form, crystalline form, co-crystalline form, amorphous form, pro-drug (including ester pro-drug) form, racemate, polymorph, chelate, stereoisomer, tautomer or optically active form of any of theforegoing. Section 1.46“Licensed Product” means any pharmaceutical product that (a) has the Licensed Compound as its soleAPI and (b) is in a form (i) for which any Tetraphase Entity (A) is Developing in the United States as of the Effective Date or (B) filesa Drug Approval Application in the United States or anywhere else outside the Territory after the Effective Date, or (ii) agreed by theParties pursuant to Section 2.08 (Field or Licensed Product Expansion).Section 1.47“Licensee Entity” means, as applicable, (a) Licensee, (b) any of Licensee’s Affiliates or (c) any director indirect sublicensee or subcontractor of Licensee or any of Licensee’s Affiliates with respect to any Licensed Product.Section 1.48“Licensee In-License Agreement” means any agreement pursuant to which any Licensee Entity hasin-licensed or otherwise acquired the right to practice, or in-licenses or otherwise acquires the right to practice, any Know-How relatedto, or Patent Rights that Cover, any of the Licensed Products in the Field in the Territory or that would result in royalties or otheramounts that would be payable to a Third Party based on the Development, Manufacture or Commercialization of Licensed Productsin the Field in the Territory.Section 1.49“Licensee Know-How” means all Know-How that is both (a) Controlled as of the Effective Date orduring the Term by Licensee or any of its Affiliates and (b) necessary or reasonably useful for the Research, Development,Manufacture or Commercialization of the Licensed Compound or any Eravacycline Product; but excluding all Joint Inventions andJoint Know-How. For the avoidance of doubt, Licensee Know-How shall include (x) any Know-How developed during clinical trialsconducted by any Licensee Entity in the Field in the Territory, (y) all Licensee Product Data and (z) all Licensee RegulatoryDocuments.Section 1.50“Licensee Patent Rights” means all Patent Rights that both (a) are Controlled as of the Effective Dateor during the Term by Licensee or any of its Affiliates, and (b) Cover the Licensed Compound or any Eravacycline Product or theirrespective Research, Development, Manufacture or Commercialization (or are necessary or reasonably useful for such Research,Development, Manufacture or Commercialization); but excluding all Joint Patent Rights.7 Section 1.51“Licensee Regulatory Documents” means Regulatory Documents Controlled by Licensee or any ofits Affiliates at any time during the Term that (a) relate to the Licensed Compound or a Licensed Product in the Territory and (b) arenecessary or reasonably useful for a Tetraphase Entity to prepare a Regulatory Filing with respect to any Eravacycline Product outsideof the Territory. For the avoidance of doubt, upon any expiration or termination of this Agreement (in its entirety or in one or moreJurisdictions), any Regulatory Documents that, at the time of such expiration or termination, constitute Licensee RegulatoryDocuments in the applicable Jurisdiction(s) shall remain Licensee Regulatory Documents after such expiration or termination.Section 1.52“Licensee Technology” means Licensee Know-How and Licensee Patent Rights.Section 1.53“Manufacture” or “Manufacturing” means, as applicable, all activities associated with theproduction, manufacture, process of formulating, processing, filling, finishing, packaging, labeling, shipping, importing or storage ofpharmaceutical compounds or materials, including process development, process validation, stability testing, manufacturing scale-up,pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and qualitycontrol development, testing and release.Section 1.54“Medical Affairs” means communications with key opinion leaders, medical education, symposia andother medical programs and communications.Section 1.55“Net Sales” means the gross invoice price of a particular Licensed Product sold or otherwise transferredto a Third Party by any Licensee Entity for consideration, reduced by the following amounts to the extent such items are customaryunder industry practices and to the extent such amounts are, with respect to any deduction described in clause (a), (b), (d), (f) or (g),included in the gross invoiced sales price or documented in the invoices or otherwise properly documented by the relevant LicenseeEntity, or, with respect to any deduction described in clause (c) or (e), documented in the invoices issued to the relevant Third Party orpaid to the relevant Third Party following the initial date of invoicing and properly documented by the relevant Licensee Entity withsuch Third Party, in each case in accordance with Accounting Standards:(a)normal and customary trade, quantity and prompt settlement discounts (including chargebacks andallowances) actually allowed and taken directly with respect to such unit of Licensed Product;(b)tariffs, duties, excises, value added tax and other sales taxes imposed by any Governmental Authorityupon and paid by the applicable Licensee Entity with respect to the sale, transportation, delivery, use, exportation, orimportation of such Licensed Product (which does not include income, withholding or similar taxes);(c)amounts repaid or credited by reason of rejection, return or recall of goods, or rebates;8 (d)freight, postage, shipping and insurance expenses to the extent that such items are included in the grossamount invoiced;(e)the portion of administrative fees paid during the relevant time period to group purchasing organizationsor pharmaceutical benefit managers relating to such Licensed Product;(f)any invoiced amounts that are not collected by such Party, its Affiliates or its or their sublicensees,including bad debts and uncollectable invoiced amounts actually written off in accordance with applicable AccountingStandards, provided that (i) any such amounts subsequently collected will be included in Net Sales and (ii) the amountsdeducted under this subsection (f) shall not exceed [**] percent ([**]%) of gross sales of the relevant Licensed Product in therelevant calendar quarter; and(g)any other similar and customary deductions that are consistent with applicable Accounting Standards;provided that the following provisions will also apply to the calculation of Net Sales hereunder:(A)Any of the deductions listed above that involves a payment by the particularLicensee Entity will be taken as a deduction in the calendar quarter in which the payment is accrued by such entity. For purposes ofdetermining Net Sales, a Licensed Product will be deemed to be sold when invoiced and a “sale” will not include transfers ordispositions of such Licensed Product for pre-clinical or clinical purposes or compassionate use, and shall not include transfers ordispositions of a commercially reasonable quantity of samples of such Licensed Product, in each case, without charge. A LicenseeEntity’s transfer of any Licensed Product to an Affiliate of Licensee or to a sublicensee will not result in any Net Sales unless (i) thetransferee is an end user or (ii) subject to the immediately preceding sentence, the next transfer to a Third Party that is not a sublicenseeis included in Net Sales.(B)In the case of pharmacy incentive programs, hospital performance incentiveprograms, chargebacks, disease management programs, similar programs or any discounts, in each case that are credited, discounted orreimbursed on a portfolio of product offerings, all such rebates, discounts and other forms of reimbursements will be allocated amongall the products in such portfolio on the basis on which such rebates, discounts and other forms of reimbursements were actuallygranted or, if such basis cannot be determined, in accordance with the applicable Licensee Entity’s existing allocation method, in eachcase consistently applied across all such Licensee Entity’s products; provided that any such allocation will be done in accordance withapplicable Law, including any price reporting Laws.(C)Subject to the above, Net Sales will be calculated in accordance with the standardinternal policies and procedures of Licensee, its Affiliates or its or their sublicensees; provided that such policies and procedures (1) arein accordance with applicable Accounting Standards and (2) do not favor other products being Developed, Manufactured orCommercialized by or on behalf of Licensee or its Affiliates or its or their sublicensees that are not Licensed Products.9 Section 1.56 “Patent Rights” means (a) all patents and patent applications (including provisional applications) inany country or jurisdiction, and (b) any substitutions, divisions, continuations, continuations-in-part, reissues, renewals, registrations,confirmations, re-examinations, extensions, supplementary protection certificates and the like.Section 1.57“Phase 1 Clinical Trial” means a clinical trial in humans which provides for the first introduction intohumans of a pharmaceutical product, to generate information on product safety, tolerability, pharmacological activity orpharmacokinetics, as described in Federal Regulation 21 C.F.R. §312.21(a) and its foreign equivalents.Section 1.58“Phase 2 Clinical Trial” means a clinical trial in humans of the safety, dose ranging and efficacy of apharmaceutical product, as described in Federal Regulation 21 C.F.R. §312.21(b) and its foreign equivalents.Section 1.59“Phase 3 Clinical Trial” means a controlled clinical trial, or a portion of a controlled clinical trial, inhumans of the efficacy and safety of a pharmaceutical product, which study (in its entirety or portion, as applicable) is prospectivelydesigned to demonstrate statistically whether such product is effective and safe for use in a manner sufficient to file a Drug ApprovalApplication, as described in Federal Regulation 21 C.F.R. §312.21(c) and its foreign equivalents. For the sake of clarity, with respectto what is commonly called a phase 2/3 trial, the Phase 3 Clinical Trial definition is met upon the first patient, first visit in the portion ofsuch study that is prospectively designed to demonstrate statistically whether such pharmaceutical product is effective and safe for usein a manner sufficient to file an Drug Approval Application, as described in Federal Regulation 21 C.F.R. §312.21(c) and its foreignequivalents.Section 1.60“Product Trademark” means any Trademark for use in connection with the Commercialization of anyLicensed Product. “Product Trademark” specifically excludes the corporate names and logos of the Parties and theirAffiliates. “Product Trademark” includes each Tetraphase Trademark and each Licensee Trademark, as applicable.Section 1.61“Regulatory Approval” means, with respect to a particular regulatory jurisdiction, any approval,product or establishment license, registration or authorization of any Governmental Authority necessary for the commercial sale of apharmaceutical product in such regulatory jurisdiction.Section 1.62“Regulatory Authority” means, in a particular country or jurisdiction, any applicable GovernmentalAuthority involved in granting Regulatory Approval in such country or jurisdiction, including (a) in the United States, the FDA andany other applicable Governmental Authority in the United States having jurisdiction over pharmaceutical products, (b) in Europe, theEuropean Medicines Agency (“EMA”), (c) in mainland China, the CFDA and (d) any other applicable Governmental Authority in theTerritory having jurisdiction over pharmaceutical products.10 Section 1.63“Regulatory Documents” means all (a) applications (including all INDs, clinical trial applications anddrug approval applications), registrations, licenses, authorizations and approvals (including Regulatory Approvals); (b) correspondenceand reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to anycommunications with any Regulatory Authority) and all supporting documents with respect thereto, including all regulatory drug lists,advertising and promotion documents, adverse event files and complaint files; and (c) preclinical, clinical and other data results,analyses, publications, and reports contained or referred to in any of the foregoing; in each case ((a), (b) and (c)) relating to theLicensed Compound or a Licensed Product. For the avoidance of doubt, Regulatory Documents include Regulatory Approvals andRegulatory Filings.Section 1.64“Regulatory Filings” means all applications, filings, dossiers and the like submitted to a RegulatoryAuthority for the purpose of Developing, Manufacturing or Commercializing a product, including obtaining Regulatory Approval fromthat Regulatory Authority. Regulatory Filings include all INDs, Drug Approval Applications and other Regulatory Approvalapplications.Section 1.65“Reimbursement Approval” means an approval, agreement, determination, or other decision by anyapplicable Regulatory Authority or other Governmental Authority that establishes prices at which a pharmaceutical product may bepriced, or will be reimbursed by the Regulatory Authorities or other applicable Governmental Authorities, in a particular country orjurisdiction.Section 1.66“Research” means all activities relating to discovery, evaluation or preclinical research (includingidentification of potential candidates, synthesis and testing by in vitro or in vivo assays).Section 1.67“Safety Data Exchange Agreement” means that agreement between the Parties regarding receipt,investigation and reporting of product complaints, adverse events, product recalls, and any other information related to the safety of theLicensed Products as set forth in Section 10.03 (Adverse Drug Events).Section 1.68“Tax” means any present or future taxes, levies, imposts, duties, tariffs, charges, assessments or fees ofany nature imposed by a Governmental Authority in the exercise of its taxing power (including interest, penalties and additionsthereto), including value-added tax (“VAT”) and withholding tax.Section 1.69“Territory” means any Jurisdiction; but excluding any Jurisdiction that is, at the relevant time, in theTerminated Territory.Section 1.70“Tetraphase Entity” means, as applicable, (a) Tetraphase, (b) any of Tetraphase’s Affiliates or (c) anydirect or indirect licensee, sublicensee or contractor of Tetraphase or any of Tetraphase’s Affiliates with respect to the LicensedCompound or any Licensed Product (other than any Licensee Entity).11 Section 1.71“Tetraphase Know-How” means all Know-How that is both (a) Controlled as of the Effective Date orduring the Term by Tetraphase or any of its Affiliates and (b) necessary or reasonably useful for the Development orCommercialization of any Licensed Product in the Field in the Territory; but excluding all Joint Inventions and Joint Know-How. Forthe avoidance of doubt, Tetraphase Know-How shall include (x) any Know-How developed during clinical trials relating to LicensedProduct conducted by any Tetraphase Entity, to the extent such Know-How is Controlled by Tetraphase or any of its Affiliates, (y) allTetraphase Product Data and (z) all Tetraphase Regulatory Documents.Section 1.72“Tetraphase Patent Rights” means all Patent Rights that both (a) are Controlled as of the EffectiveDate or during the Term by Tetraphase or any of its Affiliates in the Territory, and (b) Cover any Licensed Product, or itsDevelopment or Commercialization (or are necessary or reasonably useful for its Development or Commercialization), in the Field inthe Territory; but excluding all Joint Patent Rights. Tetraphase Patent Rights as of the Effective Date include those listed in Exhibit A.Section 1.73“Tetraphase Regulatory Documents” means Regulatory Documents Controlled by Tetraphase or anyof its Affiliates as of the Effective Date or at any time during the Term that (a) relate to the Licensed Compound or a Licensed Productand (b) are necessary or reasonably useful for a Licensee Entity to prepare a Regulatory Filing with respect to the Licensed Product inthe Field in the Territory; but excluding any Regulatory Filings submitted to a Regulatory Authority for the purpose of Manufacturingany product.Section 1.74“Tetraphase Technology” means Tetraphase Know-How and Tetraphase Patent Rights.Section 1.75“Third Party” means any person or entity other than the Parties and their Affiliates.Section 1.76“Total Indirect Costs” means Third Party costs and expenses incurred to conduct multi-region clinicaltrials that are not directly allocable to a Party’s territory, such as fees for data management that are not specific to a territory or clinicalsite. Section 1.77“TP-6076” means, as applicable, (a) (i) the compound identified on Schedule 1.77, or (ii) anymetabolite, salt, ester, hydrate, solvate, isomer, enantiomer, free acid form, free base form, crystalline form, co-crystalline form,amorphous form, pro-drug (including ester pro-drug) form, racemate, polymorph, chelate, stereoisomer, tautomer or optically activeform of any of the foregoing, or (b) any pharmaceutical product containing TP-6076, alone or with other APIs.Section 1.78“Trademark” means any trademark, trade name, service mark, service name, brand, domain name,trade dress, logo, slogan or other indicia of origin or ownership, including the goodwill and activities associated with each of theforegoing.Section 1.79“U.S.” or “United States” means the United States of America.12 Section 1.80“Valid Claim” means (a) any claim of any Patent Right that has issued, is unexpired and has not beenrejected, revoked or held unenforceable or invalid by a final, non-appealable (or unappealed within the time allowable for appeal)decision of a court or other Governmental Authority of competent jurisdiction or (b) any claim of any patent application that has (i)been pending for five (5) years or less from the date of issuance of the first substantive patent office action considering the patentabilityof such claim by the applicable patent office in the applicable country and (ii) not been cancelled, withdrawn, abandoned or finallyrejected by an administrative agency action from which no appeal can be taken; provided that if after the earliest possible date forrequesting examination in such country the patentee fails to request examination by such patent office within sixty (60) days after thelicensed Party requests the patentee to do so, such five (5) year period shall run from the date of the licensed Party’s request that thepatentee request examination.Additional Defined TermsSectionArbitration RequestSection 15.01(a)AgreementPreambleAlliance ManagerSection 3.12Acquired PartySection 16.02AcquirerSection 16.02Acquiring PartySection 2.06(b)AcquisitionSection 16.02Bankrupt PartySection 14.05(a)Breaching PartySection 14.03Breach NoticeSection 14.03CMCSection 2.04(b)CommitteeSection 3.01(a)Confidentiality AgreementSection 1.12Effective DatePreambleEMASection 1.62Event of BankruptcySection 14.05(a)Exclusive Negotiation PeriodSection 2.09Executive OfficerSection 3.08Existing PatentsSection 11.03(a)FCPASection 11.06(b)(i)Government OfficialSection 11.06(a)(A)HarvardSection 1.33Harvard IndemniteesSection 13.05Harvard Patent RightsSection 9.04(a)(i)ICCSection 15.01(c)ICHIn-License AgreementSection 10.02Section 11.03(c)Indemnified PartySection 13.03Indemnifying PartySection 13.03Infringement ActivitySection 9.05(a)JCCSection 3.01(a)13 Additional Defined TermsSectionJDCSection 3.01(a)JSCSection 3.01(a)LicenseePreambleLicensee IndemniteesSection 13.01Licensee Product DataSection 2.04(b)Licensee TrademarksSection 6.06(b)LossesSection 13.01Non-Breaching PartySection 14.03Other Covered PartySection 11.06(a)(B)Other PartySection 14.05(a)Party or PartiesPreamblePRCSection 9.09RecipientSection 12.02RepresentativesSection 12.01Royalty TermSection 8.04(b)RulesSection 15.01Severed ClauseSection 16.05SubcommitteeSection 3.01(b)Supply AgreementsSection 7.02TermSection 14.01Terminated TerritorySection 14.07(b)TetraphasePreambleTetraphase IndemniteesSection 13.02Tetraphase Product DataSection 2.04(b)Tetraphase TrademarksSection 6.06(a)TP-6076 Data PackageSection 2.09TP-6076 Negotiation NoticeSection 2.09VATSection 1.68Section 1.81Interpretation. (a) Whenever any provision of this Agreement uses the word “including,” “include,”“includes,” or “e.g.,” such word shall be deemed to mean “including without limitation” and “including but not limited to”; (b)“herein,” “hereby,” “hereunder,” “hereof” and other equivalent words shall refer to this Agreement in its entirety and not solely to theparticular portion of this Agreement in which any such word is used; (c) a capitalized term not defined herein but reflecting a differentpart of speech from that of a capitalized term which is defined herein shall be interpreted in a correlative manner; (d) wherever usedherein, any pronoun or pronouns shall be deemed to include both the singular and plural and to cover all genders; (e) the recitals setforth at the start of this Agreement, along with the schedules and the exhibits to this Agreement, and the terms and conditionsincorporated in such recitals and schedules and exhibits, shall be deemed integral parts of this Agreement and all references in thisAgreement to this Agreement shall encompass such recitals and schedules and exhibits and the terms and conditions incorporated insuch recitals and schedules and exhibits; provided that, in the event of any conflict between the terms and conditions of this Agreementand any terms and conditions set forth in the recitals, schedules or14 exhibits, the terms of this Agreement shall control; (f) in the event of any conflict between the terms and conditions of this Agreementand any terms and conditions that may be set forth on any order, invoice, verbal agreement or otherwise, the terms and conditions ofthis Agreement shall govern; (g) this Agreement shall be construed as if both Parties drafted it jointly, and shall not be construedagainst either Party as principal drafter; (h) unless otherwise provided, all references to Sections, Articles and Schedules in thisAgreement are to Sections, Articles and Schedules of and to this Agreement; (i) any reference to any Law shall mean such Law as ineffect as of the relevant time, including all rules and regulations thereunder and any successor Law in effect as of the relevant time, andincluding the then-current amendments thereto; (j) wherever used, the word “shall” and the word “will” are each understood to beimperative or mandatory in nature and are interchangeable with one another; (k) references to a particular person or entity include suchperson’s or entity’s successors and assigns to the extent not prohibited by this Agreement; (l) references to Tetraphase’s knowledgeshall be taken to refer to the knowledge of Tetraphase’s senior management team as of the Effective Date having made no particularinquiry; (m) except where the context otherwise requires, the word “or” is used in the inclusive sense that is typically associated withthe phrase “and/or”; (n) the captions and table of contents used herein are inserted for convenience of reference only and shall not beconstrued to create obligations, benefits or limitations; (o) the word “year” means any consecutive twelve (12) month period, unlessotherwise specified; (p) reference to an “indication” means, with respect to a product, any use to which such product is intended to beput for the treatment, prevention, mitigation, cure or diagnosis of a recognized disease or condition, or of a manifestation of arecognized disease or condition, or for the relief of symptoms associated with a recognized disease or condition, in each case for anysize patient population, which, if approved in the U.S., would be reflected in the “Indications and Usage” section of labeling pursuantto 21 C.F.R. §201.57(c)(2) or, to the extent applicable, any comparable labeling section outside the U.S., including any such use that isthe subject to a clinical trial; (q) references to the “Field” mean any or all of the applicable indications described in the definition of“Field”, in any size patient population; and (r) references to cAIA mean the treatment of cAIA in any size patient population. 15 ARTICLE II.LICENSES; EXCLUSIVITYSection 2.01Grants of Licenses. (a)Subject to the terms and conditions of this Agreement (including Section 4.05(z)), Tetraphase herebygrants to Licensee an exclusive (including with regard to Tetraphase and its Affiliates), royalty-bearing, non-sublicensable(except in accordance with Section 2.02 (Rights to Sublicense or Subcontract)), non-transferrable (except in accordancewith Section 16.01 (Assignment)) license under the Tetraphase Technology and Tetraphase’s interest in the JointTechnology to Develop and Commercialize Licensed Products in the Field in the Territory. (b)Subject to the terms and conditions of this Agreement, to the extent permitted by applicable Law,Tetraphase hereby grants to Licensee an exclusive (including with regard to Tetraphase and its Affiliates), non-sublicensable(except in accordance with Section 2.02 (Rights to Sublicense or Subcontract)), non-transferrable (except in accordancewith Section 16.01 (Assignment)) right of reference under the Tetraphase Regulatory Documents to Develop andCommercialize Licensed Products in the Field in the Territory. (c)Subject to the terms and conditions of this Agreement, Licensee hereby grants to Tetraphase, (i) anexclusive (including with regard to Licensee and its Affiliates), royalty-free (subject to clause (ii)), fully-paid (subject toclause (ii)), freely transferrable, freely sublicensable, perpetual, irrevocable license under Licensee Technology andLicensee’s interest in Joint Technology to Research, Develop, Manufacture and Commercialize the Licensed Compound,Eravacycline Materials and Eravacycline Products outside the Territory, and (ii) from and after any early termination of thisAgreement (in one or more Jurisdictions or in its entirety), an exclusive (including with regard to Licensee and its Affiliates),freely transferrable, freely sublicensable, perpetual, irrevocable license under Licensee Technology and Licensee’s interest inJoint Technology to Research, Develop, Manufacture and Commercialize the Licensed Compound, Eravacycline Materialsand Eravacycline Products (other than any Licensed Product and Jurisdiction with respect to which Licensee retains aperpetual license pursuant to Section 8.04(b)) in the Terminated Territory; provided that (A) if this Agreement is terminatedby Licensee pursuant to Section 14.03 (Termination for Breach), Tetraphase shall pay Licensee a royalty of [**] percent([**]%) of Net Sales of Licensed Products in the Terminated Territory, mutatis mutandis, with the provisions of Section8.04(b) (second sentence only), Section 8.04(c), Section 8.04(d), Section 8.05 (Royalty Payments and Reports), Section8.07 (Accounting), Section 8.08 (Currency Conversion), Section 8.09 (Methods of Payment), Section 8.10 (Taxes) andSection 8.11 (Late Payments) applying with respect thereto, mutatis mutandis; provided that (solely for the purposes ofsuch royalty payment, mutatis mutandis, with such provisions) “Royalty Term” shall mean that period commencing on theeffective date of termination and ending on the later of (i) expiration of the last-to-expire Valid Claim that is a composition ofmatter claim (for clarity, including a formulation claim) in the Licensee Patent Rights or Joint Patent Rights that Covers suchLicensed Product in the Field in such Jurisdiction in the Terminated Territory, (ii) expiration of marketing or regulatoryexclusivity with respect to such Licensed Product in such Jurisdiction in the Terminated Territory, (iii) ten (10) years fromthe date of First Commercial Sale of the applicable Licensed16 Product in the Field in the applicable Jurisdiction in the Terminated Territory or (iv) five (5) years from the effective date oftermination and (B) Tetraphase may, upon written notice to Licensee, terminate its license under this Section 2.01(c)(ii) and,thereby, terminate such royalty obligation. (d)Subject to the terms and conditions of this Agreement (including Section 2.01(a), Section 2.01(b),Section 2.01(c), Section 2.01(e), Section 2.01(f), Section 2.06 (Exclusivity) and Section 8.04 (Royalties)), and to theextent not already granted herein, each Party hereby grants, and shall cause its Affiliates to grant, to the other Party aworldwide, non-exclusive, royalty-free, fully-paid, freely sublicensable, freely transferrable right and license to exploit theJoint Technology in any manner without compensating or accounting to the other Party or its Affiliates.(e)Subject to the terms and conditions of this Agreement, to the extent permitted by applicable Law,Licensee hereby grants to Tetraphase an exclusive (including with regard to Licensee and its Affiliates), non-sublicensable(except in accordance with Section 2.02 (Rights to Sublicense or Subcontract)), non-transferrable (except in accordancewith Section 16.01 (Assignment)) right of reference under the Licensee Regulatory Documents to Develop andCommercialize Licensed Products outside the Territory. (f)During the Term, Tetraphase shall not, and shall not grant to any of its Affiliates or any Third Party alicense under the Tetraphase Technology and Tetraphase’s interest in the Joint Technology to, Develop or Commercializeany Eravacycline Product for any human use in the Territory.Section 2.02Rights to Sublicense or Subcontract. Except as set forth in Section 2.01(d), Licensee may notsublicense any of the rights granted to Licensee by Tetraphase hereunder, or subcontract any of Licensee’s obligations hereunder,except with (a) Tetraphase’s prior written consent, which consent may not be unreasonably withheld, delayed or conditioned (providedthat Tetraphase’s prior written consent shall not be required with respect to any such sublicense to an Affiliate of Licensee), and (b) tothe extent required under the Harvard Agreement, Harvard’s prior written consent. Whether or not Licensee is required to obtainTetraphase’s consent to sublicense any rights hereunder, Licensee shall remain responsible for the acts or omissions of any of itsAffiliates or sublicensees with respect to this Agreement.Section 2.03No Other Rights and Retained Rights. Nothing in this Agreement shall be interpreted to grant eitherParty any rights under any Patent Rights or Know-How owned by or licensed to the other Party that are not expressly granted herein,whether by implication, estoppel or otherwise. Any rights not expressly granted to a Party by the other Party under this Agreement arehereby retained by such other Party.17 Section 2.04Knowledge Transfer.(a)Within a reasonable time following the Effective Date (but, with respect to the Know-How identified inSchedule 2.04, no later than [**] days following the Effective Date, and, with respect to all other applicable Know-How,[**] days following the Effective Date), (i) Tetraphase shall provide to Licensee information describing the Developmentprogram for the Licensed Compound and Licensed Products, including all non-clinical and clinical data and other Know-How that are identified in Schedule 2.04 or, in Tetraphase’s reasonable determination, are necessary or reasonably useful forthe Development or Commercialization of the Licensed Products in the Field in the Territory and (ii) Tetraphase shall usecommercially reasonable efforts to make its qualified personnel reasonably available to Licensee, by telephone or otherremote conferencing system or at Tetraphase’s place of business and upon reasonable prior notice, for the purpose ofdiscussing such information under this Section 2.04 (Knowledge Transfer). Licensee shall reimburse Tetraphase for anyreasonable out-of-pocket costs incurred by Tetraphase in fulfilling its obligations pursuant to clause (ii) of the immediatelypreceding sentence, and shall pay Tetraphase, at the rates set forth in Exhibit D, for each hour that any of Tetraphase’spersonnel spend answering questions or providing instruction pursuant to clause (ii) of the immediately preceding sentence,in each case within [**] days after the receipt of an invoice therefor; provided that the first [**] FTE hours of such support,in aggregate, shall be at no expense to Licensee. (b)Subject to Section 4.05(z), throughout the Term, Tetraphase shall make available to Licensee copies ofTetraphase Know-How, including research data and reports, regulatory materials and correspondence (including INDs andDrug Approval Applications), clinical and preclinical data, and chemistry, manufacturing and controls (“CMC”) data,(collectively, the “Tetraphase Product Data”) to the extent such Tetraphase Product Data is necessary or reasonably usefulfor any Licensee Entity to Develop or Commercialize any Licensed Product in the Field in the Territory. Throughout theTerm, Licensee shall make available to Tetraphase copies of Licensee Know-How, including research data and reports,regulatory materials and correspondence (including INDs and Drug Approval Applications), clinical and preclinical data,and CMC data, (collectively, the “Licensee Product Data”) to the extent such Licensee Product Data is necessary orreasonably useful for any Tetraphase Entity to Develop or Commercialize the Licensed Compound or any EravacyclineProduct outside of the Territory or to Research or Manufacture the Licensed Compound or any Eravacycline Product.(c)(i) Subject to Section 4.05(z), Licensee shall be entitled at no cost to access, use, and reference theTetraphase Regulatory Documents and Tetraphase Product Data for the Development and Commercialization of theLicensed Products in the Field in the Territory in accordance with this Agreement. (ii) The Tetraphase Entities shall beentitled at no cost to access, use and reference the Licensee Regulatory Documents and Licensee Product Data for theDevelopment or Commercialization of the Licensed Compound and Eravacycline Products outside of the Territory and forthe Research or Manufacture of the Licensed Compound and Eravacycline Products.18 Section 2.05In-License Agreements. Licensee acknowledges and agrees that certain of the rights, licenses andsublicenses granted by Tetraphase to Licensee in this Agreement (including any sublicense rights) are subject to the terms of the In-License Agreements and the rights granted to the Third Party counterparties thereunder, the scope of the licenses granted to Tetraphaseor any applicable Affiliate thereunder and the rights retained by such Third Party counterparties and any other Third Parties (includingGovernmental Authorities) set forth therein. Licensee shall, and shall ensure that each Licensee Entity shall, perform and take suchactions to allow Tetraphase and its Affiliates to comply with their obligations under each In-License Agreement, only to the extentapplicable to Licensee’s rights or obligations under this Agreement, including Article 10 and Sections 4.2.3, 5.1 (first sentence onlyand solely with respect to the Development and Commercialization of Licensed Products in the Field in the Territory), 5.3, 6.3, 6.5,7.1.1, 7.3, 9.1, and 12.2 of the Harvard Agreement as in effect on the Effective Date. Without limiting the foregoing, each LicenseeEntity shall prepare and deliver to Tetraphase, or assist Tetraphase in preparing, any additional reports required under any In-LicenseAgreement, in each case reasonably sufficiently in advance to enable Tetraphase and its Affiliates to comply with their obligationsthereunder. Each Licensee Entity shall comply with each In-License Agreement. To the extent there is a conflict between the terms ofany In-License Agreement and any rights granted to Licensee hereunder, the terms of the applicable In-License Agreement(s) shallcontrol. Any breach by any Licensee Entity of any provision of any In-License Agreement applicable to any of them pursuant to thisSection 2.05 (In-License Agreements) shall be deemed a material breach of this Agreement. To the extent permitted under therelevant In-License Agreement, Tetraphase shall provide Licensee with a copy of (a) any In-License Agreement executed after theEffective Date, promptly after Tetraphase identifies that such In-License Agreement is relevant to Licensee’s rights and obligationsunder this Agreement, and (b) any amendment to any In-License Agreement previously provided to Licensee, promptly after suchamendment is executed. Section 2.06Exclusivity.(a)General Covenants. (i)During the Term and for [**] years after termination of this Agreement by Licensee pursuantto Section 14.03 (Termination for Breach) or Section 14.05 (Termination for Bankruptcy and Rights in Bankruptcy), neitherTetraphase nor any of its Affiliates shall, itself or with or through any Third Party, without the prior written consent of Licensee,engage in any Development or Commercialization of any Competing Product in the Territory. For the avoidance of doubt, andwithout limiting the foregoing, during the Term, neither Tetraphase nor any of its Affiliates shall, itself or with or through any ThirdParty, without the prior written consent of Licensee, engage in any Development or Commercialization of the Licensed Compound orof any Eravacycline Product in the Territory (including advertising or promotional activities directed primarily to customers or otherbuyers or users located in the Territory or accepting orders from or selling in the Territory).19 (ii)During the Term and for [**] years after termination of this Agreement by Tetraphasepursuant to Section 14.02 (Termination for Patent Right Challenge), Section 14.03 (Termination for Breach) or Section 14.05(Termination for Bankruptcy and Rights in Bankruptcy), or for [**] after any other termination of this Agreement, neitherLicensee nor any of its Affiliates shall, itself or with or through any Third Party, without the prior written consent of Tetraphase,engage in any Research, Development, Manufacture or Commercialization of any Competing Product in any country of the world,except with respect to the Development or Commercialization of any Licensed Product in the Field in the Territory in accordance withthis Agreement. For the avoidance of doubt, and without limiting the foregoing, during the Term and for [**] years after terminationof this Agreement, neither Licensee nor any of its Affiliates shall, itself or with or through any Third Party, without the prior writtenconsent of Tetraphase, engage in any Development or Commercialization of the Licensed Compound or of any Licensed Productoutside of the Field or outside of the Territory (including advertising or promotional activities directed primarily to customers or otherbuyers or users outside of the Field or located outside of the Territory or accepting orders from or selling outside of the Territory) or inany Research or Manufacture of the Licensed Compound or of any Eravacycline Product.(b)If, during the term of the exclusivity covenant in Section 2.06(a), a Party or any of its Affiliatesacquires or is acquired by a Third Party (whether such acquisition occurs by way of a purchase of assets, merger,consolidation, change of control or otherwise) (such Party, the “Acquiring Party” for purposes of this Section 2.06) that is,at the time of such acquisition, Researching, Developing, Manufacturing or Commercializing a Competing Product in amanner that, if performed by the Acquiring Party or any of its Affiliates, would violate Section 2.06(a), then the AcquiringParty or its applicable Affiliate will, no later than [**] days following the date of consummation of the relevant acquisition,notify the other Party in writing that the Acquiring Party or such Affiliate will:(i)divest, whether by license or otherwise, its interest in the Competing Product to a Third Party,to the extent necessary to be in compliance with Section 2.06(a), with no rights in such Competing Product retained by the AcquiringParty or any of its Affiliates; or(ii)terminate the Research, Development, Manufacture and Commercialization of the CompetingProduct, to the extent necessary to be in compliance with Section 2.06(a).(c)If the Acquiring Party or any of its Affiliates notifies the other Party in writing that it or its relevantAffiliate intends to divest such Competing Product or terminate the Research, Development, Manufacture andCommercialization of the Competing Product as provided in Section 2.06(b), then the acquiring Party or its relevantAffiliate will effect the consummation of such divestiture within [**] months or effect such termination within [**] monthsafter the consummation of the relevant acquisition, subject to compliance with applicable Law, and will confirm to the otherParty in writing when such divestiture or termination has been completed. The acquiring Party will keep the other Partyreasonably informed of its and its Affiliates’ efforts and progress in effecting such divestiture or termination until it iscompleted. Until such divestiture or termination occurs, the Acquiring Party shall keep its and its Affiliates’ activities withrespect to such Competing Product separate from their activities with respect to the Licensed Products.20 (d)Each Licensee Entity will use commercially reasonable efforts to monitor and prevent exports ofLicensed Products from the Territory for Development or Commercialization outside of the Territory using methodscommonly used in the industry for such purpose, and shall promptly inform Tetraphase of any such exports from theTerritory, and the actions taken to prevent such exports. Licensee shall take, and shall ensure that each Licensee Entitytakes, reasonable actions requested in writing by Tetraphase that are consistent with Law to prevent such exports. IfLicensee or any of its Affiliates or, to Licensee’s or any of its Affiliates’ knowledge, any other Licensee Entity receives arequest or order to (i) Research or Manufacture any Licensed Compound or Eravacycline Product or (ii) Develop orCommercialize any Licensed Compound or Eravacycline Product outside of the Territory, Licensee shall immediately notifyTetraphase thereof, shall not accept such request or order, and shall direct the relevant individual or entity toTetraphase. Tetraphase and its Affiliates will use commercially reasonable efforts to monitor and prevent exports ofLicensed Products, from countries outside the Territory in which any of Tetraphase or its Affiliates, at the relevant time,directly and actively Developing or Commercializing any Eravacycline Product, for Development or Commercialization inthe Territory, using methods commonly used in the industry for such purpose, and shall promptly inform Licensee of anysuch exports from any such country outside the Territory, and the actions taken to prevent such exports. If Tetraphase or, toTetraphase’s knowledge, any Tetraphase Entity receives a request or order to Develop or Commercialize any LicensedProduct in the Field in the Territory, Tetraphase shall immediately notify Licensee thereof, shall not accept such request ororder, and shall direct the relevant individual or entity to Licensee. (e)Each Party agrees that the duration and scope of the covenants set forth in this Section 2.06(Exclusivity) are reasonable. In the event that the arbitrator or any court determines that the duration or scope of any suchprovision is unreasonable and that any such provision is to that extent unenforceable, the Parties agree that such provisionshall remain in full force and effect for the greatest time period and to the greatest scope that would not render itunenforceable. The Parties intend that the provisions of this Section 2.06 (Exclusivity) shall be deemed to be a series ofseparate covenants, one for each and every product, indication and jurisdiction where such provision is intended to beeffective.Section 2.07Diligence. Licensee shall use Commercially Reasonable Efforts to Develop and CommercializeLicensed Products in the Field in the Territory in accordance with this Agreement (including Section 4.01 (Development in the Fieldin the Territory) and Section 6.04 (Commercialization Efforts)). Section 2.08Field or Licensed Product Expansion. Upon the written request of either Party, the Parties shallpromptly discuss in good faith whether to expand the Field to include one or more additional indications in humans or to expand thedefinition of Licensed Product to include one or more additional formulations; provided that any such expansion pursuant to thisSection 2.08 (Field or Licensed Product Expansion) shall be by mutual written agreement; provided, further, that the Parties herebyagree that such expansion of the Field or the definition of Licensed Product shall require no additional payment by Licensee; provided,for clarity, that (a) consistent with the definition of Net Sales set forth herein, any Net Sales of any additional Licensed Product ormade for use in any indication added to the Field shall be included in the Net Sales used to calculate the achievement of thecommercial milestones set forth in Section 8.03 (Sales Milestone Payments) and royalty payments owed pursuant to21 Section 8.04 (Royalties) and (b) solely for purposes of any milestone events set forth in Section 8.02 (Development MilestonePayment) that have not been achieved as of the date on which the definition of “Field” is expanded pursuant to this Section 2.08(Field or Licensed Product Expansion), all uses of the word “Field” in Section 8.02 (Development Milestone Payment) shallinclude all of the additional indications included in the expanded definition of “Field.”Section 2.09ROFN. Within [**] days after Tetraphase receives the final clinical study report for its first multipleascending dose Phase 1 Clinical Trial of TP-6076, Tetraphase shall provide to Licensee (a) a true and complete copy of such clinicalstudy report, (b) all material pre-clinical data with respect to TP-6076 in Tetraphase’s possession and Control at such time, and (c)pursuant to, and under the terms of, a material transfer agreement to be mutually agreed by the Parties, the TP-6076 needed forLicensee to conduct China-strain minimum inhibitory concentration (MIC) testing of TP-6076 to support an IND filing in PRC for TP-6076, which testing shall be at Licensee’s sole cost and expense (“TP-6076 Data Package”). Within [**] days after receipt of thecomplete TP-6076 Data Package, Licensee may provide written notice to Tetraphase of Licensee’s interest in negotiating a license toDevelop and Commercialize TP-6076 in the Territory (the “TP-6076 Negotiation Notice”); provided that Tetraphase shall respond toLicensee’s inquiries with respect to TP-6076 (including with regard to the contents of the TP-6076 Data Package) during such [**]day exercise period, to the extent Tetraphase determines that such inquiries are reasonable. If Licensee provides such notice, theParties shall enter into good faith negotiations with respect to such license, on such terms as may be mutually agreeable, which termsshall include Licensee sharing in the costs for any Tetraphase Entity’s Phase 2 Clinical Trials of TP-6076 that supports registration inthe Territory. If (a) Licensee does not provide the TP-6076 Negotiation Notice to Tetraphase within such [**] period or (b) Licenseeprovides the TP-6076 Negotiation Notice to Tetraphase during such [**] day period but the Parties are unable to reach mutualagreement and execute a definitive agreement with respect to the Development and Commercialization of TP-6076 in the Territorywithin [**] days from the date of the TP-6076 Negotiation Notice (or such extended period as may be approved in writing by theParties) (“Exclusive Negotiation Period”), Licensee shall have no rights with respect to TP-6076. During the Exclusive NegotiationPeriod, Tetraphase shall neither license or otherwise grant to any Third Party, nor engage in any negotiations or other discussions withany Third Party regarding any agreement to license or otherwise grant to any Third Party, any rights to Develop and CommercializeTP-6076 in the Territory.22 ARTICLE III.GOVERNANCESection 3.01General.(a)The Parties shall establish (i) a Joint Steering Committee (“JSC”) to oversee and coordinate the overallconduct of the Development and Commercialization of the Licensed Products in the Field in the Territory and (ii) a JointDevelopment Committee (“JDC”) to oversee and coordinate the Development of the Licensed Products in the Field in theTerritory. The JSC may, at the reasonable request of either Party, establish a Joint Commercialization Committee (“JCC”)to oversee and coordinate the Commercialization of the Licensed Products in the Field in the Territory; provided that prior toany such establishment, any matters that would fall within the purview of the JCC pursuant to this ARTICLE III(Governance) shall instead fall within the purview of the JSC. The JSC, the JDC and the JCC shall each be referred to as a“Committee”. Each Committee shall have decision-making authority with respect to the matters within its purview to theextent expressly provided herein.(b)From time to time, each Committee may establish one or more subcommittees to oversee particularprojects or activities, as it deems necessary or advisable (each, a “Subcommittee”). Each Subcommittee shall consist ofsuch number of members as the applicable Committee determines is appropriate from time to time. Such members shall beindividuals with expertise and responsibilities in the relevant areas. Such Subcommittees shall operate under the sameprinciples as are set forth in this ARTICLE III (Governance) for the Committee forming such Subcommittee.(c)At Tetraphase’s written request, the Parties shall renegotiate this ARTICLE III (Governance) in goodfaith to include in the decision-making processes one or more Tetraphase Entities (other than Tetraphase) which areDeveloping or Commercializing the Licensed Compound or any Eravacycline Product outside of the Territory orResearching or Manufacturing the Licensed Compound or any Eravacycline Product; provided that such renegotiation shallnot result in any alternative decision-making processes that would diminish Licensee’s rights in any manner that mayadversely impact Licensee’s prospects with respect to the Development or Commercialization of any Licensed Product inany Jurisdiction in the Territory.Section 3.02Joint Steering Committee.(a)Within [**] days following the Effective Date, the Parties shall establish the JSC. The JSC shall:(i)manage the strategic direction of the Development and Commercialization of the Licensed Products inthe Field in the Territory;(ii)review and monitor the progress of the Development and Commercialization of the Licensed Productsin the Field in the Territory and serve as a forum for exchanging information regarding the conduct of the Development andCommercialization of the Licensed Products in the Field in the Territory;23 (iii)provide any information to Tetraphase that is necessary or reasonably useful for the Development orCommercialization of Eravacycline Products outside of the Territory;(iv)oversee and coordinate all of the matters within the responsibilities of the Committees hereunder;(v)serve as a forum for dispute resolution in accordance with Section 3.07 (Committee Decision Making)with respect to matters that are not resolved at the JDC and JCC; and(vi)perform such other duties as are specifically assigned to the JSC under this Agreement.Section 3.03Joint Development Committee.(a)Within [**] days following the Effective Date, the Parties shall establish the JDC. Upon theestablishment of the JSC and the JDC, (i) each Party shall appoint the same [**] individuals to serve as such Party’srepresentatives on the JSC and the JDC, and (ii) the JSC and JDC shall hold joint meetings, in each case ((i) or (ii)) untilsuch time as either Party, in its sole discretion, determines it no longer desires the JSC and JDC to be so aligned. The JDCshall:(i)review and approve the Development Plan and any proposed updates or amendments to theDevelopment Plan, and propose revisions to the Development Plan in accordance with Section 4.01 (Development in the Field in theTerritory);(ii)provide a forum for the Parties to share information with respect to the Development of the LicensedProducts in the Field in the Territory, including reviewing and commenting on updates on such Development;(iii)oversee, review, coordinate and provide strategic guidance to the Parties on the Development of theLicensed Products in the Field in the Territory;(iv)subject to and within the parameters of the Development Plan (A) oversee the implementation of theDevelopment Plan (including evaluation of clinical trial protocols and review of the conduct of clinical trials conducted pursuant to theDevelopment Plan); and (B) oversee and approve the overall strategy and positioning of all material Regulatory Filings for LicensedProducts in the Field in the Territory; and(v)perform such other duties as are specifically assigned to the JDC under this Agreement.24 Section 3.04Joint Commercialization Committee.(a)At least [**] months prior to the anticipated filing of the first Drug Approval Application for a LicensedProduct in the Field in the Territory, the JSC shall establish the JCC. The JCC shall:(i)review and discuss the Launch Plan; (ii)discuss implementation of the Launch Plan;(iii)review and discuss the initial Commercialization Plan and, each year thereafter, review and approve theupdated Commercialization Plan;(iv)discuss implementation of the Commercialization Plan;(v)review and discuss any branding and/or co-branding matters with respect to Licensed Products in theField in the Territory; and(vi)perform such other duties as are specifically assigned to the JCC under this Agreement.Section 3.05Membership. Each Committee shall be composed of [**] representatives from each of Tetraphase andLicensee, each of which representatives shall be of the seniority and experience appropriate for service on the applicable Committee inlight of the functions, responsibilities and authority of such Committee and the status of activities within the scope of the authority andresponsibility of such Committee. Any representative from either Party can represent such Party on more than one Committee. EachParty may replace any of its representatives on any Committee at any time with prior written notice to the other Party; provided thatsuch replacement meets the standard described in the preceding sentence. Each Party’s representatives and any replacement of arepresentative shall be bound by obligations of confidentiality and non-use applicable to the other Party’s Confidential Information thatare at least as stringent as those set forth in ARTICLE XII (Confidentiality). Each Committee shall appoint a chairperson fromamong its members, with the first chairperson of each of the JSC and JDC being a representative of [**] and the first chairperson of theJCC being a representative of [**]. Each chairperson (whether initially appointed or any successor therefor) shall serve a term of one(1) year, at which time, the applicable Committee shall select a successor chairperson who is a representative of the Party other than theParty represented by the outgoing chairperson (e.g., the second chairperson of each of the JSC and JDC shall be a representative of[**], and the second chairperson of the JCC shall be a representative of [**]; the third chairperson of each of the JSC and JDC shall bea representative of [**] and the third chairperson of the JCC shall be a representative of [**]). Within [**] days following eachCommittee meeting, the chairperson of the applicable Committee shall circulate to all Committee members a draft of the minutes ofsuch meeting. The Committee shall then approve, by mutual agreement, such minutes within [**] days following circulation. Nochairperson of any Committee shall have any greater authority than any other representative of such Committee.25 Section 3.06Meetings. (a)Each Committee shall hold an initial meeting within [**] days after its formation or as otherwise agreedby the Parties. Thereafter, each Committee shall meet at least [**] following such Committee’s formation, unless therespective Committee members otherwise agree. All Committee meetings may be conducted either by teleconference or,solely if agreed by the Parties, in person.(b)Unless otherwise agreed by the Parties, the location at which in-person meetings for each Committeeshall be held at the offices of Tetraphase, unless Licensee has offices in the United States, in which case, such meetings shallalternate between the offices of Tetraphase and the United States offices of Licensee. A reasonable number of otherrepresentatives of a Party, including, with respect to Tetraphase, any representative of any Tetraphase Entity that isDeveloping or Commercializing the Licensed Compound or any Eravacycline Product outside of the Territory orResearching or Manufacturing the Licensed Compound or any Licensed Product, may attend any Committee meeting asnon-voting observers; provided that such additional representatives shall be bound by obligations of confidentiality and non-use applicable to the other Party’s Confidential Information that are at least as stringent as those set forth in ARTICLE XII(Confidentiality). Each Party shall be responsible for all of its own personnel and travel costs and expenses relating toparticipation in Committee meetings.Section 3.07Committee Decision Making. All decisions of a Committee shall be made by unanimous vote, witheach Party’s representatives collectively having one (1) vote, and shall be set forth in minutes approved by both Parties. Upon [**]Business Days prior written notice, either Party may convene a special meeting of a Committee for the purpose of resolving any failureto reach agreement on a matter within the scope of the authority and responsibility of such Committee. If the JDC or JCC is unable toreach agreement on any matter within [**] Business Days after the matter is referred to it or first considered by it, such matter shall bereferred to the JSC for resolution. If the JSC is unable to reach agreement on any matter within [**] Business Days after the matter isreferred to it or first considered by it, such matter shall be referred to the Executive Officers for resolution in accordance with Section3.08 (Executive Officers; Disputes).Section 3.08Executive Officers; Disputes. Each Party shall ensure that an executive officer is designated for suchParty at all times during the Term for dispute resolution purposes (each such individual, such Party’s “Executive Officer”), and shallpromptly notify the other Party of its initial, or any change in its, Executive Officer. Unless otherwise set forth in this Agreement, inthe event of a dispute arising under this Agreement between the Parties, the Parties shall refer such dispute to the Executive Officers,who shall attempt in good faith to resolve such dispute.Section 3.09Final Decision-Making Authority. If the Parties are unable to resolve a given dispute within thepurview of a Committee within [**] Business Days after referring such dispute to the Executive Officers pursuant to Section 3.08(Executive Officers; Disputes), then, subject to Section 3.10 (Limitations on Decision-Making):26 (a)the Executive Officer of Tetraphase shall have the deciding vote on any matter that has any materialadverse impact on the Development, Regulatory Approval process or Commercialization for any Eravacycline Productoutside the Territory, including as a result of a material adverse impact on (i) the Research, Development orCommercialization of the Licensed Compound or any Eravacycline Product in any way outside the Territory or theResearch or Manufacture of the Licensed Compound or any Eravacycline Product, (ii) the scope, validity or enforceabilityof any Tetraphase Technology or (iii) in Tetraphase’s reasonable opinion, any In-License Agreement; and(b)the Executive Officer of Licensee shall have the deciding vote on any matter solely related to theDevelopment or Commercialization of Licensed Products in the Field in the Territory; provided that such matter does not fallunder Tetraphase’s final decision-making authority pursuant to Section 3.09(a).Any decision made by an Executive Officer in accordance with this Section 3.09 (Final Decision-Making Authority) shallbe deemed to be a decision of the relevant Committee.Section 3.10Limitations on Decision-Making.(a)Neither Party shall have the deciding vote on, and no Committee shall have decision-making authorityregarding, any of the following matters:(i)the imposition of any requirements on the other Party to undertake obligations beyond thosefor which it is responsible, or to forgo any of its rights, under this Agreement;(ii)the imposition of any requirements that the other Party takes or declines to take any actionthat would result in a violation of any Law or any agreement with any Third Party or the infringement of intellectual property rights ofany Third Party;(iii)the resolution of any dispute involving the breach or alleged breach of this Agreement;(iv)any decision that is expressly stated to require the mutual agreement (or similar language) ofthe Parties or the approval of the other Party;(v)any matters that would excuse such Party from any of its obligations under this Agreement;or(vi)modifying the terms of this Agreement or taking any action to expand or narrow theresponsibilities of any Committee.(b)The decision-making Party shall make its decision in good faith, subject to the terms and conditions ofthis Agreement, and in a commercially reasonable manner without favoring other products being Developed, Manufacturedor Commercialized by or on behalf of such Party or its Affiliates that are not Licensed Products.27 (c)In no event may the decision-making Party unilaterally determine that it has fulfilled any obligationshereunder or that the non-deciding Party has breached any obligations hereunder.(d)In no event may Licensee unilaterally determine that the events required for the payment of milestonepayments have not occurred.(e)In no event may Tetraphase unilaterally determine that the events required for the payment of milestonepayments have occurred.Section 3.11Scope of Governance. Notwithstanding the creation of each of the Committees, each Party shall retainthe rights, powers and discretion granted to it under this Agreement, and no Committee shall be delegated or vested with rights, powersor discretion unless such delegation or vesting is expressly provided herein, or the Parties expressly so agree in writing. It isunderstood and agreed that issues to be formally decided by a particular Committee are only those specific issues that are expresslyprovided in this Agreement to be decided by such Committee, as applicable. For clarity, no Committee shall have any rights, powersor discretion to decide any matter not relating to the Development or Commercialization of the Licensed Product in the Field and theTerritory, and Tetraphase retains all such rights, powers and discretion.Section 3.12Alliance Managers. Each of the Parties shall appoint a single individual to manage Development,Manufacturing and Commercialization obligations between the Parties under this Agreement (each, an “Alliance Manager”). Therole of the Alliance Manager is to act as a single point of contact between the Parties to ensure a successful relationship under thisAgreement. The Alliance Managers may attend any Committee meetings. Each Alliance Manager shall be a non-voting participant insuch Committee meetings, unless s/he is also appointed a member of such Committee; provided, however, that an Alliance Managermay bring any matter to the attention of a Committee if such Alliance Manager reasonably believes that such matter warrants suchattention. Each Party may change its designated Alliance Manager at any time upon written notice to the other Party. Any AllianceManager may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the otherParty. Each Party’s Alliance Manager and any substitute for an Alliance Manager shall be bound by obligations of confidentiality andnon-use applicable to the other Party’s Confidential Information that are at least as stringent as those set forth in ARTICLE XII(Confidentiality). Each Alliance Manager will also: (a) plan and coordinate cooperative efforts and internal and externalcommunications; and (b) facilitate the governance activities hereunder and the fulfillment of action items resulting from Committeemeetings.28 ARTICLE IV.DEVELOPMENTSection 4.01Development in the Field in the Territory.(a)The Development of Licensed Products in the Field in the Territory shall be governed by theDevelopment Plan, and no Licensee Entity may Develop any Licensed Product in the Field in the Territory other than inaccordance with the Development Plan, or as otherwise approved by Tetraphase in advance in writing. The initialframework for the Development Plan is attached to this Agreement as Exhibit B. The Parties shall, through the JDC, adoptthe initial Development Plan within [**] days after the Effective Date, and once the JDC adopts such initial DevelopmentPlan it will be attached (or deemed attached) to this Agreement as Exhibit C. The JDC shall periodically review theDevelopment Plan and determine whether to update the Development Plan. A Party may also develop and submit to theJDC from time to time proposed substantive amendments to the Development Plan. The JDC shall review such proposedamendments and may approve such proposed amendments or any other proposed amendments that the JDC may considerfrom time to time in its discretion and, upon any such approval by the JDC, the Development Plan shall be amendedaccordingly.(b)If, at any time during the Term, Tetraphase notifies Licensee in writing that it plans to conduct, for anyLicensed Product, a multi-region clinical trial that includes activities in the Territory, the Parties shall, subject to Section 4.05(Development Costs)), amend the Development Plan to include such activities in the Territory, and Tetraphase shall grant toLicensee any rights required to enable Licensee to conduct such activities.(c)Licensee shall use Commercially Reasonable Efforts to execute and to perform, or cause to beperformed, the activities assigned to it in the Development Plan, in each case in accordance with Section 4.03 (Standards ofConduct). (d)Licensee shall use Commercially Reasonable Efforts to obtain, or cause to be obtained, RegulatoryApproval and, if applicable, Reimbursement Approval, for a Licensed Product in the Field in each Jurisdiction in theTerritory.Section 4.02Development Reports. Within [**] Business Days after the end of each calendar quarter, Licenseeshall provide Tetraphase with a written report that summarizes the Development of the Licensed Products in the Field in the Territoryperformed by the Licensee Entities during the prior calendar quarter, which report shall include the status of each pending andproposed Regulatory Filing for Licensed Products in the Field in the Territory. In addition, Licensee shall promptly provide writtennotice to Tetraphase of any significant Development events (e.g., any clinical trial initiation or completion, clinical holds, RegulatoryFilings, Regulatory Approvals, Licensee Product Data).29 Section 4.03Standards of Conduct. The Licensee Entities shall perform all Development activities under theDevelopment Plan in a good scientific manner, in accordance with GLP and GCP, as applicable, and in compliance in all materialrespects with applicable Laws.Section 4.04Records. The Licensee Entities shall maintain written or electronic records in sufficient detail, in agood scientific manner (in accordance with GLP and GCP, as applicable) and appropriate for regulatory and patent purposes, whichare complete and accurate in all material respects and reflect all Development work performed under the Development Plan and resultsachieved. Tetraphase shall have the right, upon reasonable advance notice, and at reasonable intervals, to inspect and copy all suchrecords (for clarity, including all applicable clinical, regulatory and quality records).Section 4.05Development Costs. Except as expressly provided in this Agreement or the Development Plan, eachParty shall bear its own costs incurred in the performance of its obligations under this ARTICLE IV(Development). Notwithstanding the foregoing sentence, if any Tetraphase Entity, in collaboration with one or more LicenseeEntities, conducts any multi-region clinical trial for any Licensed Product that includes any trial site in the Territory, Licensee maydetermine, at its sole discretion, whether to participate in such multi-region clinical trial. In the event that Licensee determines toparticipate in the aforementioned multi-region clinical trial, such trial shall enroll at least the minimum number of study subjectsrequired to satisfy the applicable Regulatory Authority, and Licensee shall bear both (a) all costs incurred in the performance of suchclinical trial in the Territory and (b) a pro rata portion of the Total Indirect Costs incurred in the performance of such multi-regionclinical trial outside the Territory, which portion shall be the ratio of study sites in the Territory to total study sites worldwide, providedthat such portion shall in no event exceed [**] percent ([**]%) of the Total Indirect Costs incurred in the performance of such multi-region clinical trial outside the Territory; provided, however, that (y) nothing in this Agreement shall prevent or delay any TetraphaseEntity from conducting any such multi-region clinical trial outside the Territory and (z) if Licensee determines not to participate in suchmulti-region clinical trial outside the Territory pursuant to Section 4.05(b), then notwithstanding Licensee’s rights pursuant to Section2.01(a) and Section 2.01(b) or Licensee’s access rights pursuant to Section 2.04 (Knowledge Transfer) or Section 5.01(c), Licenseeshall not have access to any Tetraphase Product Data or Tetraphase Regulatory Documents arising out of such multi-region clinicaltrial outside the Territory, unless and until Licensee pays to Tetraphase [**] percent ([**]%) of the amount provided pursuant toclauses (a) and (b) of this sentence with respect to such multi-region clinical trial. 30 ARTICLE V.REGULATORYSection 5.01Regulatory Filings.(a)Under the oversight of the JDC and subject to Section 4.01(a), Licensee shall have the sole right toprepare, obtain, and maintain all Regulatory Filings and Regulatory Approvals, and to conduct communications with theRegulatory Authorities, for the Development or Commercialization of Licensed Products in the Field in the Territory.Licensee shall provide Tetraphase with an opportunity to review and comment on original language versions of allRegulatory Filings in the Territory for which Licensee is responsible under this Section 5.01(a). Licensee shall provideaccess to interim drafts of all Regulatory Filings (in their original language) to Tetraphase via the access methods (such assecure databases) established by the JDC, and Tetraphase shall provide its comments on the final drafts of all RegulatoryFilings or of proposed material actions within [**] days ([**] days for Drug Approval Applications), or such other longerperiod of time mutually agreed to by the Parties. In the event that a Regulatory Authority establishes a response deadline forany Regulatory Filing or material action shorter than such [**] day (or [**] day) period, the Parties shall work cooperativelyto ensure the other Party has a reasonable opportunity for review and comment within such deadlines. Licensee shall, andshall cause relevant Licensee Entities to, consider any such comments from Tetraphase in good faith.(b)All Regulatory Filings for Licensed Products in the Field in the Territory shall be filed in the name ofLicensee or its designated Licensee Entity or designee, and all Licensee Regulatory Documents (including all RegulatoryApprovals) shall be owned by, and shall be the sole property and held in the name of, Licensee or its designated LicenseeEntity or designee. All Regulatory Filings and Regulatory Approvals in the Field in the Territory shall be at Licensee’s soleexpense.(c)Subject to Section 4.05(z), (i) Tetraphase shall, at Licensee’s reasonable request and expense, provideLicensee with all reasonable assistance and support in obtaining Regulatory Approvals for the Licensed Products, and in theactivities in support thereof, including providing necessary documents or other materials required by applicable Laws toobtain Regulatory Approvals, or attending meetings with Licensee and Regulatory Authorities relating to the LicensedCompound or a Licensed Product upon Licensee’s request, in each case in accordance with the terms and conditions of thisAgreement and the applicable Development Plan, and (ii) in support of Licensee’s preparation and filing of any IND orDrug Approval Application with respect to any Licensed Product in the Field in the Territory, Tetraphase shall, atLicensee’s reasonable written request and expense, provide Licensee a complete electronic copy of reasonably requestedTetraphase Regulatory Documents. In support of each Tetraphase Entity’s preparation and filing of any IND or DrugApproval Application with respect to any Eravacycline Product outside of the Territory, at Tetraphase’s reasonable writtenrequest, Licensee shall provide Tetraphase access to a complete electronic copy of all Licensee Regulatory Documents (inthe original language). 31 ARTICLE VI.COMMERCIALIZATIONSection 6.01General. Under the direction of the JCC, Licensee (itself or through any of the Licensee Entities) shallhave the sole right to Commercialize the Licensed Products in the Field in the Territory at its own cost and expense (except asotherwise expressly set forth herein). At least [**] prior to anticipated filing of the first Drug Approval Application for a LicensedProduct in the Field in the Territory, Licensee shall prepare a Launch Plan, which shall be reviewed by the JCC no later than [**] daysafter the JCC’s receipt of such Launch Plan. Within [**] months prior to anticipated approval of the first Drug Approval Applicationfor a Licensed Product in the Field in the Territory, Licensee shall prepare the initial Commercialization Plan, which shall be reviewedby the JCC no later than [**] days following the JCC’s receipt of such Commercialization Plan. Each [**] thereafter, Licensee shallprovide the JCC with an updated Commercialization Plan, which the JCC shall review and approve within [**] days after receiptthereof. Section 6.02Promotional Materials. The Licensee Entities shall share their promotional materials for the LicensedProducts with the JCC on a regular basis, and the JCC shall have the right to review and comment on, which comments shall beconsidered in good faith by Licensee, any of the Licensee Entities’ promotional materials prior to their use in the Territory.Section 6.03Commercialization Reports. Within [**] Business Days after the end of each calendar quarterfollowing the First Commercial Sale of any Licensed Product in the Field in the Territory, Licensee shall provide the JCC with (i) awritten report that summarizes Commercialization activities performed during the prior calendar quarter with respect to each LicensedProduct in each Jurisdiction in the Territory, (ii) detailed sales reports for each month of the prior calendar quarter of each LicensedProduct in each Jurisdiction in the Territory, and (iii) quarterly sales forecasts for each Licensed Product in each Jurisdiction in theTerritory.Section 6.04Commercialization Efforts. Licensee shall use Commercially Reasonable Efforts to CommercializeLicensed Products in the Field in the Territory following receipt of relevant Regulatory Approvals therefor.Section 6.05Standards of Conduct. The Licensee Entities shall perform all Commercialization activities withrespect to Licensed Products in the Field in the Territory in a professional and ethical business manner and in compliance in all materialrespects with applicable Laws.32 Section 6.06Trademarks. (a)The applicable Tetraphase Entity(ies) shall own all rights to the Product Trademark(s) developed orused by the Tetraphase Entities with respect to the Commercialization of Licensed Products outside of the Territory (the“Tetraphase Trademarks”), and all goodwill associated therewith, in each country of the world. The applicableTetraphase Entity(ies) shall also own rights to any Internet domain names incorporating any Tetraphase Trademark or anyvariation or part of any Tetraphase Trademark as its URL address or any part of such address. No Licensee Entity shall useany Tetraphase Trademark without Tetraphase’s prior written consent.(b)Licensee will develop and propose for the JCC’s review and comment, which comments shall beconsidered in good faith by Licensee, one or more Product Trademark(s) for use by the Licensee Entities in the Field in theTerritory. Any Product Trademark(s) (other than the Tetraphase Trademarks that Tetraphase permits Licensee to use) thatare used by any Licensee Entity to Commercialize Licensed Products in the Field in the Territory are hereinafter referred toas the “Licensee Trademarks.” The applicable Licensee Entity(ies) shall own all rights to Licensee Trademarks and allgoodwill associated therewith, in each country of the world. The applicable Licensee Entity(ies) shall also own rights to anyInternet domain name incorporating any Licensee Trademark or any variation or part of any Licensee Trademark as its URLaddress or any part of such address. No Tetraphase Entity shall use any Licensee Trademarks to Commercialize anyLicensed Product without Licensee’s prior written consent.(c)Any use of Tetraphase’s corporate name by any Licensee Entity shall require the prior written consentof Tetraphase.(d)Except as expressly provided herein, or except as otherwise required by applicable Law or agreed bythe Parties in advance in writing, neither Party shall have any right to use the other Party’s or the other Party’s Affiliates’,and Licensee shall not have any right to use any Tetraphase Entity’s, corporate names or logos in connection with anyDevelopment or Commercialization of any Licensed Product.33 ARTICLE VII.MANUFACTURE AND SUPPLYSection 7.01Supply Obligations. From and after the execution of applicable Supply Agreements pursuant toSection 7.02 (Supply Agreement), and subject to the terms of such Supply Agreements, Tetraphase will use CommerciallyReasonable Efforts, either itself or through Third Parties, to Manufacture Finished Drug Product and supply to Licensee Finished DrugProduct in quantities that are reasonably sufficient for the conduct of Development and Commercialization of Licensed Products in theField in the Territory by the Licensee Entities. For any Finished Drug Product supplied by Tetraphase to Licensee pursuant to thisSection 7.01 (Supply Obligations) for purposes of Commercialization of Licensed Products in the Field in the Territory, Licenseeshall pay to Tetraphase an amount equal to [**] percent ([**]%) of Tetraphase’s COGS for such Finished Drug Product, payablewithin [**] days after receipt of an invoice therefor. For any Finished Drug Product supplied by Tetraphase to Licensee pursuant tothis Section 7.01 (Supply Obligations) for purposes of Development of Licensed Products in the Field in the Territory, Licensee shallpay to Tetraphase an amount equal to [**] percent ([**]%) of Tetraphase’s COGS for such Finished Drug Product, payable within[**] days after receipt of an invoice therefor.Section 7.02Supply Agreements. Within [**] days after the Effective Date, or at such later date as may bemutually agreed in writing, the Parties will negotiate in good faith and enter into one or more supply agreements for clinical (includinginvestigator-sponsored trials, but solely to the extent such investigator-sponsored trials have been mutually approved by both Parties)and commercial supply of Licensed Products and related quality agreement(s) (collectively, the “Supply Agreements”), which SupplyAgreements will be consistent with the terms set forth in Section 7.01 (Supply Obligations). In addition, the Supply Agreements shallinclude a provision for the Parties to negotiate in good faith, for a reasonable period of time at the relevant point during whichTetraphase is providing clinical supply to Licensee, the terms and conditions on which Tetraphase would transfer to Licensee or aThird Party manufacturer approved by Tetraphase the then-current process for the Manufacture of the Licensed Products and grantLicensee the right to Manufacture, or have Manufactured, the Licensed Product for Commercialization of the Licensed Product in theField in the Territory, including, to the extent required, amendment of the relevant provisions of this Agreement to such grant of rights,including Sections 1.71, 1.72, 1.73, 2.01 and 2.06(a)(ii). Notwithstanding anything to the contrary set forth herein, when the Partiesenter into the Supply Agreements, the terms of such Supply Agreements shall supersede the terms set forth in Section 7.01 (SupplyObligations) and in this Section 7.02 (Supply Agreement).34 ARTICLE VIII.PAYMENTSSection 8.01Upfront Payment. Within [**] Business Days after the Effective Date, Licensee shall pay Tetraphasea one-time, non-refundable, non-creditable upfront payment of Seven Million Dollars ($7,000,000). Section 8.02Development Milestone Payment. (a)Licensee shall make the non-refundable, non-creditable milestone payments to Tetraphase set forth inthe table below, each payable once only, no later than [**] days after the earliest date on which the corresponding milestoneevent has first been achieved by any Licensee Entity with respect to the first Licensed Product to achieve such milestoneevent.Milestone EventMilestone Payment[**][**][**][**][**][**][**][**](b)If Licensee has not paid to Tetraphase a milestone payment set forth in a row in the table in Section8.02(a), and a milestone event set forth in a later row in the table in Section 8.02(a) occurs, then, upon the occurrence ofsuch milestone event set forth in such later row, Licensee shall pay to Tetraphase the milestone payment set forth in suchearlier row. By way of example and not limitation, if Licensee has not paid to Tetraphase the milestone payment set forth inrow (a)(i), and the milestone event set forth in row (a)(ii), (a)(iii) or (a)(iv) occurs, then, upon such event, Licensee shall payto Tetraphase the milestone payment set forth in row (a)(i).(c)Upon achievement by any Licensee Entity of any of the milestone events listed above, Licensee shallpromptly (but in no event more than [**] days after such achievement) notify Tetraphase of such achievement. Section 8.03Sales Milestone Payments. Licensee shall pay to Tetraphase the following non-refundable and non-creditable amounts after the first achievement of aggregate Net Sales of all Licensed Products in the Territory in a calendar year thatmeet or exceed the minimum annual Net Sales thresholds set forth below, which payment shall be made no later than [**] days afterthe end of such calendar year:Annual Net Sales ThresholdPayment AmountEqual to or greater than $[**][**]Equal to or greater than $[**][**]Equal to or greater than $[**][**]35 Each milestone payment in this Section 8.03 (Sales Milestone Payments) shall be payable only once upon thefirst achievement of such milestone in a given calendar year and no amounts shall be due for subsequent or repeatedachievements of such milestone in subsequent calendar years. For clarity, the Net Sales of all Licensed Products in acalendar year shall be aggregated for purposes of determining whether any milestone in the table above has been met. Ifmore than one of the milestones set forth in the table above are first achieved in a single calendar year, then Licensee shallpay to Tetraphase in such calendar year all of the payments corresponding to all of the milestones achieved in such calendaryear under this Section 8.03 (Sales Milestone Payments).Section 8.04Royalties.(a)Subject to the remainder of this Section 8.04 (Royalties), Licensee shall pay Tetraphase the followingroyalties on aggregate Net Sales of all Licensed Products, at an incremental royalty rate determined by aggregate annual NetSales of all Licensed Products in each calendar year during the Term in the Territory:Portion of Annual Net Sales of all Licensed ProductsRoyaltyLess than or equal to $[**][**]Greater than $[**] and less than or equal to $[**][**]Greater than $[**][**]By way of example and not limitation, if Net Sales of all Licensed Products in the first quarter of a calendar yearare [**] Dollars ($[**]), then the royalty shall be [**]. (b)Running royalties paid by Licensee under this Section 8.04 (Royalties) shall be paid on a LicensedProduct-by-Licensed Product and Jurisdiction-by-Jurisdiction basis until the latest of (i) expiration of the last-to-expire Valid Claim that is a composition of matter claim (for clarity, including a formulation claim) in the Tetraphase Patent Rights orJoint Patent Rights that Covers such Licensed Product in the Field in such Jurisdiction, (ii) expiration of marketing orregulatory exclusivity with respect to such Licensed Product in such Jurisdiction, or (iii) ten (10) years from the FirstCommercial Sale of such Licensed Product in the Field in such Jurisdiction (each, a “Royalty Term”). Following theexpiration of the Royalty Term with respect to a particular Licensed Product in the Field in a Jurisdiction, the license grantedby Tetraphase to Licensee pursuant to Section 2.01(a) with respect to such Licensed Product in the Field in such Jurisdictionshall be perpetual, irrevocable, fully-paid and royalty-free, and Net Sales of such Licensed Product shall no longer beincluded in the aggregate Net Sales calculation in Section 8.03 (Sales Milestone Payments) or Section 8.04(a).(c)Notwithstanding the foregoing, in the event that, on a Licensed Product-by-Licensed Product,Jurisdiction-by-Jurisdiction and (subject to Section 8.04(c)(iv)) calendar quarter-by-calendar quarter basis:36 (i)in such Jurisdiction in the Territory during such calendar quarter during the Royalty Term for suchLicensed Product, one or more applicable Generic Products are on the market in such Jurisdiction and unit sales of such GenericProduct(s) in such Jurisdiction constitute more than [**] percent ([**]%) but less than [**] percent ([**]%) of the total unit sales ofsuch Generic Product(s) and Licensed Product in such Jurisdiction, Licensee shall, for such calendar quarter for such Licensed Productin such Jurisdiction, pay to Tetraphase a royalty rate that is [**] percent ([**]%) of the applicable rate set forth in Section 8.04(a);(ii)in such Jurisdiction in the Territory during such calendar quarter during the Royalty Term for suchLicensed Product, one or more applicable Generic Products are on the market in such Jurisdiction and unit sales of such GenericProduct(s) in such Jurisdiction constitute [**] percent ([**]%) or more of the total unit sales of such Generic Product(s) and LicensedProduct in such Jurisdiction, Licensee shall, for such calendar quarter for such Licensed Product in such Jurisdiction, pay to Tetraphasea royalty rate that is [**] percent ([**]%) of the applicable rate set forth in Section 8.04(a);(iii)in the event that Section 8.04(c)(i), Section 8.04(c)(ii) does not apply, but, under applicable Law, theroyalty rate must be reduced in order to ensure enforceability of the royalty obligation once clause (i) or (ii) of the Royalty Term endswith respect to a Licensed Product in a Jurisdiction, then the royalty with respect to such Licensed Product in such Jurisdiction shall bereduced by [**] percent ([**]%) from the rate set forth in Section 8.04(a). (iv)Subject in all cases to Section 8.04(d), if (A) a royalty reduction pursuant to Section 8.04(c)(i) orSection 8.04(c)(ii) is applicable with respect to a calendar quarter, (B) Licensee has paid to Tetraphase a royalty payment with respectto such calendar quarter pursuant to Section 8.05 (Royalty Payments and Reports) and (C) any or all of the amount of royaltyreduction to which Licensee is entitled as set forth in clause (A) of this sentence was not applied to the royalty payment paid as setforth in clause (B) of this sentence due to time lag of information regarding market share of Generic Product(s), then the amount ofreduction not applied shall be fully creditable against payments owed by Licensee to Tetraphase in one or more subsequent calendarquarters. (d)On a Licensed Product-by-Licensed Product, Jurisdiction-by-Jurisdiction and calendar quarter-by-calendar quarter basis, in no event shall the royalty rate payable to Tetraphase under this Section 8.04 (Royalties) bereduced by more than [**] percent ([**]%) of what it would otherwise be by operation of Section 8.04(a) alone with respectto such Licensed Product in such Jurisdiction in such calendar quarter as a result of the reductions set forth in Section8.04(c).Section 8.05Royalty Payments and Reports.(a)On a Licensed Product-by-Licensed Product and Jurisdiction-by-Jurisdiction basis, until the expirationof the Royalty Term with respect to such Licensed Product in such Jurisdiction, Licensee agrees to provide (i) written reportsto Tetraphase within [**] Business Days after the end of each calendar month providing a good faith estimate of Net Salesof such Licensed Product in such Jurisdiction by any Licensee Entity in such calendar month and (ii) quarterly writtenreports to Tetraphase within [**] Business Days after the end of each37 calendar quarter, covering all Net Sales of such Licensed Product in such Jurisdiction by any Licensee Entity, each suchwritten report under this clause (ii) stating for the period in question (A) the amount of gross sales and Net Sales of eachLicensed Product in each Jurisdiction in the Territory during the applicable calendar quarter (including such amountsexpressed in local currency and as converted to Dollars) and a calculation of the amount of royalty payment due on such NetSales for such calendar quarter and (B) such information as is reasonably necessary for Tetraphase to comply with itsreporting obligations under Section 7.1.1 of the Harvard Agreement. (b) Licensee shall make the royalty payments due hereunder within [**] days after the end of eachcalendar quarter.Section 8.06Financial Responsibility for In-License Agreements. Provided that Licensee has complied with thisAgreement, Tetraphase shall be solely responsible for payment of any and all amounts due to any Third Party counterparty under or inconnection with any In-License Agreement except as set forth in Section 9.04(a)(i) and Section 9.05(c)(i). Licensee shall be solelyresponsible for payment of any and all amounts due to any Third Party under or in connection with any Licensee In-LicenseAgreement.Section 8.07Accounting. Each Licensee Entity shall keep full, clear and accurate records of Licensed Products thatare made, used or sold under this Agreement, in accordance with the Accounting Standards consistently applied, for a period of at least[**] years after the end of the calendar year to which the records relate, setting forth the sales of Licensed Products in sufficient detailto enable royalties and other amounts payable to Tetraphase hereunder to be determined. Each Licensee Entity further agrees to permitits books and records to be examined by an independent accounting firm selected by Tetraphase or Harvard, as applicable, andreasonably acceptable to Licensee, to verify any reports and payments delivered under this Agreement, upon reasonable notice (whichshall be no less than [**] days prior notice) and during regular business hours and subject to a reasonable confidentialityagreement. The Parties shall reconcile any underpayment or overpayment within [**] days after the accounting firm delivers theresults of any audit. Such examination is to be made at the expense of Tetraphase or Harvard, as applicable, except in the event thatthe results of the audit reveal an underpayment by Licensee of [**] percent ([**]%) or more during the period being audited, in whichcase reasonable audit fees for such examination shall be paid by Licensee.Section 8.08Currency Conversion. Wherever it is necessary to convert currencies for Net Sales invoiced in acurrency other than the Dollar, such conversion shall be made into Dollars at the conversion rate existing in the United States (asreported in the Wall Street Journal) on the last working day of the applicable calendar quarter or, if such rate is unavailable, a substitutetherefor reasonably selected by Tetraphase. All payments due to Tetraphase under this Agreement shall be made without deduction ofexchange, collection or other charges.38 Section 8.09Methods of Payment. All payments due to Tetraphase under this Agreement shall be made in Dollarsby wire transfer to a bank account of Tetraphase designated from time to time in writing by Tetraphase.Section 8.10Taxes. (a)Licensee Entities will make all payments to Tetraphase under this Agreement without deduction orwithholding for Taxes except to the extent that any such deduction or withholding is required by applicable Law in effect atthe time of payment.(b)The full amount of any Tax required to be deducted or withheld within the meaning of Section 8.10(a)on payments under this Agreement will be duly deducted, withheld and timely paid over by Licensee Entities on behalf ofTetraphase. If, in accordance with the foregoing, a Licensee Entity withholds any amount, it shall pay to Tetraphase thebalance when due, make timely payment to the proper Governmental Authority of the withheld amount and send toTetraphase proof of such payment within [**] days following such payment.(c)The Parties will cooperate with respect to all documentation required by any taxing authority orreasonably requested by either Party to secure a reduction in the rate of applicable withholding Taxes. (d)If (i) a Licensee Entity (A) had a duty to deduct, withhold and pay over any Tax to any GovernmentalAuthority in connection with any payment it made to Tetraphase under this Agreement but (B) failed to so deduct, withholdand timely pay over all or any portion of such Tax, and (ii) such Tax or portion thereof is assessed against Tetraphase, thensuch Licensee Entity will indemnify and hold harmless Tetraphase from and against any penalties imposed as a resultthereof.(e)To the extent any VAT is due on any amounts payable to Tetraphase under this Agreement, theapplicable Licensee Entity shall bear and timely pay such VAT. The Parties will cooperate to provide Licensee Entity alldocumentation required to properly and timely pay such VAT.(f)For example, if a Licensee Entity is required by the terms and conditions of this Agreement, prior tooperation of this Section 8.10 (Taxes), to make a payment of [**] Dollars ($[**]) to Tetraphase, and such payment issubject to [**] percent ([**]%) PRC tax withholding and [**] percent ([**]%) VAT, Licensee shall (i) deduct such [**]percent ([**]%) tax withholding and pay to Tetraphase [**] Dollars ($[**]) and (ii) be responsible for such [**] percent([**]%) VAT and pay to the applicable Governmental Authority [**] Dollars ($[**]).Section 8.11Late Payments. Interest shall be payable by Licensee on any amounts payable to Tetraphase under thisAgreement which are not paid by the due date for payment. All interest shall accrue and be calculated on a daily basis (both beforeand after any judgment) at a rate per month equal to the lesser of (a) the higher of (i) [**] above the then-current “prime rate” in effectpublished in The Wall Street Journal or (ii) [**] percent ([**]%) per month or (b) the maximum rate permissible under applicable Law,for the period from the due date for payment until the date of actual payment. The payment of such interest shall not limit Tetraphasefrom exercising any other rights it may have as a consequence of the lateness of any payment. 39 ARTICLE IX.OWNERSHIP OF INTELLECTUAL PROPERTYSection 9.01Tetraphase Intellectual Property. Ownership of the Tetraphase Technology shall remain vested at alltimes in Tetraphase.Section 9.02Licensee Intellectual Property. Ownership of the Licensee Technology shall remain vested at alltimes in Licensee.Section 9.03Joint Technology.(a)Each Party shall promptly disclose to the other Party any Joint Invention upon becoming aware thereof,but in any event no later than [**] days after the identification, conception, discovery, authorship, development or reductionto practice thereof.(b)Ownership of Joint Technology shall be vested jointly in Tetraphase and Licensee. For purposes ofdetermination of ownership hereunder, inventorship shall be determined according to United States patent Laws.Section 9.04Prosecution of Patent Rights. (a)Subject to the terms of each In-License Agreement:(i)Tetraphase shall have the sole right, but not the obligation, to file, prosecute and maintain all TetraphasePatent Rights that are licensed to Tetraphase under the Harvard Agreement (the “Harvard Patent Rights”) and the first right, but notthe obligation, to file, prosecute and maintain all other Tetraphase Patent Rights and all Joint Patent Rights. Licensee shall reimburseTetraphase for (i) all costs incurred by Tetraphase after the Effective Date in filing, prosecuting and maintaining Tetraphase PatentRights (for the avoidance of doubt, including amounts paid by Tetraphase after the Effective Date to any Third Party counterpartyunder any In-License Agreement, including amounts paid after the Effective Date to Harvard under Section 3.3 of the HarvardAgreement, with respect to such Third Party counterparty’s filing, prosecution and maintenance of applicable Tetraphase PatentRights), (ii) all costs incurred by Tetraphase in filing, prosecuting and maintaining Joint Patent Rights that Cover Licensed Products inthe Field in the Territory and (iii) [**] percent ([**]%) of all costs incurred by Tetraphase in filing, prosecuting and maintaining allother Joint Patent Rights, in each case ((i)-(iii)) within [**] days after receiving an invoice therefor.(ii)Tetraphase shall consult with Licensee on the preparation, filing, prosecution and maintenance of allTetraphase Patent Rights and Joint Patent Rights, and shall take into consideration the commercial strategy of Licensee in theTerritory. Tetraphase shall furnish Licensee with copies of each document relevant to such preparation, filing, prosecution andmaintenance at least [**] days prior to filing such document or making any payment due thereunder to allow for review and commentby Licensee and shall consider in good faith timely comments from Licensee thereon; provided that any comment provided byLicensee with [**] days of Licensee’s receipt of the applicable document shall be considered “timely” for purposes of thissentence. Tetraphase shall also furnish Licensee with copies of all final filings and40 responses made to any patent authority with respect to the Tetraphase Patent Rights and Joint Patent Rights in a timely mannerfollowing submission thereof.(iii)Licensee shall, without cost to Tetraphase, obtain all necessary assignment documents for Tetraphase,render all signatures that shall be necessary for the relevant patent filings and assist Tetraphase in all other reasonable ways that arenecessary for the filing, prosecution, issuance and maintenance of the Joint Patent Rights.(iv)Should Tetraphase decide that it is no longer interested in maintaining or prosecuting a particularTetraphase Patent Right (other than a Harvard Patent Right) or Joint Patent Right during the Term, it shall promptly provide Licenseewritten notice of this decision. Absent such written notice to Licensee, Tetraphase shall use commercially reasonable efforts to file,prosecute and maintain all Tetraphase Patent Rights (other than Harvard Patent Rights) and all Joint Patent Rights that Cover LicensedProducts in the Field in the Territory. Licensee may, upon written notice to Tetraphase, assume such prosecution and maintenance atLicensee’s sole expense.(b)Subject to the terms of each Licensee In-License Agreement:(i)Licensee shall have the sole right, but not the obligation, to file, prosecute and maintain all LicenseePatent Rights that Cover Licensed Products in the Field in the Territory, and the first right, but not the obligation, to file, prosecute andmaintain all other Licensee Patent Rights. Licensee agrees to use commercially reasonable efforts to file, prosecute and maintain allLicensee Patent Rights that Cover Licensed Products in the Territory.(ii)Licensee shall consult with Tetraphase on the preparation, filing, prosecution and maintenance of allLicensee Patent Rights shall furnish Tetraphase with copies of each document relevant to such preparation, filing, prosecution andmaintenance at least [**] days prior to filing such document or making any payment due thereunder to allow for review and commentby Tetraphase and shall consider in good faith timely comments from Tetraphase thereon; provided that any comment provided byTetraphase with [**] days of Tetraphase’s receipt of the applicable document shall be considered “timely” for purposes of thissentence. Licensee shall also furnish Tetraphase with copies of all final filings and responses made to any patent authority with respectto the Licensee Patent Rights in a timely manner following submission thereof.Section 9.05Enforcement and Defense. Subject to the terms of each In-License Agreement: (a)If either Party becomes aware of any Third Party activity in the Territory, including any Developmentactivity (whether or not an exemption from infringement liability for such Development activity is available under applicableLaw), that infringes (or that is directed to the Development of a product that would infringe) a Tetraphase Patent Right or aJoint Patent Right, or that misappropriates any Tetraphase Know-How or Joint Know-How, then the Party becoming awareof such activity shall give prompt written notice to the other Party regarding such alleged infringement or misappropriation(collectively, “Infringement Activity”).41 (b)Tetraphase shall have the first right, but not the obligation, to attempt to resolve any InfringementActivity by commercially appropriate steps at its own expense, including the filing of an infringement or misappropriationsuit using counsel of its own choice. If Tetraphase fails to resolve such Infringement Activity or to initiate a suit with respectthereto by the date that is [**] days before any deadline for taking action to avoid any loss of material enforcement rights orremedies, then, with Tetraphase’s written consent (which shall not be unreasonably withheld, conditioned or delayed),Licensee shall have the right, but not the obligation, to attempt to resolve such Infringement Activity by commerciallyappropriate steps at its own expense, including the filing of an infringement or misappropriation suit using counsel of its ownchoice. (c)Any amounts recovered by a Party as a result of an action pursuant to Section 9.05(b), whether bysettlement or judgment, shall be allocated as follows:(i)first, the Parties shall pay to each Third Party counterparty under any In-License Agreement anyamounts owed to such Third Party counterparty with respect to such enforcement action, including any amounts owed to Harvardpursuant to Section 8.2 or 8.3 of the Harvard Agreement;(ii) second, each Party’s internal and external costs associated with the enforcement action shall bereimbursed; and(iii)third, any remaining amount shall be retained [**] percent ([**]%) by the enforcing Party and paid[**] percent ([**]%) to the other Party.(d)In any event, at the request and expense of the Party bringing an infringement or misappropriationaction under Section 9.05(b), the other Party shall provide reasonable assistance in any such action (including entering into acommon interest agreement if reasonably deemed necessary by any Party) and to be joined as a party to the suit if necessaryfor the initiating Party to bring or continue such suit. Neither Party may settle any action or proceeding brought underSection 9.05(b), or knowingly take any other action in the course thereof, in a manner that materially adversely affects theother Party’s interest in any Tetraphase Patent Rights or Joint Patent Rights without the written consent of such otherParty. Each Party shall always have the right to be represented by counsel of its own selection and its own expense in anysuit or other action instituted by the other Party pursuant to Section 9.05(b).(e)If a Third Party asserts that a Tetraphase Patent Right (other than a Harvard Patent Right) or Joint PatentRight in mainland China is invalid or unenforceable, then Licensee shall have the first right, but not the obligation, to defendagainst such assertion and, at Licensee’s request and expense, Tetraphase shall provide reasonable assistance in defendingagainst such Third Party assertion. Licensee shall (i) keep Tetraphase reasonably informed regarding such assertion andsuch defense (including by providing Tetraphase with drafts of each filing a reasonable period before the deadline for suchfiling and promptly providing Tetraphase with copies of all final filings and correspondence), (ii) consult with Tetraphase onsuch defense, and (iii) consider in good faith all comments from Licensee regarding such defense. In the event Licenseecontrols such defense, Tetraphase shall have the right to join as a party to such defense and participate with its own counselat its sole cost; provided that Licensee shall retain control of42 such defense. Should Licensee decide that it is not, or is no longer, interested in controlling such defense, it shall promptly(and in any event by the date that is [**] days before any deadline for taking action to avoid any loss of material rights)provide Tetraphase written notice of this decision. Tetraphase may, upon written notice to Licensee, assume such defense atTetraphase’s sole expense.(f)If a Third Party asserts that a Tetraphase Patent Right or Joint Patent Right anywhere in the Territoryother than in mainland China is invalid or unenforceable, then Tetraphase shall have the first right, but not the obligation, todefend against such assertion. Should Tetraphase decide that it is not, or is no longer, interested in controlling such defensewith respect to any Tetraphase Patent Right other than a Harvard Patent Right or any Joint Patent Right, it shall promptly(and in any event by the date that is [**] days before any deadline for taking action to avoid any loss of material rights)provide Licensee written notice of this decision. Licensee may, upon written notice to Tetraphase, assume such defense atLicensee’s sole expense.Section 9.06Defense of Third Party Infringement and Misappropriation Claims. Subject to the terms of eachIn-License Agreement:(a)If a Third Party asserts that a Patent Right or other right controlled by it in the Territory is infringed ormisappropriated by a Party’s activities under this Agreement or a Party becomes aware of a Patent Right or other right thatmight form the basis for such a claim, the Party first obtaining knowledge of such a claim or such potential claim shallimmediately provide the other Party with notice thereof and the related facts in reasonable detail. The Parties shall discusswhat commercially appropriate steps, if any, to take to avoid infringement or misappropriation of said Third Party PatentRight or other right controlled by such Third Party in the Territory. (b)If a Third Party asserts that a Patent Right or other right controlled by it in the Territory is infringed ormisappropriated by a Party’s activities under this Agreement, then such Party shall have the first right, but not the obligation,to defend against such assertion and, at such Party’s request and expense, the other Party will provide reasonable assistancein defending against such Third Party assertion. Such Party shall keep the other Party reasonably informed regarding suchassertion and such defense.43 Section 9.07Patent Term Extensions. Subject to the terms of each In-License Agreement, Tetraphase shall havethe sole authority to select the appropriate Tetraphase Patent Rights or Joint Patent Rights for filing to obtain patent term extensions,including supplementary protection certificates and any other extensions that are now available or become available in the future, forLicensed Products in the Field in the Territory, and shall consult with Licensee with respect to such decisions and shall consider thecomments and concerns of Licensee in good faith. Licensee shall cooperate with Tetraphase in gaining any such patent termextensions, including by signing all necessary papers.Section 9.08Trademarks. Licensee shall be responsible for the registration, maintenance and enforcement of theLicensee Trademarks throughout the Territory, as well as all expenses associated therewith.Section 9.09Recordal. Tetraphase shall, at Licensee’s request and expense, promptly provide Licensee with allnecessary assistance and documents required for all government approvals, registrations and/or recordals required or advisable underany applicable Law in the Territory (or any part thereof) to enable the Parties to exercise, enforce and enjoy all of the rights andobligations contained thereunder, including any approval, registration or recordal required under the People’s Republic of China(“PRC”) technology import and export laws and the PRC patent laws.ARTICLE X.DATA SECURITY AND ADVERSE DRUG EVENTS AND REPORTSSection 10.01Data Security. During the Term, Tetraphase and its Affiliates and each Licensee Entity will maintainsafety and facility procedures, data security procedures and other safeguards against the disclosure, destruction, loss, or alteration ofLicensee’s or Tetraphase’s, respectively, information in its possession, which such procedures and safeguards shall be no less rigorousthan those maintained by Tetraphase or Licensee, respectively, for its own information of a similar nature.Section 10.02Complaints. Each Party shall maintain a record of all non-medical and medical product-relatedcomplaints it receives with respect to the Licensed Compound or any Licensed Product. Each Party shall notify the other Party of anysuch complaint received by it in sufficient detail and in accordance with the timeframes and procedures for reporting established, and inany event in sufficient time to allow each Tetraphase Entity and each Licensee Entity to comply with any and all regulatoryrequirements imposed upon it, including in accordance with International Conference on Harmonisation of Technical Requirements forRegistration of Pharmaceuticals for Human Use (“ICH”) guidelines. The Party that holds the applicable Regulatory Filing(s) in aparticular country shall investigate and respond to all such complaints in such country with respect to the Licensed Compound or anyLicensed Product as soon as reasonably practicable. All such responses shall be made in accordance with the procedures establishedpursuant to ICH, FDA, EMA, CFDA and other applicable guidelines. The Party responsible for responding to such complaint shallpromptly provide the other Party a copy of any such response.44 Section 10.03Adverse Drug Events. [**] days prior to the commencement of any clinical trial for any LicensedProduct in the Territory, the Parties shall enter into the Safety Data Exchange Agreement. Such Safety Data Exchange Agreementshall provide for the exchange by the Parties of any information of which a Party becomes aware concerning any adverse eventexperienced by a subject or patient being administered any Licensed Product, whether or not such adverse event is determined to beattributable to any Licensed Product, including any such information received by either Party from any Third Party (subject to receiptof any required consents from such Third Party). It is understood that each Party and its Affiliates and licensees or sublicensees shallhave the right to disclose such information if such disclosure is reasonably necessary to comply with applicable Laws and requirementsof any applicable Regulatory Authority. The Safety Data Exchange Agreement will also detail Licensee’s responsibilities relating torecalls, suspensions and withdrawals of each Licensed Product.ARTICLE XI.REPRESENTATIONS, WARRANTIES, AND COVENANTSSection 11.01Mutual Representations and Warranties. Each of Licensee and Tetraphase hereby represents andwarrants to the other Party as of the Effective Date that:(a)it is a corporation or entity duly organized and validly existing under the Laws of the state, municipality,province, administrative division or other jurisdiction of its incorporation or formation;(b)the execution, delivery and performance of this Agreement by it has been duly authorized by allrequisite corporate action;(c)it has the power and authority to execute and deliver this Agreement and to perform its obligationshereunder, and such performance does not conflict with or constitute a breach of any of its agreements with any Third Party;(d)it has the right to grant the rights and licenses described in this Agreement;(e)it has not made any commitment to any Third Party in conflict with the rights granted by it hereunder;(f)to its knowledge, no consent, approval or agreement of any person or Governmental Authority isrequired to be obtained in connection with the execution and delivery of this Agreement; and(g)it has not been debarred by the FDA, is not the subject of a conviction described in Section 306 of theFD&C Act, and is not subject to any similar sanction of any other Governmental Authority outside of the U.S., and neitherit nor any of its Affiliates has used, in any capacity, any person who either has been debarred by the FDA, is the subject of aconviction described in Section 306 of the FD&C Act or is subject to any such similar sanction inside or outside of the U.S. 45 Section 11.02Mutual Covenants. Each of Licensee and Tetraphase hereby covenants to the other Party that:(a)it will not engage, in any capacity in connection with this Agreement or any ancillary agreement, anyperson who either has been debarred by the FDA, is the subject of a conviction described in Section 306 of the FD&C Actor is subject to any such similar sanction inside or outside of the U.S., and such Party shall inform the other Party in writingpromptly if such Party or any person engaged by such Party who is performing services under this Agreement, or anyancillary agreements, is debarred or is the subject of a conviction described in Section 306 of the FD&C Act or any similarsanction inside or outside of the U.S., or if any action, suit, claim, investigation or legal or administrative proceeding ispending or, to such Party’s knowledge, is threatened, relating to the debarment or conviction of a Party, any of its Affiliatesor any such person performing services hereunder or thereunder;(b)during the Term, it will not make any commitment to any Third Party in conflict with the rights grantedby it hereunder; and(c)it will comply with all applicable Laws in performing its activities hereunder.Section 11.03Additional Tetraphase Warranties. Tetraphase hereby represents and warrants to Licensee as of theEffective Date that:(a)to Tetraphase’s knowledge, Exhibit A contains a list of all Tetraphase Patent Rights existing as of theEffective Date (the “Existing Patents”);(b)to Tetraphase’s knowledge, each issued patent within the Existing Patents as of the Effective Date is notinvalid or unenforceable, in whole or in part;(c)all of the In-License Agreements existing on the Effective Date are listed on Exhibit E;(d)there are no claims, judgments, or settlements against, or amounts with respect thereto, owed byTetraphase or any of its Affiliates relating to the Existing Regulatory Documents, the Existing Patents, or the TetraphaseKnow-How;(e)no claim or litigation has been brought and served on Tetraphase, or, to Tetraphase’s knowledge,threatened, by any Person alleging that the issued patents in the Existing Patents are invalid or unenforceable;(f)to Tetraphase’s knowledge, the Development or Commercialization in the Territory of the LicensedProduct, in the intravenous form in which such Licensed Product is being clinically Developed by Tetraphase in the U.S. asof the Effective Date and in the indications for which such form has been clinically Developed by Tetraphase in the U.S. asof the Effective Date, will not infringe any Patent Right;46 (g)to Tetraphase’s knowledge, no Third Party is infringing or misappropriating any TetraphaseTechnology in the Field in the Territory in derogation of the rights granted to Licensee in this Agreement;(h)Tetraphase has not received written notice of any investigations, inquiries, actions or other proceedingspending before or threatened by any Regulatory Authority or other Governmental Authority in the Territory with respect tothe Licensed Products in the Field in the Territory arising from any default by Tetraphase or any of its Affiliates or a ThirdParty acting on behalf Tetraphase in the discovery, Research or Development of the Licensed Products;(i)to Tetraphase’s knowledge, the Existing Patents represent all Patent Rights that Tetraphase or itsAffiliates own, Control or, to Tetraphase’s knowledge, otherwise have rights under, as of the Effective Date that Cover theDevelopment or Commercialization of the Licensed Product in the Field in the Territory in accordance with thisAgreement. To Tetraphase’s knowledge, there is no Know-How owned by or otherwise in the possession or control ofTetraphase or any of its Affiliates as of the Effective Date that is necessary or reasonably useful for the Development orCommercialization of the Licensed Product in the Field in the Territory that is not within the Tetraphase Know-How;(j)except with respect to the rights granted to or retained by Harvard or any Governmental Authority underthe Harvard Agreement, neither Tetraphase nor any of its Affiliates has licensed or otherwise encumbered its right, title orinterest under the Existing Patents, Tetraphase Know-How or Existing Regulatory Documents (including by granting anycovenant not to sue with respect thereto) in a manner that is inconsistent with the rights and licenses granted to Licenseeunder this Agreement;(k)Tetraphase has obtained from its Affiliates the licenses and other rights necessary for Tetraphase togrant to Licensee the rights and licenses provided herein and for Licensee to perform its obligations hereunder;(l)to Tetraphase’s knowledge, each of the Existing Patents properly identifies each and every inventor ofthe claims thereof as determined in accordance with the Laws of the jurisdiction in which such Existing Patent is issued orpending;(m)Tetraphase owns or otherwise Controls the Existing Patents, and owns or otherwise Controls anyTetraphase Know-How existing as of the Effective Date;(n)to Tetraphase’s knowledge, Tetraphase and its Affiliates have generated, prepared, maintained andretained all Regulatory Documents that is required to be maintained or retained pursuant to and in accordance with, asapplicable, GLP and GCP and applicable Law; and(o)to Tetraphase’s knowledge, true, complete and correct copies (as of the Effective Date) of all materialadverse information with respect to the safety and efficacy of the Licensed Products known to Tetraphase have beenprovided to Licensee prior to the Effective Date.47 Section 11.04Additional Licensee Warranties and Covenants. Licensee hereby represents, warrants andcovenants to Tetraphase that: (a)Licensee has the capability to Develop, obtain Regulatory Approval and, if applicable, ReimbursementApproval for, and Commercialize Licensed Products as contemplated in this Agreement; and(b)each Licensee Entity (other than Licensee) and each Licensee Entity’s employees and permitted agentsand contractors have executed agreements or have existing obligations under applicable Laws, or, upon their engagement byLicensee or any of its Affiliates, will execute such agreements, requiring automatic assignment to Licensee of all Inventionsor other Know-how identified, discovered, authored, developed, conceived or reduced to practice during the course of andas the result of their association with Licensee or its Affiliates, and all intellectual property rights therein, and obligating therelevant individual or entity to maintain as confidential Licensee’s confidential information related to any Licensed Product,Eravacycline Product or Eravacycline Materials as well as confidential information of other parties (including Tetraphaseand its Affiliates) which such individual or entity may receive, to the extent required to support Licensee’s obligations underthis Agreement.Section 11.05Additional Tetraphase Warranty and Covenant. Tetraphase hereby represents and warrants toLicensee as of the Effective Date that (a) it has provided a true, complete and correct copy of each In-License Agreement listed onExhibit E, as amended, and (b) to Tetraphase’s knowledge, Tetraphase is not, and has not been, in material breach of any In-LicenseAgreement listed on Exhibit E. Tetraphase (a) will use commercially reasonable efforts to comply with each In-License Agreement tothe extent such obligations have not been delegated to Licensee and to the extent that failure to do so would materially adversely affectLicensee’s rights hereunder and (b) will not, without Licensee’s prior written consent, amend or otherwise modify or permit to beamended or modified, any In-License Agreement in a manner that would materially adversely affect the rights and licenses granted toLicensee under this Agreement.Section 11.06Anti-Corruption.(a)Anti-Corruption Provisions. Each Party represents and warrants to the other Party that such Party hasnot, directly or indirectly, offered, promised, paid, authorized or given, and each Party agrees that such Party will not, in thefuture, offer, promise, pay, authorize or give, money or anything of value, directly or indirectly, to any Government Official(as defined below) or Other Covered Party (as defined below) for the purpose, pertaining to this Agreement, of: (i)influencing any act or decision of such Government Official or Other Covered Party; (ii) inducing such Government Officialor Other Covered Party to do or omit to do an act in violation of a lawful duty; (iii) securing any improper advantage; or (iv)inducing such Government Official or Other Covered Party to influence the act or decision of a Governmental Authority, inorder to obtain or retain business, or direct business to, any person or entity, in any way related to this Agreement.48 For purposes of this Agreement: (A) “Government Official” means any official, officer, employee or representative of: (1)any Governmental Authority; (2) any public international organization or any department or agency thereof; or (3) any company orother entity owned or controlled by any Governmental Authority; and (B) “Other Covered Party” means any political party or partyofficial, or any candidate for political office.(b)Anti-Corruption Compliance.(i)In performing under this Agreement, each Party, on behalf of itself and its respective Affiliates, agrees tocomply with all applicable anti-corruption Laws, including the Foreign Corrupt Practices Act of 1977, as amended from time to time(“FCPA”) and all anti-corruption Laws of the Territory.(ii)Each Party represents and warrants to the other Party that such Party is not aware of any GovernmentOfficial or Other Covered Party having any financial interest in the subject matter of this Agreement or in any way personallybenefiting, directly or indirectly, from this Agreement.(iii)No Party, nor any Affiliate of any Party, shall give, offer, promise or pay any political contribution orcharitable donation at the request of any Government Official or Other Covered Party that is in any way related to this Agreement orany related activity.(iv)In the event that a Party violates the FCPA, any anti-corruption Law of the Territory or any otherapplicable anti-corruption Law, or breaches any provision in this Section 11.06 (Anti-Corruption), the other Party shall have the rightto unilaterally terminate this Agreement pursuant to Section 14.03 (Termination for Breach), subject to the cure periods therein.Section 11.07Disclaimer. EXCEPT AS EXPRESSLY SET FORTH HEREIN, THE INTELLECTUALPROPERTY RIGHTS PROVIDED BY TETRAPHASE TO LICENSEE HEREIN ARE PROVIDED “AS IS” AND WITHOUTWARRANTY. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH OF THE PARTIES EXPRESSLY DISCLAIMSANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN,MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OR ENFORCEABILITY OF THEIRRESPECTIVE INTELLECTUAL PROPERTY RIGHTS, AND NONINFRINGEMENT OF THE INTELLECTUALPROPERTY RIGHTS OF THIRD PARTIES.Section 11.08Limitation of Liability. NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THEOTHER PARTY ANY SPECIAL, INCIDENTAL, EXEMPLARY, INDIRECT, CONSEQUENTIAL OR PUNITIVEDAMAGES OR DAMAGES FOR LOSS OF PROFIT OR LOST OPPORTUNITY IN CONNECTION WITH THISAGREEMENT, ITS PERFORMANCE OR LACK OF PERFORMANCE HEREUNDER, OR ANY LICENSE GRANTEDHEREUNDER. THE FOREGOING SHALL NOT LIMIT (a) ANY INDEMNIFICATION OBLIGATIONS HEREUNDER OR(b) REMEDIES AVAILABLE TO EITHER PARTY WITH RESPECT TO A BREACH OF ARTICLE XII(CONFIDENTIALITY) OR SECTION 2.06 OR FRAUD COMMITTED BY THE OTHER PARTY.49 ARTICLE XII.CONFIDENTIALITYSection 12.01Generally. During the Term and for a period of [**] years thereafter, each Party (a) shall maintain inconfidence all Confidential Information of the other Party; (b) shall not use such Confidential Information for any purpose except tofulfill its obligations or exercise its rights under this Agreement; and (c) shall not disclose such Confidential Information to anyoneother than those of its Affiliates, directors, investors, prospective investors, lenders, prospective lenders, acquirers, prospectiveacquirers, licensees, prospective licensees, sublicensees, prospective sublicensees, employees, consultants, financial or legal advisors,or other agents or contractors (collectively, “Representatives”) who are bound by written obligations of nondisclosure and non-use noless stringent than those set forth in this ARTICLE XII (Confidentiality) and to whom such disclosure, under this Agreement or theConfidentiality Agreement, is necessary in connection with the fulfillment of such Party’s obligations or exercise of such Party’s rightsunder this Agreement or in connection with bona fide financing or acquisition activities. Each Party shall (y) ensure that such Party’sRepresentatives who receive any of the other Party’s Confidential Information comply with the obligations set forth in this ARTICLEXII (Confidentiality) and (z) be responsible for any breach of these obligations by any of its Representatives who receive any of theother Party’s Confidential Information. Each Party shall notify the other Party promptly on discovery of any unauthorized use ordisclosure of the other’s Confidential Information. Notwithstanding anything to the contrary in this ARTICLE XII (Confidentiality),Tetraphase may disclose Licensee’s Confidential Information to each Third Party counterparty under any In-License Agreement asreasonably required to fulfill Tetraphase’s obligations under such In-License Agreement, and Licensee acknowledges and agrees that,with respect to any such Confidential Information, such Third Party counterparty(ies) shall only be bound by the confidentialityobligations set forth in the applicable In-License Agreement(s).Section 12.02Exceptions. The obligations of confidentiality, non-disclosure, and non-use set forth in Section 12.01(Generally) shall not apply to, and “Confidential Information” shall exclude, any information to the extent the receiving Party (the“Recipient”) can demonstrate that such information: (a) was in the public domain or publicly available at the time of disclosure to theRecipient or any of its Affiliates by the disclosing Party or any of its Affiliates pursuant to this Agreement or the ConfidentialityAgreement, or thereafter entered the public domain or became publicly available, in each case other than as a result of any action of theRecipient, or any of its Representatives, in breach of this Agreement or the Confidentiality Agreement; (b) was rightfully known by theRecipient or any of its Affiliates (as shown by its written records) prior to the date of disclosure to the Recipient or any of its Affiliatesby the disclosing Party or any of its Affiliates pursuant to this Agreement or the Confidentiality Agreement; (c) was received by theRecipient or any of its Affiliates on an unrestricted basis from a Third Party rightfully in possession of such information and not undera duty of confidentiality to the disclosing Party or any of its Affiliates; or (d) was independently developed by or for the Recipient orany of its Affiliates without reference to or reliance on the Confidential Information of the other Party or any of its Affiliates (asdemonstrated by written records). 50 Section 12.03Permitted Disclosures. Notwithstanding any other provision of this Agreement, Recipient’s (or itsAffiliates’) disclosure of the other Party’s Confidential Information shall not be prohibited if such disclosure: (a) is in response to avalid order of a court or other Governmental Authority; or (b) is otherwise required by applicable Law or rules of a nationallyrecognized securities exchange or NASDAQ. If a Recipient is required to disclose Confidential Information pursuant to Section12.03(a) or Section 12.03(b), prior to any disclosure the Recipient shall, to the extent practicable, provide the disclosing Party withprior written notice of such disclosure in order to permit the disclosing Party to seek a protective order or other confidential treatment ofsuch disclosing Party’s Confidential Information. Further, notwithstanding any other provision of this Agreement but subject to (i)Section 12.01 (Generally) with respect to disclosures to Representatives and (ii) if applicable, the first two sentences of this Section12.03 (Permitted Disclosures), either Party may disclose the other Party’s Confidential Information to the extent necessary to fulfillthe obligations imposed on the Recipient under this Agreement or exercise the rights granted to or retained by the Recipient under thisAgreement, including in filing or prosecuting patent applications, prosecuting or defending litigation, responding to an investigation bya Governmental Authority, or otherwise establishing rights or fulfilling or enforcing obligations under this Agreement, makingRegulatory Filings with respect to any Licensed Product in the Field in the Territory (if the Recipient is Licensee) or any EravacyclineProduct outside of the Territory (if the Recipient is Tetraphase), or conducting Development, or Commercialization with respect to anyLicensed Product in the Field in the Territory (if the Recipient is Licensee) or conducting Development or Commercialization withrespect to the Licensed Compound or any Eravacycline Product outside the Territory or Researching or Manufacturing the LicensedCompound or any Eravacycline Product (if the Recipient is Tetraphase). Section 12.04Publicity. The Parties recognize that each Party may from time to time desire to issue press releasesand make other public statements or public disclosures regarding the terms of this Agreement. In such event, the Party desiring to issuea press release or make a public statement or public disclosure shall provide the other Party with a copy of the proposed press release,statement or disclosure for review and approval as soon as practicable prior to publication, which advance approval shall not beunreasonably withheld, conditioned or delayed. No other public statement or public disclosure of, or concerning, the terms of thisAgreement shall be made, either directly or indirectly, by either Party, without first obtaining the written approval of the otherParty. Once any public statement or public disclosure has been approved in accordance with this Section 12.04 (Publicity), theneither Party may appropriately communicate information contained in such permitted statement or disclosure. Notwithstandinganything to the contrary in this ARTICLE XII (Confidentiality), (a) a Party may disclose the terms of this Agreement whererequired, as reasonably determined by the disclosing Party, by applicable Law or legal process or by applicable stock exchange orNASDAQ rule (with prompt notice of any such legally required disclosure to the other Party and to the extent practicable anopportunity to comment on such disclosure), (b) a Party may disclose the terms of this Agreement under obligations of confidentialityand non-use that are at least as stringent as those set forth in ARTICLE XII (Confidentiality) to such Party’s Representatives inconnection with such Party’s fulfillment of obligations or exercise of rights hereunder or in connection with such Party’s bona fidefinancing or acquisition activities, and (c) Tetraphase may disclose the terms of this Agreement to any Third Party counterparty underany In-License Agreement, and Licensee acknowledges and agrees that, with respect to the terms of51 this Agreement, each such Third Party counterparty shall only be bound by the confidentiality obligations set forth in the applicable In-License Agreement(s).Section 12.05Publications. Tetraphase acknowledges Licensee’s interest in publishing certain key results ofLicensee’s Development and Commercialization of Licensed Products in the Field in the Territory. Licensee recognizes the mutualinterest in obtaining valid patent protection and Tetraphase’s interest in protecting its trade secret information. Consequently, except fordisclosures permitted pursuant to Section 12.02 (Exceptions), Section 12.03 (Permitted Disclosures) or Section 12.04 (Publicity), ifLicensee wishes to make a publication or public presentation with respect to the Development, Manufacturing or Commercialization ofLicensed Products in the Field in the Territory, Licensee shall deliver to Tetraphase a copy of the proposed written publication orpresentation within [**] days prior to submission for publication or presentation. Tetraphase shall have the right (a) to requiremodifications to the publication or presentation for patentability reasons or trade secret reasons, and Licensee will remove all ofTetraphase’s Confidential Information if requested by Tetraphase and (b) to require a reasonable delay in publication or presentation inorder to protect patentable information. If Tetraphase requests a delay, then Licensee shall delay submission or presentation for a periodof [**] days (or such shorter period as may be mutually agreed by the Parties) to enable Tetraphase to file patent applications protectingTetraphase’s rights in such information.Section 12.06Injunctive Relief. Each Party acknowledges and agrees that there may be no adequate remedy at lawfor any breach of its obligations under this ARTICLE XII (Confidentiality), that any such breach may result in irreparable harm tothe other Party and, therefore, that upon any such breach or any threat thereof, such other Party may seek appropriate equitable relief inaddition to whatever remedies it might have at law, without the necessity of showing actual damages.ARTICLE XIII.INDEMNIFICATIONSection 13.01Indemnification by Tetraphase. Tetraphase shall indemnify, hold harmless and defend Licensee andits Affiliates, and their respective directors, officers, consultants and employees (the “Licensee Indemnitees”) from and against anyand all Third Party suits, claims, actions, demands, liabilities, expenses, costs, damages, deficiencies, obligations or losses (includingreasonable attorneys’ fees, court costs, witness fees, damages, judgments, fines and amounts paid in settlement) (“Losses”) to theextent that such Losses arise out of (a) any breach of this Agreement by Tetraphase, (b) the Development, Manufacture orCommercialization of the Licensed Compound or any Licensed Product by or on behalf of any Tetraphase Entity or (c) the grossnegligence or willful misconduct of any Tetraphase Indemnitee. Notwithstanding the foregoing, Tetraphase shall not have anyobligation to indemnify the Licensee Indemnitees to the extent that the applicable Losses arise out of the negligence or willfulmisconduct of any Licensee Indemnitee or any breach of this Agreement by Licensee.52 Section 13.02Indemnification by Licensee. Licensee shall indemnify, hold harmless and defend Tetraphase and itsAffiliates, and their respective directors, officers, employees and consultants (the “Tetraphase Indemnitees”) from and against anyand all Losses, to the extent that such Losses arise out of (a) any breach of this Agreement by Licensee, or any act or failure to act byany Licensee Entity that causes a breach of any In-License Agreement, (b) the Development or Commercialization of the LicensedCompound or any Licensed Product by or on behalf of any Licensee Entity or (c) the gross negligence or willful misconduct of anyLicensee Indemnitee. Notwithstanding the foregoing, Licensee shall not have any obligation to indemnify the Tetraphase Indemniteesto the extent that the applicable Losses arise out of the negligence or willful misconduct of any Tetraphase Indemnitee or any breach ofthis Agreement by Tetraphase.Section 13.03Procedure. In the event of a claim by a Third Party against an Licensee Indemnitee or TetraphaseIndemnitee entitled to indemnification under this Agreement (“Indemnified Party”), the Indemnified Party shall promptly notify theParty obligated to provide such indemnification (“Indemnifying Party”) in writing of the claim and the Indemnifying Party shallundertake and solely manage and control, at its sole expense, the defense of the claim and its settlement. The Indemnified Party shallcooperate with the Indemnifying Party. The Indemnified Party may, at its option and expense, be represented in any such action orproceeding by counsel of its choice. The Indemnifying Party shall not be liable for any litigation costs or expenses incurred by theIndemnified Party without the Indemnifying Party’s written consent. The Indemnifying Party shall not settle any such claim unlesssuch settlement fully and unconditionally releases the Indemnified Party from all liability relating thereto and does not impose anyobligations on the Indemnified Party, unless the Indemnified Party otherwise agrees in writing. No Indemnified Party may settle anyclaim for which it is being indemnified under this Agreement without the Indemnifying Party’s prior written consent. Section 13.04Insurance. Licensee shall, at its own expense, obtain and maintain insurance with a reputableinsurance carrier with respect to the Licensee Entities’ Development and Commercialization of Licensed Products in the Field in theTerritory under this Agreement in such type and amount and subject to such deductibles and other limitations as biopharmaceuticalcompanies in the Territory customarily maintain with respect to the Development and Commercialization of similar products, but inany event no less than [**] Dollars ($[**]) per incident and [**] Dollars ($[**]) annual aggregate. Such insurance policy shall provideproduct liability coverage and broad form contractual liability coverage for Licensee’s indemnification obligations under thisAgreement and shall name the Tetraphase Indemnitees and the Harvard Indemnitees as additional insureds. Licensee shall provide acopy of such insurance policy to Tetraphase upon reasonable request by Tetraphase (and, by way of example and not limitation, anyrequest by Tetraphase made [**], or at Harvard’s request, shall be considered reasonable). Licensee shall provide Tetraphase withwritten notice at least [**] days prior to any cancellation, non-renewal or material change in such insurance. If Licensee does notobtain replacement insurance providing comparable coverage within such [**] day period, Tetraphase shall have the right to terminatethis Agreement effective at the end of such [**] day period without notice or any additional waiting periods. This Section 13.04(Insurance) shall survive expiration or termination of this Agreement and last until [**] years after the last sale of any LicensedProduct in the Field in the Territory (or Terminated Territory, as applicable) by any Licensee Entity. 53 Section 13.05Indemnification of Harvard. Licensee shall indemnify, hold harmless and defend Harvard and itscurrent or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, studentsand agents and their respective successors, heirs and assigns (collectively, the “Harvard Indemnitees”) from and against any and allLosses, to the extent that such Losses arise out of, are based upon, or otherwise relate to (a) any acts or omissions of Licensee, itsAffiliates or any of its sublicensees in connection with Licensed Products or this Agreement or (b) product liability concerning anyproduct, process, or service made, used or sold pursuant to any right or license granted under this Agreement. Licensee shall not settleany claim for which a Harvard Indemnitee seeks indemnification from Licensee unless such settlement fully and unconditionallyreleases Harvard from all liability relating thereto, does not impose any obligations on the Harvard Indemnitee and does not limit thescope, validity or enforceability of any Licensed Patent Right (as defined in the Harvard Agreement), unless Harvard otherwise agreesin writing. Licensee shall, at its own expense, provide attorneys reasonably acceptable to Harvard to defend against any such claim,whether or not such actions are rightfully brought.ARTICLE XIV.TERM AND TERMINATIONSection 14.01Term. The term of this Agreement shall begin on the Effective Date and, unless earlier terminated inaccordance with the terms of this ARTICLE XIV (Term and Termination), will expire upon the later of (a) expiration of the last-to-expire Royalty Term or (b) the expiration of the Harvard Agreement (the “Term”).Section 14.02Termination for Patent Right Challenge. In the event that any Licensee Entity challenges, or assistsany individual or entity in challenging, the validity, patentability or enforceability of any Patent Right that (a) is owned by or licensedto Tetraphase or any of its Affiliates and (b) Covers or otherwise claims the Licensed Compound or any Eravacycline Product or theirrespective Research, Development, Manufacture or Commercialization anywhere in the world, or otherwise opposes the validity,patentability or enforceability of any such Patent Right (except, in each case, as required by Law), then, to the extent consistent withapplicable Law, Tetraphase may immediately terminate this Agreement by providing written notice thereof to Licensee.Section 14.03Termination for Breach. Subject to the terms and conditions of this Section 14.03 (Termination forBreach), a Party (the “Non-Breaching Party”) shall have the right, in addition to any other rights and remedies available to suchParty at law or in equity, to terminate this Agreement in the event the other Party (the “Breaching Party”) is in material breach of itsobligations under this Agreement. The Non-Breaching Party shall first provide written notice to the Breaching Party, which noticeshall identify with particularity the alleged breach (the “Breach Notice”). With respect to material breaches of any payment provisionhereunder, the Breaching Party shall have a period of [**] days after such Breach Notice is provided to cure such breach. With respectto all other breaches, the Breaching Party shall have a period of [**] days after such Breach Notice is provided to cure suchbreach. Notwithstanding anything to the contrary in this Section 14.03 (Termination for Breach), with respect to any breach byLicensee that results, or could reasonably be expected to result in, a54 breach of any In-License Agreement, Licensee shall have a period of [**] days after Tetraphase provides written notice to Licenseethat Tetraphase has received a written notice of breach from the applicable Third Party licensor to cure such breach. If such breach isnot cured within the applicable period set forth above, the Non-Breaching Party may, at its election, terminate this Agreement uponwritten notice to the Breaching Party; provided that, if a material breach pertains only to facts relating to one or more Jurisdictions otherthan mainland China, then the Non-Breaching Party shall only have the right to terminate this Agreement only with respect to suchJurisdiction(s); provided, further, that, solely with respect to any breach (other than a breach of any payment provision) that is notreasonably likely to result in a breach of any In-License Agreement, the termination shall not become effective for [**] days after theBreach Notice if the breach specified in such Breach Notice cannot be cured within the initial [**] day cure period, and if theBreaching Party commenced actions to cure such breach within the initial [**] day cure period and thereafter diligently continued suchactions and cured such breach within such [**] day period. The waiver by either Party of any breach of any term or condition of thisAgreement shall not be deemed a waiver as to any subsequent or similar breach. In the event Licensee is entitled to terminate thisAgreement in its entirety pursuant to this Section 14.03 (Termination for Breach), as an alternative to such termination, Licenseemay elect upon written notice to Tetraphase that, as an alternative to such termination, from the date on which such termination wouldotherwise have become effective, any royalties otherwise payable by Licensee to Tetraphase pursuant to Section 8.04 (Royalties) shallbe reduced by [**] percent ([**]%) and, for clarity, this Agreement shall otherwise continue in full force and effect. Such election byLicensee of a royalty reduction as an alternative to termination for a breach shall not be deemed a waiver as to any subsequent orsimilar breach.Section 14.04[Intentionally Left Blank].Section 14.05Termination for Bankruptcy and Rights in Bankruptcy. (a)To the extent permitted under applicable Law, if, at any time during the Term, an Event of Bankruptcy(as defined below) relating to either Party (the “Bankrupt Party”) occurs, the other Party (the “Other Party”) shall have, inaddition to all other legal and equitable rights and remedies available to such Party, the option to terminate this Agreementupon sixty (60) days written notice to the Bankrupt Party. It is agreed and understood that, if the Other Party does not electto terminate this Agreement upon the occurrence of an Event of Bankruptcy, except as may otherwise be agreed with thetrustee or receiver appointed to manage the affairs of the Bankrupt Party, the Other Party shall continue to make all paymentsrequired of it under this Agreement as if the Event of Bankruptcy had not occurred, and the Bankrupt Party shall not havethe right to terminate any license granted herein. The term “Event of Bankruptcy” means: (a) filing in any court or agencypursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization orfor an arrangement or for the appointment of a receiver or trustee of the Bankrupt Party or of its assets or (b) being servedwith an involuntary petition against the Bankrupt Party, filed in any insolvency proceeding, where such petition is notdismissed within sixty (60) days after the filing thereof.(b)All rights and licenses granted under or pursuant to this Agreement by Licensee and Tetraphase are andshall otherwise be deemed to be, for purposes of Section 365(n) of the55 U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of right to “intellectualproperty” as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of suchrights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. BankruptcyCode or any analogous provisions in any other country or jurisdiction. The Parties further agree that, in the event of thecommencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogousprovisions in any other country or jurisdiction, the Party hereto that is not a Party to such proceeding shall be entitled to acomplete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of suchintellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (i) uponany such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Partysubject to such proceeding elects to continue to perform all of its obligations under this Agreement or (ii) if not deliveredunder clause (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceedingupon written request therefor by the non-subject Party. The Parties acknowledge and agree that payments made underSection 8.02 (Development Milestone Payments) or Section 8.03 (Sales Milestone Payments) or pursuant to any SupplyAgreements shall not (x) constitute royalties within the meaning of Section 365(n) of the U.S. Bankruptcy Code or anyanalogous provisions in any other country or jurisdiction or (y) relate to licenses of intellectual property hereunder.Section 14.06Automatic Termination of In-Licensed Rights. Upon any termination of the Harvard License inwhole or in part, any Patent Rights or other intellectual property rights that, pursuant to such termination, Tetraphase has ceased toControl shall be excluded from the Patent Rights and intellectual property licensed to Licensee pursuant to Section 2.01 (Grant ofRights). Upon such termination due to any act or failure to act by any Licensee Entity, then Licensee shall use commerciallyreasonable efforts, only to the extent requested by Tetraphase in writing and only to the extent permitted pursuant to the HarvardAgreement, (A) negotiate a direct license from Harvard pursuant to Section 4.2.2.3 of the Harvard Agreement that permits Licensee tosublicense the rights granted under such direct license to Tetraphase (and, to the extent possible, Licensee shall ensure that such directlicense contains terms no less favorable to Licensee than the terms of the Harvard Agreement are to Tetraphase as of the EffectiveDate) and (B) exclusively sublicense such rights to Tetraphase on terms no less favorable than those in Licensee’s direct licenseagreement with Harvard. Upon any other such termination (i.e., other than due to any act or failure to act by any Licensee Entity),then Licensee shall, at its sole discretion, have the right to negotiate a direct license from Harvard to the extent set forth in Section4.2.2.3 of the Harvard Agreement.56 Section 14.07Effect of Termination. (a)In the event of any termination of this Agreement in its entirety, the following shall apply:(i)All license grants in this agreement from Tetraphase to Licensee shall immediately terminate;(ii)To the extent permitted under applicable Law, Licensee shall promptly wind down all clinical trials thenbeing conducted with respect to any Licensed Product in the Territory; provided that Licensee shall be permitted to take all reasonablesteps necessary to minimize liability and harm to patients in this process;(iii)Licensee shall cease using the Tetraphase Technology and return all inventory of the EravacyclineMaterials to Tetraphase, together with all copies of the Tetraphase Know-How and other Confidential Information of Tetraphase in thepossession or control of Licensee or any of its Representatives;(iv)Licensee shall, at Tetraphase’s written request, to the extent feasible under applicable Law, promptly:(A) assign and transfer to Tetraphase all of the Licensee Entities’ right, title, and interest in and to all Licensee Regulatory Documents(including Regulatory Approvals), clinical trial agreements (to the extent assignable and not cancelled), confidentiality and otheragreements, and materials and Know-How relating exclusively to clinical trials of any Licensed Product, in each case solely to theextent related to and necessary or useful for the Research, Development, Manufacture or Commercialization of the LicensedCompound or any Licensed Product, and solely to the extent in Licensee’s possession or control, and Licensee Trademarks (includingall goodwill associated therewith and each Internet domain name incorporating any Licensee Trademark or any variation or part of anyLicensee Trademark as its URL address or any part of such address) relating to the Research, Development, Manufacture orCommercialization of the Licensed Compound or any Eravacycline Product and (B) disclose to Tetraphase all documents embodyingthe foregoing that are in any Licensee Entity’s possession or control or that any Licensee Entity is able to obtain using reasonableefforts;(v)The costs associated with the activities set forth in subsections (a)(ii), (a)(iii), (a)(iv)(A) and (a)(iv)(B) ofthis Section 14.07 (Effect of Termination) shall be borne by Licensee; and(vi)Notwithstanding any expiration or termination of this Agreement, the Safety Data ExchangeAgreement (with respect to Licensee’s obligations thereunder) shall continue in accordance with its terms.(b)In the event of any termination in respect of one or more Jurisdictions (such Jurisdictions (or, in theevent that this Agreement is terminated in its entirety, all Jurisdictions), the “Terminated Territory”) (but not in the case ofany termination of this Agreement in its entirety), the following shall apply:57 (i)All rights and licenses granted by Tetraphase to Licensee, shall automatically be deemed to be amendedto exclude the Terminated Territory;(ii)To the extent permitted under applicable Law, Licensee shall promptly wind down all clinical trials thenbeing conducted with respect to any Licensed Product in the Terminated Territory; provided that Licensee shall be permitted to take allreasonable steps necessary to minimize liability and harm to patients in this process;(iii)All Licensee diligence obligations with respect to the Terminated Territory shall terminate;(iv)Licensee shall, at Tetraphase’s written request, to the extent feasible under applicable Law, promptly:(A) assign and transfer to Tetraphase all of the Licensee Entities’ right, title, and interest in and to all Licensee Regulatory Documents(including Regulatory Approvals), clinical trial agreements (to the extent assignable and not cancelled), confidentiality and otheragreements, and materials and Know-How relating exclusively to clinical trials of any Licensed Product in the Terminated Territory, ineach case solely to the extent exclusively related to Licensed Product the Terminated Territory, and solely to the extent in Licensee’spossession or control, and Licensee Trademarks in the Terminated Territory (including all goodwill associated therewith and eachInternet domain name incorporating any Licensee Trademark or any variation or part of any Licensee Trademark as its URL address orany part of such address) and (B) disclose to Tetraphase all documents embodying the foregoing that are in any LicenseeEntity’s possession or control or that any Licensee Entity is able to obtain using reasonable efforts; and(v)The costs associated with the activities set forth in subsections (b)(ii), (b)(iv)(A) and (b)(iv)(B) of thisSection 14.07 (Effect of Termination) shall be borne by Licensee. Section 14.08Survival; Accrued Rights. The following articles and sections of this Agreement shall surviveexpiration or early termination for any reason: ARTICLE I (Definitions), Section 2.01(c), Section 2.01(d), Section 2.01(e), Section2.03 (No Other Rights and Retained Rights), Section 2.04(c)(ii), Section 2.05 (In-License Agreements) (solely to the extentapplicable to Licensee’s exercise of any rights, or performance of any obligations, retained by Licensee hereunder following theapplicable expiration or termination), Section 2.06 (Exclusivity), Section 6.06(a), ARTICLE VIII (Payments) (solely with respectto any payment obligations incurred prior to expiration or termination), Section 9.01 (Tetraphase Intellectual Property), Section9.02 (Licensee Intellectual Property), Section 9.03 (Joint Technology), Section 9.04 (Prosecution of Patent Rights) (with respectto Joint Patent Rights), Section 9.05 (Enforcement and Defense) (with respect to Joint Patent Rights), Section 9.06 (Defense ofThird Party Infringement and Misappropriation Claims) (with respect to Third Party claims regarding infringement ormisappropriation during the Term), Section 11.07 (Disclaimer), Section 11.08 (Limitation of Liability), ARTICLE XII(Confidentiality), ARTICLE XIII (Indemnification), Section 14.06 (Automatic Termination of In-Licensed Rights) (second andthird sentences only), Section 14.07 (Effect of Termination), Section 14.08 (Survival; Accrued Rights), ARTICLE XV (DisputeResolution; Governing Law), and ARTICLE XVI (Miscellaneous). In any event, expiration or termination of this Agreement shallnot relieve either Party of any liability which accrued hereunder prior to the effective date of such58 expiration or termination nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equitywith respect to any breach of this Agreement, nor prejudice either Party’s right to obtain performance of any obligation.ARTICLE XV.DISPUTE RESOLUTION; GOVERNING LAWSection 15.01Arbitration. Subject to Section 15.01(d) (Intellectual Property Disputes), any disputes, claims orcontroversies in connection with this Agreement, including any questions regarding its formation, existence, validity, enforceability,performance, interpretation, breach or termination, that are not resolved in accordance with ARTICLE III (Governance) shall bereferred to and finally resolved by binding arbitration under the International Chamber of Commerce Rules of Arbitration (the“Rules”), which rules are deemed to be incorporated by reference into this Section 15.01 (Arbitration), in the manner describedbelow: (a)Arbitration Request. If a Party intends to begin an arbitration to resolve a dispute arising under thisAgreement, such Party shall provide written notice (the “Arbitration Request”) to the other Party of such intention and theissues for resolution.(b)Additional Issues. Within [**] days after the receipt of an Arbitration Request, the other Party may, bywritten notice, add additional issues for resolution.(c)Arbitration Procedure. The seat of arbitration will be in Singapore unless other venue is agreed upon byParties, and it will be conducted in the English language. The arbitrators may not decide based on equity. Unless agreed bythe Parties to choose a single common arbitrator, the arbitration will be conducted by three arbitrators, one appointed by eachParty, according to the Rules. The two arbitrators appointed by the Parties will by mutual agreement appoint the thirdarbitrator, who will preside over the arbitration. Any dispute or omission regarding the appointment of the arbitrators by theParties, as well as the choice of the third arbitrator, will be resolved by the International Chamber of Commerce (“ICC”).The arbitral award shall be final, definitive and binding on the Parties and their successors. The Parties reserve the right toapply to a competent judicial court to obtain urgent remedies to protect rights before establishment of the arbitration panel,without such recourse being considered as a waiver of arbitration. Except as otherwise determined by the arbitrators, theParties shall each bear half of the fees and expenses of the arbitrators and the ICC, and each Party shall bear the costs andfees of its attorneys. Nothing in this Agreement shall be deemed as preventing either Party from seeking injunctive relief (orany other provisional remedy) from any court having jurisdiction over the Parties and the subject matter of the dispute asnecessary to protect either Party’s name, Confidential Information, Know-How, intellectual property rights or any otherproprietary right or otherwise to avoid irreparable harm. If the issues in dispute involve scientific or technical matters, anyarbitrator chosen hereunder shall have educational training or experience sufficient to demonstrate a reasonable level ofknowledge in the field of biotechnology and pharmaceuticals. Judgment on the award rendered by the arbitrator may beentered in any court having jurisdiction thereof. 59 (d)Intellectual Property Disputes. Unless otherwise agreed by the Parties, a dispute between the Partiesrelating to the validity or enforceability of any Patent Right shall not be subject to arbitration and shall be submitted to a courtor patent office of competent jurisdiction in the relevant country in which such patent was issued or, if not issued, in whichthe underlying patent application was filed. The Parties submit to the jurisdiction of such court or patent office andirrevocably waive any assertion that the case should be heard in a different venue or forum.Section 15.02Choice of Law. This Agreement and all amendments, modifications, alterations, or supplementshereto, and the rights of the Parties hereunder, shall be construed under and governed by the Laws of the State of New York, exclusiveof its conflicts of laws principles. Section 15.03Language. This Agreement has been prepared in the English language and the English language shallcontrol its interpretation. All consents, notices, reports and other written documents to be delivered or provided by a Party under thisAgreement shall be in the English language, and in the event of any conflict between the provisions of any document and the Englishlanguage translation thereof, the terms of the English language translation shall control.ARTICLE XVI.MISCELLANEOUSSection 16.01Assignment. (a)Tetraphase may assign this Agreement without the prior written consent of Licensee (i) to any Affiliateof Tetraphase, provided that Tetraphase remains fully liable for the performance of Tetraphase’s obligations hereunder bysuch Affiliate and Tetraphase informs Licensee of such assignment or (ii) to a successor in connection with a merger orconsolidation of Tetraphase or the sale of all or substantially all of that portion of Tetraphase’s assets or Tetraphase’sbusiness to which this Agreement relates, in which case Tetraphase will provide prior written notice to Licensee.(b)Licensee may not assign this Agreement without the prior written consent of Harvard and Tetraphase,except that Licensee may assign this Agreement to an Affiliate of Licensee or to a successor in connection with the merger,consolidation or sale of all or substantially all of Licensee’s assets or that portion of Licensee’s business to which thisAgreement relates; provided, however, that any permitted assignee agrees in writing in a manner reasonably satisfactory toHarvard to be bound by the terms of this Agreement.(c)Any assignment in violation of this Section 16.01 (Assignment) shall be null and void. ThisAgreement shall be binding on and shall inure to the benefit of the permitted successors and assigns of the Parties.Section 16.02Acquisitions. Each Party agrees that, in the event that a Party (the “Acquired Party”) is acquired(whether by way of merger, acquisition, sale of all or substantially all of its business, or otherwise) or sells all or substantially all of itsbusiness or assets to which this Agreement pertains (an “Acquisition”) by or to a Third Party (the60 “Acquirer”), the non-Acquired Party shall not obtain any rights or access under this Agreement to any Know-How or Patent Rightsowned by or licensed to such Acquirer, or any of such Acquirer’s Affiliates that were not Affiliates of the Acquired Party immediatelyprior to the consummation of such Acquisition, that were not already within Tetraphase Technology (if the Acquired Party isTetraphase) or Licensee Technology (if the Acquired Party is Licensee) immediately prior to the consummation of such Acquisition.Section 16.03Force Majeure. Subject to the terms of each In-License Agreement, if either Party shall be delayed,interrupted in or prevented from the performance of any obligation hereunder by reason of force majeure, which may include any actof God, fire, flood, earthquake, war (declared or undeclared), public disaster, act of terrorism, government action, strike or labordifferences, in each case outside of such Party’s reasonable control, such Party shall not be liable to the other therefor, and the time forperformance of such obligation shall be extended for a period equal to the duration of the force majeure which occasioned the delay,interruption or prevention. The Party invoking the force majeure rights of this Section 16.03 (Force Majeure) must notify the otherParty by courier or overnight dispatch (e.g., Federal Express) within a period of thirty (30) days of both the first and last day of theforce majeure unless the force majeure renders such notification impossible, in which case notification will be made as soon aspossible. If the delay resulting from the force majeure exceeds one hundred eighty (180) days, the other Party may terminate thisAgreement immediately upon written notice to the Party invoking the force majeure rights of this Section 16.03 (Force Majeure).Section 16.04Entire Agreement. This Agreement, together with the exhibits and schedules attached hereto,constitutes the entire agreement between Tetraphase or any of its Affiliates, on the one hand, and Licensee or any of its Affiliates, onthe other hand, with respect to the subject matter hereof, supersedes all prior understandings and writings between Tetraphase or any ofits Affiliates, on the one hand, and Licensee or any of its Affiliates, on the other hand relating to such subject matter, including theConfidentiality Agreement, and shall not be modified, amended or terminated, except by another agreement in writing executed by theParties.Section 16.05Severability. If, under applicable Law, any provision of this Agreement is invalid or unenforceable,or otherwise directly or indirectly affects the validity of any other material provision of this Agreement (such invalid or unenforceableprovision, a “Severed Clause”), it is mutually agreed that this Agreement shall endure except for the Severed Clause. The Partiesshall consult one another and use their reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitutefor the Severed Clause in view of the intent of this Agreement.Section 16.06Notices. Any notice or report required or permitted to be given under this Agreement shall be inwriting and shall be mailed by internationally recognized express delivery service, or sent by facsimile and confirmed by mailing, asfollows (or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing inaccordance herewith):61 If to Tetraphase:Tetraphase Pharmaceuticals480 Arsenal Way, Suite 110Watertown, MA 02472Attention: General CounselFacsimile: [**] With a copy to (which shall not constitute notice for purposes of this Agreement):WilmerHale60 State StreetBoston, Massachusetts 02109Attention: Belinda M. JuranFacsimile: (617) 526-5000 If to Licensee:Everest Medicines LimitedSuite 4508, 45F, Tower 2, Plaza 661266 Nanjing Xi LuShanghai 200040ChinaAttention: General CounselFax: [**] With a copy to (which shall not constitute notice for purposes of this Agreement):Covington & Burling2701 Two ifc, Shanghai ifcNo. 8 Century AvenuePudong New DistrictShanghai 200120Attention: Weishi LiFacsimile: [**] Any such notice shall be deemed to have been given (a) when delivered if personally delivered, (b) on receipt if sent byovernight courier or (c) on receipt if sent by mail.Section 16.07Agency. Neither Party is, nor will be deemed to be a partner, employee, agent or representative of theother Party for any purpose. Each Party is an independent contractor of the other Party. Neither Party shall have the authority to speakfor, represent or obligate the other Party in any way without prior written authority from the other Party.62 Section 16.08No Waiver. Any omission or delay by either Party at any time to enforce any right or remedyreserved to it, or to require performance of any of the terms, covenants or provisions hereof, by the other Party, shall not constitute awaiver of such Party’s rights to the future enforcement of any of its rights under this Agreement. Any waiver by a Party of a particularbreach or default by the other Party shall not operate or be construed as a waiver of any subsequent breach or default by the otherParty.Section 16.09Cumulative Remedies. Except as may be expressly set forth herein, no remedy referred to in thisAgreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreementor otherwise available under law or in equity.Section 16.10No Third Party Beneficiary Rights. This Agreement is not intended to and shall not be construed togive any Third Party any interest or rights (including any third party beneficiary rights) with respect to or in connection with anyagreement or provision contained herein or contemplated hereby, other than, (a) to the extent provided in Section 13.01(Indemnification by Tetraphase), the Licensee Indemnitees, (b) to the extent provided in Section 13.02 (Indemnification byLicensee), the Tetraphase Indemnitees and (c) to the extent provided in Section 13.05 (Indemnification of Harvard), and also withrespect to Section 13.04 (Insurance), the Harvard Indemnitees.Section 16.11Use of Harvard Name. Licensee shall not, and shall ensure that its Affiliates and sublicensees shallnot, use the name or insignia of Harvard or the name of any of Harvard’s officers, faculty, other researchers or students, or anyadaptation of such names, in any advertising, promotional or sales literature, including any press release or any document employed toobtain funds, without the prior written approval of Harvard. The restriction set forth in this Section 16.11 (Use of Harvard Name)shall not apply to any information required by Law to be disclosed to any Governmental Authority, including any information requiredto be disclosed pursuant to rules and regulations promulgated by the United States Securities and Exchange Commission or the rulesand regulations of any stock exchange or NASDAQ.Section 16.12Performance by Affiliates, Sublicensees or Subcontractors. To the extent that this Agreementimposes any obligation on any Affiliate, permitted sublicensee or permitted subcontractor of Licensee, Licensee shall cause suchAffiliate, permitted sublicensee or permitted subcontractor (as applicable) to perform such obligation. Either Party may use one ormore of its Affiliates to perform its obligations and duties hereunder; provided that such Party so notifies the other Party in writing andprovided, further, that such Party shall remain liable hereunder for the prompt payment and performance of all of its obligationshereunder.Section 16.13Counterparts. This Agreement may be executed in counterparts, all of which taken together shall beregarded as one and the same instrument.[Signature page follows] 63 IN WITNESS WHEREOF, the Parties have executed this Agreement through their duly authorized representatives to beeffective as of the Effective Date.TETRAPHASE PHARMACEUTICALS, INC. By:/s/ Guy Macdonald Name:Guy Macdonald Title:President and Chief Executive Officer EVEREST MEDICINES LIMITED By:/s/ Sean Wuxiong Cao Name:Sean Wuxiong Cao Title:President  Exhibit AList of Tetraphase Patent Rights Existing as of the Effective DateJurisdictionPatent Application No.Patent No.Grant Date[**]  Exhibit BDevelopment Plan Framework[see attached]Confidential Materials omitted and filed separately with theSecurities and Exchange Commission. A total of 7 pages were omitted. [**]  Exhibit CDevelopment Plan  Exhibit DPersonnel RatesEmployeeHourly Rate[**][**][**][**][**][**][**][**][**][**][**][**][**][**][**][**] On January 1, 2019 and on January 1 of each subsequent calendar year, the foregoing rates shall be increased for the calendar yearthen commencing by the percentage increase, if any, in the Consumer Price Index (CPI) as of December 31 of the then most recentlycompleted calendar year with respect to the level of the CPI on December 31, 2017. As used in this Exhibit D, CPI means theConsumer Price Index – Urban Wage Earners and Clerical Workers, US City Average, All Items, 1982-84 = 100, published by theUnited States Department of Labor, Bureau of Labor Statistics (or its successor equivalent index).  Exhibit EList of In-License Agreements Existing as of the Effective Date 1.The Harvard Agreement  Schedule 1.45Eravacycline  Schedule 1.77TP-6076  Schedule 2.04Specified Tetraphase Know-How[**] Exhibit 10.31 Tetraphase Pharmaceuticals, Inc.480 Arsenal Street, Suite 110Watertown, MA 02472 February 28, 2018Larry Edwards[address][address] Dear Larry:On behalf of Tetraphase Pharmaceuticals, Inc. (the "Company"), I am very pleased to present you with this amended and restated offerletter in connection with our offer to promote you to the position of Chief Operating Officer. The purpose of this letter is to summarizethe terms of your continued employment with the Company in this new appointment, should you accept our offer. 1.Employment. Effective March 1, 2018 (the “Effective Date”), you will be employed to serve on a full-time basis in theposition of Chief Operating Officer, reporting directly to me as President and Chief Executive Officer, TetraphasePharmaceuticals, Inc. As Chief Operating Officer, you will have such duties and responsibilities as are customary for suchposition and such other duties and responsibilities as may be assigned to you by the Company. You agree to continue todevote your full business time, best efforts, skill, knowledge, attention, and energies to the advancement of the Company'sbusiness and interests and to the performance of your duties and responsibilities as an employee of the Company. 2.Base Compensation. As of the Effective Date, your base salary will be increased to the rate of $15,384.62 per bi-weeklypay period (equivalent to an annualized rate of $400,000), less all applicable federal, state, and local taxes and withholdings,such base salary to be paid in installments in accordance with the Company’s standard payroll practices. Such base salarymay be adjusted from time to time in accordance with normal business practices and in the sole discretion of the Company. 3.Bonus. If the Board of Directors approves an annual bonus for fiscal year 2018 or any fiscal year thereafter, you may beeligible for a discretionary retention and performance bonus award of up to 40% of your annualized base salary in such year(the “Target Bonus”). The bonus award, if any, will be based on both individual and corporate performance and will bedetermined by the Board of Directors of the Company in its sole discretion. In any event, in order to be eligible for and toearn a bonus, if any, you must be an active employee of the Company on the date such bonus is distributed, as it also servesas an incentive to remain employed by the Company. Any bonus that the Board determines to be payable for a fiscal yearwill be paid before March 15th of the next fiscal year. 4.Benefits. You will continue to participate in any and all benefit programs that the Company establishes and makes availableto its employees from time to time, provided that you are eligible under (and subject to all provisions of) the plan documentsgoverning those programs. Such benefits may include: participation in group medical and dental insurance programs, termlife  insurance, long-term disability insurance and participation in the Company's 401(k) plan. The benefits made available by theCompany, and the rules, terms, and conditions for participation in such benefit programs, may be changed by the Company atany time and from time to time without advance notice (other than as required by such programs or under law). With respectto vacation time, you will begin to accrue vacation at 1.67 days/month or the equivalent of a maximum of 4 weeks percalendar year. Vacation may be taken at such times as may be approved by the Company. Your accrual and use of vacationtime will also be subject to any and all vacation policies and procedures that the Company establishes from time to time. 5.Stock Incentive Program. You will continue to be eligible to participate in the Company's stock incentive program. 6.At-Will Employment. This letter shall not be construed as an agreement, either express or implied, to continue to employyou for any stated term, and shall in no way alter the Company’s policy of employment at will, under which both you and theCompany remain free to terminate the employment relationship at any time, for any reason, with or without cause, and withor without notice. Although your job duties, title, compensation and benefits, as well as the Company's personnel policiesand procedures, may change from time to time, the "at-will" nature of your employment may only be changed by a writtenagreement signed by you and the principal executive officer of the Company, which expressly states the intention to modifythe at-will nature of your employment. Similarly, nothing in this letter shall be construed as an agreement, either express orimplied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company,except to the extent explicitly set forth in Section 7 hereof. 7.Severance Benefits. Notwithstanding your status as an at-will employee, in the event that the Company (or, as may beapplicable, an acquiring or succeeding company) terminates your employment without “Cause,” or you terminate youremployment with the Company (or, as may be applicable, an acquiring or succeeding company) for “Good Reason” (eachterm as defined in Exhibit A and in either case a “Qualifying Termination”), you will be eligible for the benefits outlined ineither sub-section A or subsection B (the “Severance Benefits”), subject to the terms set forth in this letter agreement:(A)If a Qualifying Termination occurs prior to or more than twelve months following a Change in Control Event (as definedin Exhibit A), the Company will provide to you as severance pay an amount equal to twelve (12) months of your then-currentbase salary (subject to all applicable federal, state and local taxes and withholdings and payable over a twelve -month periodin accordance with the Company’s regular payroll practices). In addition, should you timely elect and be eligible to continuereceiving group medical coverage pursuant to applicable “COBRA” law, and so long as the Company can provide suchbenefit without violating the nondiscrimination requirements of applicable law, the Company will, until the earlier of (x) thedate that is twelve (12) months following your termination date and (y) the date you (or, as applicable, your beneficiaries)become eligible for coverage through a new employer, continue to pay the share of the premium for such coverage that ispaid by the Company for active and similarly-situated employees who receive the same type of coverage (provided that theCompany will not pay more each month than the monthly amount it was paying for your coverage when your employmentended). The remaining balance of any premium costs shall timely be paid by- 2 -  you on a monthly basis (or such other basis as is required by the Company) for as long as, and to the extent that, you remaineligible for COBRA continuation. (B)If a Qualifying Termination occurs upon or during the twelve month period commencing upon a Change inControl Event, the Company will provide to you as severance pay an amount equal to the sum of (i) twelve (12) months ofyour then-current base salary (subject to all applicable federal, state and local taxes and withholdings and payable over atwelve -month period in accordance with the Company’s regular payroll practices) and (ii) an amount equal to 100% of yourthen-current annual Target Bonus (subject to all applicable federal, state and local taxes and withholdings and payable in alump sum). In addition, should you timely elect and be eligible to continue receiving group medical coverage pursuant toapplicable “COBRA” law, and so long as the Company can provide such benefit without violating the nondiscriminationrequirements of applicable law, the Company will, until the earlier of (x) the date that is twelve (12) months following yourtermination date and (y) the date you (or, as applicable, your beneficiaries) become eligible for coverage through a newemployer, continue to pay the share of the premium for such coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage (provided that the Company will not pay more each month thanthe monthly amount it was paying for your coverage when your employment ended). The remaining balance of anypremium costs shall timely be paid by you on a monthly basis (or such other basis as is required by the Company) for as longas, and to the extent that, you remain eligible for COBRA continuation. Further, the vesting of all stock options held by youon the date of termination shall be accelerated, such that such stock options shall become 100% fully vested and exercisable.Your receipt of severance pay and benefits as set forth in this Section 7 is conditioned upon your full compliance with theNon-Solicitation Agreement (as defined in Section 8 below), your timely execution of a separation and release of claimsagreement prepared by and satisfactory to the Company (which will include, at a minimum, a release by you of all releasableclaims, non-disparagement and cooperation obligations, and reaffirmation of your continuing obligations under the Non-Solicitation Agreement) (the “Release”), and any applicable revocation period with respect to the Release expiring withoutrevocation within 60 days (or such shorter period as may be directed by the Company) following your termination date. Ifthe Release has been executed and any applicable revocation period has expired prior to the 60th day following yourtermination, then the severance payments and benefits shall commence (or in the case of any lump sum payment, be paid) onthe first regular pay date after any applicable revocation period has expired (but no earlier than the 30th day following yourtermination date); provided, however, that if the 60th day following your termination occurs in the calendar year followingthe calendar year during which your termination occurs, then the severance payments shall commence (or in the case of anylump sum payment, be paid) no earlier than January 1 of such subsequent calendar year. The provision of severance pay andbenefits hereunder shall be subject to the terms and conditions set forth in Section 11 hereto. In the event you breach yourobligations under the Release or the Non-Solicitation Agreement, you will have no right to receive, and the Company shallnot provide to you, any severance pay or benefits following the date of such breach. Such cessation of payments and benefitsshall be in addition to, and not in lieu of, any and all other remedies, whether at law or in equity, available to the Companyfor such breach.- 3 -  8.Non-Solicitation, Non-Disclosure and Developments Agreement. As a condition of your continued employment andpromotion, you reaffirm your obligations under the Non-Solicitation, Non-Disclosure and Developments Agreement (the“Non-Solicitation Agreement”) which you previously signed in connection with your employment, a copy of which isenclosed with this letter. 9.Company Policies and Procedures. As an employee of the Company, you remain required to comply with all Companypolicies and procedures. Violations of the Company's policies may lead to immediate termination of youremployment. Further, the Company's premises, including all workspaces, furniture, documents, and other tangible materials,and all information technology resources of the Company (including computers, data and other electronic files, and allinternet and email) remain subject to oversight and inspection by the Company at any time. Company employees shouldhave no expectation of privacy with regard to any Company premises, materials, resources, or information. 10.Other Agreements and Governing Law. You represent that you are not bound by any employment contract, restrictivecovenant or other restriction preventing you from continuing employment with or carrying out your responsibilities for theCompany hereunder, or which is in any way inconsistent with the terms of this letter. Please note that this amended andrestated offer letter is your formal offer of continued employment and supersedes any and all prior or contemporaneousagreements, discussions and understandings, whether written or oral, relating to the subject matter of this letter or youremployment with the Company, including without limitation the previous offer letter between you and the Company datedMay 21, 2015. The resolution of any disputes under this letter will be governed by Massachusetts law. 11.Section 409A of the Code. Subject to the provisions in this Section 11, any severance payments or benefits under this letter will begin only upon the dateof your “separation from service” (determined as set forth below) which occurs on or after the date of termination of youremployment. The following rules shall apply with respect to distribution of the payments and benefits, if any, to be providedto you under this letter.(a) It is intended that each installment of the severance payments and benefits provided under this letter shall be treated as aseparate “payment” for purposes of Section 409A of the Internal Revenue Code and the guidance issued thereunder(“Section 409A”). Neither you nor the Company will have the right to accelerate or defer the delivery of any such paymentsor benefits except to the extent specifically permitted or required by Section 409A.(b) The determination of whether and when your separation from service from the Company has occurred shall be made andin a manner consistent with and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely forpurposes of this paragraph, “Company” shall include all persons with whom the Company would be considered a singleemployer under Section 414(b) and 414(c) of the Internal Revenue Code.(c) If, as of the date of your separation from service from the Company, you are not a “specified employee” (within themeaning of Section 409A), then each installment of the severance payments and benefits provided under this letter shall bemade on the dates and terms set forth in this letter.- 4 -  (d) If, as of the date of your separation from service from the Company, you are a “specified employee” (within the meaningof Section 409A), then:(i) Each installment of the severance payments and benefits due under this letter that, in accordance with the dates and termsset forth herein, will in all circumstances, regardless of when your separation from service occurs, be paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of TreasuryRegulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be paid on the datesand terms set forth in this letter; and(ii) Each installment of the severance payments and benefits due under this letter that is not described in Section 11(d)(i) andthat would, absent this subsection, be paid within the six-month period following your separation from service from theCompany shall not be paid until the date that is six months and one day after such separation from service (or, if earlier, yourdeath), with any such installments that are required to be delayed being accumulated during the six-month period and paid ina lump sum on the date that is six months and one day following your separation from service and any subsequentinstallments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the precedingprovisions of this sentence shall not apply to any installment of payments or benefits if and to the maximum extent that thatsuch installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation byreason of the application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntaryseparation from service). Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following the taxable year in which the separationfrom service occurs.(e) All reimbursements and in-kind benefits provided under this letter shall be made or provided in accordance with therequirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A,including, where applicable, the requirements that (i) any reimbursement is for expenses incurred during your lifetime (orduring a shorter period of time specified in your offer letter), (ii) the amount of expenses eligible for reimbursement during acalendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of aneligible expense will be made on or before the last day of the calendar year following the year in which the expense isincurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.(f) Notwithstanding anything herein to the contrary, the Company makes no representation or warranty and shall have noliability to you or to any other person if the payments and benefits provided in this letter are determined to constitute deferredcompensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section. If you agree with the terms of your continued employment in connection with your appointment to the position of ChiefOperating Officer, as set forth herein, please sign the enclosed duplicate of this letter in the space provided below and return it tome. This offer is effective through March 1, 2018. If you do not accept this offer by such date, it will be deemed revoked. - 5 -  On behalf of Tetraphase Pharmaceuticals, Inc. Guy MacdonaldPresident and Chief Executive Officer The foregoing correctly sets forth the terms of my continued at-will employment by the Company. I am not relying on anyrepresentations pertaining to my employment other than those set forth above. /s/ Larry Edwards Larry EdwardsDate: March 1, 2018 - 6 -  EXHIBIT ADefinitionsFor the purposes of this amended and restated offer letter:(1) “Cause” shall mean: (a) a good faith finding by the Board of Directors of the Company in its sole discretion that you have(i) failed or refused to substantially perform your assigned duties for the Company, or failed or refused to comply in any materialrespect with the Company’s material policies or procedures, which failure or violation is not cured (provided that the Company deemsthat such failure or violation is curable) within 20 days following written notice from the Company to you specifying the duties notperformed or the nature of the violation, (ii) engaged in dishonesty, gross negligence or misconduct, or (iii) breached any employmentagreement, confidentiality agreement, non-solicitation agreement, or other agreement entered into between you and the Company; or(b) your conviction of, or the entry of a pleading of guilty or nolo contendere by you to, any crime involving dishonesty or moralturpitude or any felony.(2) “Change in Control Event” shall mean(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Actof 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after suchacquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more ofthe combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitionsshall not constitute a Change in Control Event: (i) any acquisition directly from the Company (excluding an acquisition pursuant to theexercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or votingsecurities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly fromthe Company or an underwriter or agent of the Company), or (ii) any acquisition by any employee benefit plan (or related trust)sponsored or maintained by the Company or any corporation controlled by the Company; or(b) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Companyor a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediatelyfollowing such Business Combination all or substantially all of the individuals and entities who were the beneficial owners of theOutstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, morethan 50% of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors,respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, acorporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly orthrough one or more subsidiaries) in substantially the same proportions as their ownership of the Outstanding Company VotingSecurities immediately prior to such Business Combination:provided that, where required to avoid additional taxation under Section 409A, the event that occurs must also be a “change in theownership or effective control of a corporation, or a change in the- 7 -  ownership of a substantial portion of the assets of a corporation” as defined in Treasury Regulation Section 1.409A-3(i)(5). (3) “Good Reason” shall occur if a Cause event has not occurred or has not been cured, to the extent curable, and if (x) youprovide written notice to the Company of the event or change you consider to constitute “Good Reason” within 30 calendar daysfollowing its occurrence, (y) you provide the Company with a period of at least 30 calendar days to cure the event or change, and (z)the “Good Reason” persists following the cure period, and you actually resign within 60 calendar days following the event or change.An event or change constituting “Good Reason” shall be limited to any of the following that occur without your prior written consent:(a) a material diminution of your duties, authority or responsibilities, provided, however, that the assignment of different duties to youby the Company involving a reasonably comparable level of responsibility shall not, by itself, constitute “Good Reason,” andprovided, further, that a change in your duties, authority or responsibilities solely as a result of the Company’s acquisition by or mergerwith another entity, if you continue to have a comparatively senior role relative to the Company or its successor following such event,shall not, by itself, constitute “Good Reason”; (b) a material diminution in your base compensation, or (c) the relocation of the principalplace at which you provide services to the Company by at least 50 miles and to a location such that your daily commuting distance isincreased. - 8 - Exhibit 21.1 SUBSIDIARIES OF THE REGISTRANT Name Jurisdiction of Organization Percentage Ownership Tetraphase Pharma Securities, Inc. Massachusetts 100%Tetraphase Pharmaceuticals (Bermuda) Ltd. Bermuda 100%Tetraphase Ireland Limited Republic of Ireland *Tetraphase UK Limited United Kingdom * *100% owned by Tetraphase Pharmaceuticals (Bermuda) Ltd. Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-209991) pertaining to the 2013 Stock Incentive Plan and Inducement Stock OptionAwards of Tetraphase Pharmaceuticals, Inc., (2)Registration Statement (Form S-8 No. 333-198098) pertaining to the 2014 Employee Stock Purchase Plan of TetraphasePharmaceuticals, Inc., (3)Registration Statement (Form S-8 No. 333-194125, No. 333-202576 and No. 333-216742) pertaining to the 2013 Stock IncentivePlan of Tetraphase Pharmaceuticals, Inc., (4)Registration Statement (Form S-8 No. 333-189361) pertaining to the 2006 Stock Incentive Plan and the 2013 Stock Incentive Plan ofTetraphase Pharmaceuticals, Inc., and (5)Registration Statement (Form S-3 No. 333-214500 and No. 333-222699) of Tetraphase Pharmaceuticals, Inc.of our reports dated March 6, 2018, with respect to the consolidated financial statements of Tetraphase Pharmaceuticals, Inc. and the effectiveness of internalcontrol over financial reporting of Tetraphase Pharmaceuticals, Inc. included in this Annual Report (Form 10-K) of Tetraphase Pharmaceuticals, Inc. for theyear ended December 31, 2017./s/ Ernst & Young LLPBoston, MassachusettsMarch 6, 2018Exhibit 31.1CERTIFICATIONI, Guy Macdonald, certify that: 1.I have reviewed this Annual Report on Form 10-K of Tetraphase Pharmaceuticals, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: March 6, 2018 /s/ Guy Macdonald Guy Macdonald Chief Executive Officer Exhibit 31.2CERTIFICATIONI, Kamalam Unninayar, certify that: 1.I have reviewed this Annual Report on Form 10-K of Tetraphase Pharmaceuticals, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; b.Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles; c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: March 6, 2018 /s/ Kamalam Unninayar Kamalam Unninayar Chief Financial Officer EXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Tetraphase Pharmaceuticals, Inc. (the “Company”) for the fiscal year ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Guy Macdonald, Chief Executive Officer of theCompany, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to his knowledge on the date hereof:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 6, 2018 /s/ Guy Macdonald Guy Macdonald Chief Executive Officer EXHIBIT 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Tetraphase Pharmaceuticals, Inc. (the “Company”) for the fiscal year ended December 31, 2017 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Kamalam Unninayar, Chief Financial Officer of theCompany, hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to her knowledge on the date hereof:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 6, 2018 /s/ Kamalam Unninayar Kamalam Unninayar Chief Financial Officer 

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