Nabriva Therapeutics plc (Form: 10-Q, Received: 11/06/2018 15:17:57)

Number of Parking Passes (Article 24):

Eleven (11) unreserved parking passes.

Brokers (Section 25.20):

Cushman & Wakefield representing Landlord and RE:Align, Inc., representing Tenant.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)

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

For the quarterly period ended September 30, 2018

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

For the transition period from to

Commission file number 001-37558

Nabriva Therapeutics plc

(Exact name of registrant as specified in its charter)

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

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

+353 1 649 2000

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o

		Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. x

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

As of October 26, 2018, the registrant had 66,982,094 ordinary shares outstanding.

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NABRIVA THERAPEUTICS plc

INDEX TO REPORT ON FORM 10-Q

		Page
	PART I — FINANCIAL INFORMATION

Item 1:	Financial Statements	5

	Consolidated balance sheets as of December 31, 2017 and September 30, 2018 (unaudited)	5

	Consolidated statements of operations and comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2018 (unaudited)	6

	Consolidated statements of cash flows for the nine months ended September 30, 2017 and 2018 (unaudited)	7

	Notes to the unaudited consolidated financial statements	8

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4:	Controls and Procedures	29

	PART II — OTHER INFORMATION

Item 1:	Legal Proceedings	29

Item 1A:	Risk Factors	29

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	69

Item 3:	Defaults Upon Senior Securities	70

Item 4:	Mine Safety Disclosures	70

Item 5:	Other Information	70

Item 6:	Exhibits	70

SIGNATURES		73

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FORWARD-LOOKING STATEMENTS

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

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

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

· the anticipated and unanticipated costs, fees, expenses and liabilities related to the Acquisition;

· our ability to successfully integrate Zavante’s business into our business;

· our expectations regarding how far into the future our cash on hand will fund our ongoing operations;

· the timing of and our ability to submit applications for and obtain and maintain marketing approval of lefamulin, CONTEPO and other product candidates, including the completion of any post-marketing requirements with respect to any marketing approval we may obtain;

· the potential receipt of revenues from future sales of lefamulin or CONTEPO;

· our plans to pursue development of lefamulin for additional indications other than community-acquired bacterial pneumonia, or CABP, and of CONTEPO for additional indications other than in complicated urinary tract infections, or cUTIs;

· our plans to pursue research and development of other product candidates;

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

· our sales, marketing and distribution capabilities and strategy;

· our ability to successfully commercialize lefamulin, CONTEPO and our other product candidates;

· the potential advantages of lefamulin, CONTEPO and our other product candidates;

· our estimates regarding the market opportunities for lefamulin, CONTEPO and our other product candidates;

· the rate and degree of market acceptance and clinical benefit of lefamulin for CABP, CONTEPO for cUTI and our other product candidates;

· our ability to establish and maintain collaborations;

· the future development or commercialization of lefamulin in the greater China region;

· the potential benefits under our license agreement with Sinovant Sciences, Ltd., or the Sinovant License Agreement;

· our ability to acquire or in-license additional products, product candidates and technologies;

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· our future intellectual property position;

· our estimates regarding future expense, capital requirements and needs for additional financing;

· our ability to effectively manage our anticipated growth;

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

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

· competitive factors;

· compliance with current or prospective governmental regulation;

· general economic and market conditions;

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

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

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

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

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

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

SPECIAL NOTE REGARDING THE REDOMICILIATION

On June 23, 2017, Nabriva Therapeutics plc, a public limited company organized under the laws of Ireland, or Nabriva Ireland, became the successor issuer to Nabriva Therapeutics AG, a stock corporation ( Aktiengesellschaft ) organized under the laws of Austria, or Nabriva Austria, for certain purposes under both the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such succession occurred following the conclusion of a tender offer related to the exchange of American Depositary Shares and common shares of Nabriva Austria for ordinary shares of Nabriva Ireland, which resulted in Nabriva Ireland, a new Irish holding company, becoming the ultimate holding company of Nabriva Austria (the predecessor registrant and former ultimate holding company) and its subsidiaries, which we refer to as the Redomiciliation Transaction. On October 19, 2017, Nabriva Austria was converted into a limited liability company under Austrian law and renamed Nabriva Therapeutics GmbH.

Throughout this Quarterly Report on Form 10-Q, unless the context requires otherwise, all references to “Nabriva,” “the Nabriva Group,” “the Company,” “we,” “ours,” “us,” or similar terms on or prior to June 23, 2017 (the effective date of the Redomiciliation Transaction), refer to our predecessor, Nabriva Therapeutics AG, together with its subsidiaries.

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PART I

ITEM 1. FINANCIAL STATEMENTS

NABRIVA THERAPEUTICS plc

Consolidated Balance Sheets (unaudited)

(in thousands, except share data)	As of December 31, 2017			As of September 30, 2018

Assets
Current assets:
Cash and cash equivalents	$	86,769		$	100,331
Short-term investments	110			326
Other receivables	5,402			7,362
Contract asset	—			1,500
Prepaid expenses	1,558			1,163
Total current assets	93,839			110,682
Property, plant and equipment, net	1,327			1,226
Intangible assets, net	172			109
Long-term receivables	425			428
Total assets	$	95,763		$	112,445

Liabilities and equity
Current liabilities:
Accounts payable	$	5,136		$	4,765
Accrued expense and other current liabilities	8,124			10,300
Total current liabilities	13,260			15,065
Non-current liabilities
Long-term debt	232			710
Other non-current liabilities	203			244
Total non-current liabilities	435			954
Total liabilities	13,695			16,019
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Ordinary shares, nominal value $0.01, 1,000,000,000 ordinary shares authorized at September 30, 2018; 36,707,685 and 66,484,159 issued and outstanding at December 31, 2017 and September 30, 2018, respectively	367			665
Preferred shares, par value $0.01, 100,000,000 shares authorized at September 30, 2018; None issued and outstanding	—			—
Additional paid in capital	360,872			458,887
Accumulated other comprehensive income	27			27
Accumulated deficit	(279,198		)	(363,153		)
Total stockholders’ equity	82,068			96,426
Total liabilities and stockholders’ equity	$	95,763		$	112,445

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

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NABRIVA THERAPEUTICS plc

Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share data)	2017			2018			2017			2018
Revenues:
Collaboration revenue	$	—		$	—		$	—		$	6,500
Research premium and grant revenue	1,468			461			4,197			2,359
Total revenue	1,468			461			4,197			8,859
Operating expenses:
Research and development	(12,668		)	(40,804		)	(36,371		)	(60,800		)
General and administrative	(9,525		)	(12,582		)	(19,313		)	(31,555		)
Total operating expenses	(22,193		)	(53,386		)	(55,684		)	(92,355		)
Loss from operations	(20,725		)	(52,925		)	(51,487		)	(83,496		)
Other income (expense):
Other income (expense), net	301			(54		)	391			(172		)
Interest income	69			11			302			39
Interest expense	(42		)	(8		)	(46		)	(19		)
Loss before income taxes	(20,397		)	(52,976		)	(50,840		)	(83,648		)
Income tax benefit (expense)	(1,872		)	151			(1,254		)	(307		)
Net loss	(22,269		)	(52,825		)	(52,094		)	(83,955		)
Other comprehensive income (loss), net of tax
Unrealized gains (losses) on available-for-sale financial assets	69			—			43			—
Other comprehensive income (loss), net of tax	69			—			43			—
Comprehensive loss	$	(22,200	)	$	(52,825	)	$	(52,051	)	$	(83,955	)

Loss per share
Basic and Diluted ($ per share)	$	(0.79	)	$	(0.90	)	$	(1.89	)	$	(1.85	)

Weighted average number of shares:
Basic and Diluted	28,147,226			58,442,987			27,517,267			45,369,040

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

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NABRIVA THERAPEUTICS plc

Consolidated Statements of Cash Flows (unaudited)

	Nine Months Ended September 30,
(in thousands)	2017			2018
Cash flows from operating activities
Net loss	$	(52,094	)	$	(83,955	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash other expense, net	(1,356		)	167
Non-cash interest income	—			(57		)
Depreciation and amortization expense	295			391
Stock-based compensation	4,538			3,434
In-process research and development	—			31,930
Deferred income taxes	1,410			—
Other, net	147			12
Changes in operating assets and liabilities:
Changes in long-term receivables	—			(3		)
Changes in other receivables and prepaid expenses	1,554			(2,361		)
Changes in accounts payable	2,632			(1,473		)
Changes in accrued expenses and other liabilities	(2,404		)	1,137
Changes in other non-current liabilities	27			41
Changes in income tax liabilities	(15		)	245
Net cash used in operating activities	(45,266		)	(50,492		)
Cash flows from investing activities
Purchases of plant and equipment and intangible assets	(1,141		)	(209		)
Purchases of term deposits	—			(216		)
Proceeds from sales of property, plant and equipment	2			—
Proceeds from sales of available-for-sale securities	50,500			—
Transaction costs related to Zavante acquisition, net of cash acquired	—			(3,950		)
Net cash provided by (used in) investing activities	49,361			(4,375		)
Cash flows from financing activities
Proceeds from September 2017 public offering	80,000			—
Proceeds from July 2018 public offering	—			50,000
Proceeds from at-the-market facility	—			22,784
Proceeds from long-term debt	228			535
Proceeds from exercise of stock options	83			—
Equity transaction costs	(6,382		)	(4,723		)
Net cash provided by financing activities	73,929			68,596

Effects of foreign currency translation on cash and cash equivalents	1,356			(167		)
Net increase in cash and cash equivalents	79,380			13,562
Cash and cash equivalents at beginning of period	32,778			86,769
Cash and cash equivalents at end of period	$	112,158		$	100,331

Supplemental disclosure of cash flow information:
Transaction costs related to Zavante acquisition included in accounts payable and accrued expensed	$	—		$	243

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

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

1. Organization and Business Activities

Nabriva Therapeutics plc (“Nabriva Ireland”), together with its wholly owned and consolidated subsidiaries, Nabriva Therapeutics GmbH (“Nabriva Austria”), Nabriva Therapeutics US, Inc., Nabriva Therapeutics Ireland DAC, and Nabriva Therapeutics One DAC (In Voluntary Liquidation) (collectively, “Nabriva”, the “Nabriva Group” or the “Company”) is a clinical stage biopharmaceutical company engaged in the research and development of novel anti-infective agents to treat serious infections. The Company’s headquarters are located at 25-28 North Wall Quay, Dublin, Ireland.

On July 23, 2018, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) for the acquisition of Zavante Therapeutics Inc, (“Zavante”) a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection). CONTEPO is a potentially first-in-class epoxide intravenous antibiotic in the United States with a broad spectrum of bactericidal Gram-negative and Gram-positive activity, including activity against many contemporary multi-drug resistant strains that threaten hospitalized patients.

Liquidity

Since its inception, the Company has incurred net losses and generated negative cash flows from its operations. To date, it has financed its operations through the sale of equity securities, convertible debt financings and research and development support from governmental grants and loans. As of September 30, 2018, the Company had cash, cash equivalents and short-term investments of $100.7 million.

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

As of the date of this filing , management assessed the Company’s ability to continue as a going concern and determined that it expects that its existing cash, cash equivalents and short-term investments, as well as anticipated near-term milestone payments under its license agreement with Sinovant Sciences, Ltd. and anticipated research premiums from the Austrian government for its qualified 2017 research and development expenditures, will be sufficient to enable the Company to fund its operating expenses and capital expenditure requirements into the first quarter of 2020, subject to a successful commercial launch in the United States of lefamulin for CABP and CONTEPO for cUTI in 2019. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could use its capital resources sooner than it currently expects.

The Company’s expenses will increase if it suffers any regulatory delays or is required to conduct additional clinical trials to satisfy regulatory requirements. If the Company obtains marketing approval for lefamulin, CONTEPO or any other product candidate that it develops, it expects to incur significant commercialization expenses related to product sales, marketing, distribution and

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

manufacturing. The Company will continue to invest in critical pre-commercialization and supply chain activities prior to potentially receiving marketing approval and making lefamulin and CONTEPO available to patients.

The Company expects to seek additional funding in future periods for purposes of investment in its commercial and medical affairs organization as well as investing in its supply chain, including building active pharmaceutical ingredient safety stock for the commercial supply of lefamulin and CONTEPO, in an effort to enhance the potential commercial launch of lefamulin and CONTEPO.

In March 2018, the Company entered into a Controlled Equity Offering SM Sales Agreement (the “ATM Agreement”), with Cantor Fitzgerald & Co. (“Cantor”), pursuant to which, from time to time, the Company may offer and sell its ordinary shares having aggregate gross proceeds of up to $50.0 million through Cantor. As of September 30, 2018, the Company has issued and sold an aggregate of 4,243,096 ordinary shares under the ATM Agreement, for gross proceeds of $22.8 million, and net proceeds of $22.2 million, after deducting commissions. From September 30, 2018 to the date of this filing, the Company issued and sold an aggregate of 497,935 ordinary shares under the ATM Agreement, for gross proceeds of $1.4 million, and net proceeds of $1.3 million, after deducting commissions.

On July 31, 2018, the Company completed an underwritten public offering of 18,181,818 ordinary shares at a public offering price of $2.75 per share, resulting in gross proceeds of $50.0 million and net proceeds to the Company of $46.1 million, after deducting underwriting discounts and commissions and offering expenses (the “Public Offering”).

2. Summary of Significant Accounting Policies

Basis of Preparation

The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and U.S. Securities and Exchange Commission (“SEC”) regulations for quarterly reporting. The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial information as of September 30, 2018 and for the three months and nine months ended September 30, 2017 and 2018 are unaudited. The December 31, 2017 balance sheet was derived from audited consolidated financial statements but does not include all disclosures required by US GAAP. The interim unaudited consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2018 and for the three and nine months ended September 30, 2017 and 2018. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2017 and 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018, any other interim periods or any future year or period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2017 contained in the Company’s Annual Report on Form 10-K, as filed with the SEC on March 16, 2018.

The Company’s significant accounting policies are described in Note 2 of the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date.

Adopted as of the current period:

· In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers , an updated standard on revenue recognition. ASU 2014-09 provides enhancements to the quality and consistency of how revenue is reported by companies while also improving comparability in the financial statements of companies reporting using International Financial Reporting Standards or US GAAP. The main purpose of the new standard is for companies to

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also results in enhanced revenue disclosures, guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements. The effective date of ASU 2014-09 for the Company is the first quarter of fiscal year 2018. The adoption of ASU 2014-09 did not have an impact on the Company.

· In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation : Scope of Modification Accounting . ASU 2017-09 clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718, Compensation—Stock Compensation . ASU 2017-09 is effective for annual periods beginning after December 15, 2017. An entity should apply the amendments prospectively to a modification that occurs on or after the adoption date. The Company adopted ASU 2017-09 in the first quarter of fiscal year 2018. The impact of adopting this standard did not have a material effect on the Company’s financial position, results of operation or cash flow and related disclosures.

To be adopted in future periods:

· In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends, among other things, the existing guidance by requiring lessees to recognize lease assets (right-of-use) and liabilities (for reasonably certain lease payments) arising from operating leases on the balance sheet. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. For leases with a term of twelve months or less, ASU 2016-02 permits an entity to make an accounting policy election to not recognize a right-of-use asset nor lease liability, but rather to recognize such leases as lease expense, generally on a straight-line basis over the lease term. Originally, entities were required to adopt ASU 2016-02 using a modified retrospective approach, at the beginning of the earliest comparative period presented in the financial statements. However, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements , which provides an optional transition method to apply the initial application of the new accounting standard at the adoption date and the recognition of a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of the period of adoption. On January 1, 2019, the Company will adopt ASU 2016-02 and intends to elect certain practical expedients, including the optional transition method that allows for the application of the new standard at its adoption date. The comparative financial information will not be restated and will continue to be reported under the previous lease standard in effect during those periods.

The Company is in process of evaluating the impact of ASU 2016-02 will have on its consolidated financial statements and expects to recognize lease-related assets and liabilities on its consolidated balance sheets; however, the Company does not expect to have a material impact on its consolidated statements of operations or cash flows. Upon adoption, the Company expects that its financial statement disclosures will be expanded to present additional details of its leasing arrangements. While the Company continues to evaluate the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures, the actual impact of the standard will be dependent upon the Company’s lease portfolio at adoption.

· In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): “Improvements to Nonemployee Share-Based Payment Accounting,” which largely aligns the accounting for share-based payment awards issued to nonemployees with the accounting for share-based payment awards issued to employees. Under previous GAAP, the accounting for nonemployee share-based payments differed from that applied to employee awards, particularly with regard to the measurement date and the impact of performance conditions. Under the new guidance, (i) equity-classified share-based payment awards issued to nonemployees will be measured at the grant date, instead of the previous requirement to remeasure the awards through the performance completion date, (ii) for performance conditions, compensation cost associated with the award will be recognized when the achievement of the performance condition is probable, rather than upon achievement of the performance condition, and (iii) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. This new guidance will be effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company does not expect the adoption of the new guidance to have a material effect on its financial statements.

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

3. Fair Value Measurement

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

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

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

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

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

(in thousands)	Level 1		Level 2		Level 3		Total
December 31, 2017
Assets:
Short-term investments:
Available-for-sale securities	$	—	$	50	$	—	$	50
Term deposits	60		—		—		60
Total Assets	$	60	$	50	$	—	$	110

(in thousands)	Level 1		Level 2		Level 3		Total
September 30, 2018
Assets:
Short-term investments:
Available-for-sale securities	$	—	$	151	$	—	$	151
Term deposits	175		—		—		175
Total Assets	$	175	$	151	$	—	$	326

As of September 30, 2018 and December 31, 2017, the Company held short-term investments classified as both Level 1 and Level 2, and the Company did not hold any Level 3 financial instruments measured at fair value. There were no transfers between Level 1 and 2 in the nine months ended September 30, 2018 or the year ended December 31, 2017. There were no changes in valuation techniques during the nine months ended September 30, 2018.

As of September 30, 2018 and December 31, 2017, the Company did not hold any financial instruments as liabilities that were held at fair value. Other receivables and accounts payable are carried at their historical cost which approximates fair value due to their short-term nature.

4. Accrued Expenses and Other Liabilities

(in thousands)	As of December 31, 2017		As of September 30, 2018
Research and development related costs	$	2,308	$	3,395
Payroll and related costs	4,426		4,882
Accounting, tax and audit services	231		232
Other	1,159		1,791
Total other current liabilities	$	8,124	$	10,300

5. Revenue

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2017		2018		2017		2018
Collaboration revenues	$	—	$	—	$	—	$	6,500
Research premium	1,277		427		3,653		1,907
Government grants	163		34		464		452
Grants from WWFF	28		—		80		—
Total	$	1,468	$	461	$	4,197	$	8,859

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

The collaboration revenues for the nine months ended September 30, 2018 reflect the income recorded from the Sinovant License Agreement (see Note 10) and includes the $5.0 million non-refundable upfront payment received in the first quarter of 2018 as consideration for entering into the Sinovant License Agreement as well as $1.5 million of variable consideration related a future milestone payment that the Company believes is probable to be met and received.

6. Share-Based Payments

Stock Option Plan 2015

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

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

The following table summarizes information regarding our stock option awards under the SOP 2015 for the nine months ended September 30, 2018:

Stock Option Plan 2015	Options		Weighted average exercise price in $ per share	Aggregate intrinsic value
Outstanding as of January 1, 2018	3,044,899		8.35
Granted	—		—
Exercised	—		—
Forfeited	(171,300	)	8.38
Outstanding as of September 30, 2018	2,873,599		8.34	$	—
Vested and exercisable as of September 30, 2018	1,693,267		8.07	$	—

Stock-based compensation expense under the SOP 2015 was $0.9 million and $2.2 million for the three and nine months ended September 30, 2018, respectively, and $1.6 million and $4.5 million for the three and nine months ended September 30, 2017, respectively.

The weighted average remaining contractual life of the options as of September 30, 2018 is 7.7 years.

As of September 30, 2018, there was $6.4 million of total unrecognized compensation expense, related to unvested options granted under the SOP 2015, which will be recognized over the weighted-average remaining vesting period of 1.1 years.

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

2017 Share Incentive Plan

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

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

At September 30, 2018, 5,033,692 ordinary shares were available for issuance under the 2017 Plan.

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

The following table summarizes information regarding our stock option awards under the 2017 Plan for the nine months ended September 30, 2018:

2017 Plan	Options		Weighted average exercise price in $ per share	Aggregate intrinsic value
Outstanding as of January 1, 2018	294,100		6.92
Granted	2,005,525		5.57
Exercised	—		—
Forfeited	(86,500	)	6.78
Outstanding as of September 30, 2018	2,213,125		5.72	$	17
Vested and exercisable as of September 30, 2018	78,100		7.16	—

Stock-based compensation expense under the 2017 Plan was $0.5 million and $1.2 million for the three and nine months ended September 30, 2018, respectively. The weighted average fair value of the options granted during the nine months ended September 30, 2018 was $3.25 per share. The options granted in the nine months ended September 30, 2018 were valued based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:

Input parameters
Range of expected volatility		59.8% - 61.0%
Expected term of options (in years)		6.1
Range of risk-free interest rate		2.6% - 3.0%
Dividend yield		—

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

The weighted average remaining contractual life of the options as of September 30, 2018 is 9.5 years.

As of September 30, 2018, there was $6.0 million of total unrecognized compensation expense, related to unvested options granted under the 2017 Plan, which will be recognized over the weighted-average remaining vesting period of 1.6 years.

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

Restricted Stock Units

During the nine months ended September 30, 2018, the Company granted 371,550 RSUs with a grant date fair value of $6.13 per share. As of September 30, 2018, there were 358,100 RSUs outstanding. Vesting of the RSUs is subject to U.S. Food and Drug Administration (“FDA”), approval of a new drug application (“NDA”), for lefamulin. Fifty percent (50%) of each RSU award will vest upon FDA approval of an NDA for lefamulin, and the remaining fifty percent (50%) will vest on the one-year anniversary of such approval. If the FDA does not approve an NDA for lefamulin within two years of the grant date, the RSU award will terminate in full. No compensation expense was recognized for the RSUs as vesting is not probable at September 30, 2018.

Inducement Awards

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

Stock-based compensation expense was $0.1 million for the three and nine months ended September 30, 2018, respectively. The performance-based restricted share units had a grant date fair value of $3.53 per share and the options had a grant date fair value of $2.05 per share based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:

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

The weighted average remaining contractual life of the options as of September 30, 2018 is 9.8 years.

As of September 30, 2018, there was $1.7 million of total unrecognized compensation expense, related to unvested inducement award options granted, which will be recognized over the weighted-average remaining vesting period of 2.0 years.

Employee Stock Purchase Plan

The Company’s board of directors adopted, and in August 2018 Company’s stockholders approved, the 2018 employee stock purchase plan (the “2018 ESPP”). The maximum aggregate number of shares of ordinary shares that may be purchased under the 2018 ESPP is 500,000 shares, (the “ESPP Share Pool”), subject to adjustment as provided for in the 2018 ESPP. The ESPP Share Pool represented 0.8% of the total number of shares of ordinary shares outstanding as of September 30, 2018. The 2018 ESPP allows eligible employees to purchase shares at a 15% discount to the then current market price of the Company’s ordinary shares during certain offering periods, which will be six -month periods commencing November 1 and ending April 30 and commencing May1 and ending October 31 of each year. The first offering under the 2018 ESPP commenced on November 1, 2018.

7. Income Tax (Expense) Benefit

For the three months ended September 30, 2018 the Company recorded a tax benefit of $0.2 million and for the three months ended September 30, 2017, the Company recorded a tax expense of $1.9 million, respectively. For the nine months ended September 30, 2018 and 2017, the Company recorded a tax expense of $0.3 million $1.3 million, respectively.

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax bases of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of its deferred tax assets. On the basis of this evaluation, as of September 30, 2018 and December 31, 2017, the Company has recorded a valuation allowance of $96.3 million and $80.1 million, respectively. The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company’s projections for growth.

On July 24, 2018, the Company completed the acquisition of Zavante which included net operating loss and research and development tax credit attributes. The tax attributes are subject to an annual limitation as a result of the acquisition which constitutes a change of ownership as defined under Internal Revenue Code Section 382.

8. Earnings (Loss) per Share

Basic and diluted loss per share

For the three and nine months ended September 30, 2017 and 2018, basic and diluted net loss per share was determined by dividing net loss attributable to shareholders by the weighted average number of shares outstanding during the period. Diluted net loss per share is the same as basic net loss per share during the periods presented as the effects of the Company’s potential common stock equivalents are antidilutive and thus not included in the calculation.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2017			2018			2017			2018
Net loss for the period	$	(22,269	)	$	(52,825	)	$	(52,094	)	$	(83,955	)
Weighted average number of shares outstanding	28,147,226			58,442,987			27,517,267			45,369,040
Basic and diluted loss per share	$	(0.79	)	$	(0.90	)	$	(1.89	)	$	(1.85	)

The following ordinary share equivalents were excluded from the calculations of diluted earnings per share as their effect would be anti-dilutive:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2018	2017	2018
Stock option awards	3,294,240	5,936,724	3,294,240	5,936,724
Restricted stock units	—	508,100	—	508,100

9. Acquisition of Zavante

On July 24, 2018, the Company acquired Zavante. The Acquisition was completed on July 24, 2018 (the “Closing”). In connection with the Closing, the Company issued 7,336,906 Company ordinary shares to former Zavante stockholders, which together with the 815,186 ordinary shares that are issuable upon release of the Holdback Shares (as defined below) constitute approximately 19.9% of the Company ordinary shares outstanding as of immediately prior to the Closing (the “Upfront Shares”).

Pursuant to the Merger Agreement, former Zavante stockholders and other equity holders, in the aggregate and subject to the terms and conditions of the Merger Agreement, will also be entitled to receive from the Company up to $97.5 million in contingent consideration, of which $25.0 million would become payable upon the first approval of a NDA from the FDA for fosfomycin for injection for any indication (the “Approval Milestone Payment”) and an aggregate of up to $72.5 million would become payable upon the achievement of specified sales milestones (the “Net Sales Milestone Payments”).

At the Company’s Extraordinary General Meeting of Shareholders held in October 2018, the shareholders approved the issuance of the Company’s ordinary shares in settlement of potential milestone payment obligations that may become payable in the future to former Zavante stockholders, including the Approval Milestone Payment which will be settled in Company ordinary shares. The

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

Company also now has the right to settle the Net Sales Milestone Payments in Company ordinary shares, except as otherwise provided in the Merger Agreement.

Subject to the terms of the Merger Agreement, 10% of the Upfront Shares (the “Holdback Shares”) will serve as a source for the satisfaction of indemnification and other obligations of the former Zavante stockholders and, subject to reduction in respect of these obligations, will be issued to the former Zavante stockholders following the first anniversary of the Closing.

Former Zavante stockholders who do not comply with specified procedural requirements set forth in the Merger Agreement, and former holders of Zavante options and warrants, will receive cash in lieu of any Company ordinary shares that otherwise would be issuable to them pursuant to the Merger Agreement. As of September 30, 2018 the Company did not distribute any cash in lieu of ordinary shares to former Zavante stockholders. Also, the Company anticipates that cash distributions, if any, will not be material.

The Company accounted for the Acquisition as an asset acquisition as the arrangement did not meet the definition of a business pursuant to the guidance prescribed in ASC Topic 805, Business Combinations . The Company concluded the Acquisition did not meet the definition of a business because the transaction resulted in the acquisition of the exclusive rights to IV fosfomycin in the U.S. which is a single identifiable asset and represents substantially all the fair value of the assets acquired.

The Company expensed the acquired intellectual property as of the acquisition date as in- process research and development with no alternative future uses. The Company recorded an in-process research and development expense of $31.9 million which represents $26.9 million for the fair value of the Upfront Shares, $4.8 million of transaction costs and $0.2 million of net liabilities assumed.

In addition, the Company assumed certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by the Company upon closing of the Acquisition. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Acquisition of Zavante” for further information regarding the agreements that were assumed by the Company.

10. Sinovant License Agreement

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

Under the License Agreement, Sinovant and the Company’s subsidiaries have established a joint development committee (the “JDC’), to review and oversee development and commercialization plans in the Territory. The Company received a non-refundable $5.0 million upfront payment pursuant to the terms of the License Agreement and will be eligible for up to an additional $91.5 million in milestone payments upon the achievement of certain regulatory and commercial milestone events related to lefamulin for CABP, plus an additional $4.0 million in milestone payments if any Licensed Product receives a second or any subsequent regulatory approval in the People’s Republic of China. The first milestone is a $1.5 million payment for the submission of a clinical trial application (“CTA”), by Sinovant to the Chinese Food and Drug Administration, which is planned for the fourth quarter of 2018. The remaining milestone payments are tied to additional regulatory approvals and annual sales targets. In addition, the Company will be eligible to receive low double-digit royalties on sales, if any, of Licensed Products in the Territory.

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

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

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NABRIVA THERAPEUTICS plc

Notes to the Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

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

The Company has identified two performance obligations at inception: (1) the delivery of the licenses to Sinovant; and, (2) the participation in the JDC. The $5.0 million non-refundable upfront payment was allocated to the delivery of the licenses as the JDC deliverable was deemed to be de minimis. In addition, since the first $1.5 million milestone payment related to the submission of the CTA is within the control of the parties and is scheduled for submission in the fourth quarter of this year, the Company recorded such milestone as variable consideration allocated to the licenses at the inception of the arrangement as the Company believes it is probable to be met and received. The future regulatory and commercial milestone payments will be accounted for on an “as incurred basis” and recorded during the period the milestones are achieved.

11. Commitments and Contingencies

During the nine months ended September 30, 2018, there were no material changes outside the ordinary course of the Company’s business to its contractual obligations as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 other than the supply agreements assumed as a result of the Zavante Acquisition. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Acquisition of Zavante” for further information regarding the agreements that were assumed by the Company.

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

12. Subsequent Events

The Company evaluated all events or transactions that occurred subsequent to September 30, 2018 through the date the unaudited consolidated financial statements were issued, and have not identified any such events material to an understanding of the unaudited consolidated financial statements.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our historical consolidated financial statements and the related notes thereto appearing in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 16, 2018. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical stage biopharmaceutical company engaged in the research and development of novel anti-infective agents to treat serious infections. We have two product candidates that are in late stage development: lefamulin, under development to potentially be the first pleuromutilin antibiotic available for systemic administration in humans, and CONTEPO, a potentially first-in-class epoxide intravenous, or IV, antibiotic in the United States. We are developing both IV and oral formulations of lefamulin for the treatment of community-acquired bacterial pneumonia, or CABP. We are developing CONTEPO IV for complicated urinary tract infections, or cUTI. We may potentially develop lefamulin and CONTEPO for additional indications.

On July 24, 2018, we completed the acquisition, or the Acquisition, of Zavante Therapeutics, Inc., or Zavante, a privately-held late clinical-stage biopharmaceutical company focused on developing novel therapies to improve the outcomes of hospitalized patients. Zavante’s lead product candidate is CONTEPO (fosfomycin for injection).

We submitted a new drug application (“NDA”) for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States, utilizing the U.S. Food and Drug Administration, or the FDA’s, 505(b)(2) pathway, in October 2018. We expect to submit an NDA for marketing approval of lefamulin for the treatment of CABP in adults in the United States in the fourth quarter of 2018. We also expect to submit a marketing authorization application, or MAA, for lefamulin for the treatment of CABP in adults in Europe a few months after our NDA filing. Both lefamulin and CONTEPO have been granted qualified infectious disease product designation by the FDA. The FDA has granted fast track designation to CONTEPO under the Generating Antibiotics Incentives Now Act, or the GAIN Act, and we plan to apply for fast track designation for lefamulin, which would allow for potential approval of both lefamulin and CONTEPO in 2019. We currently have a team of regional business directors and medical science liaisons in the field performing educational and market development activities. We plan to use a targeted hospital-based sales force to promote both lefamulin and CONTEPO, if approved.

We initiated the first of two pivotal, international Phase 3 clinical trials of lefamulin, which we refer to as Lefamulin Evaluation Against Pneumonia 1, or LEAP 1, in September 2015 and initiated the second trial, which we refer to as LEAP 2, in April 2016. On September 18, 2017, we announced positive topline results for LEAP 1. In LEAP 1, which enrolled 551 patients, lefamulin met all of the primary endpoints of non-inferiority compared to moxifloxacin with or without linezolid as required by the FDA and European Medicines Agency, or EMA. On May 21, 2018, we announced positive topline results for LEAP 2. In LEAP 2, which enrolled 738 patients, lefamulin met all of the primary endpoints of non-inferiority compared to moxifloxacin as required by the FDA and EMA. In both LEAP 1 and LEAP 2, lefamulin was generally well tolerated.

In June 2016, the first patient was enrolled by Zavante in its pivotal ZTI-01 Efficacy and Safety Study, which we refer to as the ZEUS Study. In April 2017, Zavante announced positive topline results of the ZEUS Study. The ZEUS Study was a multicenter, randomized, parallel-group, double-blind Phase 2/3 clinical trial designed to evaluate safety, tolerability, efficacy and pharmacokinetics of seven days of treatment, or up to 14 days of treatment for patients with concurrent bacteremia, with CONTEPO compared to piperacillin-tazobactam, or PIP-TAZ, in the treatment of hospitalized adults with cUTI or acute pyelonephritis, or AP. In June 2018, Zavante initiated a Phase 1, non-comparative, open-label study of the pharmacokinetics and safety of a single dose of CONTEPO in pediatric subjects less than 12 years of age receiving standard-of-care antibiotic therapy for proven or suspected infection or peri-operative prophylaxis. We anticipate completing enrollment in this study in late 2020.

Since inception, we have incurred significant operating losses. As of September 30, 2018, we had an accumulated deficit of $363.2 million. To date, we have financed our operations primarily through our 2018 equity offering, our “at-the-market” offering facility, our 2017 equity offering, our 2016 rights offering, our 2015 initial public offering, private placements of our equity securities, convertible loans and research and development support from governmental grants and loans. We have devoted substantially all of our efforts to research and development, including clinical trials. Our ability to generate profits from operations and remain profitable depends on our ability to successfully develop and commercialize drugs that generate significant revenue.

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We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect to continue to invest in critical pre-commercialization and supply chain activities prior to potentially receiving marketing approval and making lefamulin and CONTEPO available to patients.

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

Based on our current plans, we do not expect to generate significant revenue unless and until we obtain marketing approval for, and commercialize, lefamulin and CONTEPO. We do not expect to obtain marketing approval before 2019, if at all. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Adequate additional financing may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization effort.

Acquisition of Zavante

On July 24, 2018, we acquired Zavante, a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection) to improve the outcomes of hospitalized patients.

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

Upon the Closing, we issued 7,336,906 of our ordinary shares to former Zavante stockholders, which together with the 815,186 ordinary shares that are issuable upon release of the Holdback Shares (as defined below) constitute approximately 19.9% of our ordinary shares outstanding as of immediately prior to the Closing, or the Upfront Shares.

Pursuant to the Merger Agreement, former Zavante stockholders and other equity holders, in the aggregate and subject to the terms and conditions of the Merger Agreement, will also be entitled to receive from us up to $97.5 million in contingent consideration, of which $25.0 million would become payable upon the first approval of a new drug application from the U.S. Food and Drug Administration, or the FDA, for fosfomycin for injection for any indication, or the Approval Milestone Payment, and an aggregate of up to $72.5 million would become payable upon the achievement of specified sales milestones, or the Net Sales Milestone Payments.

At our Extraordinary General Meeting of Shareholders held in October 2018, our shareholders approved the issuance of ordinary shares in settlement of potential milestone payment obligations that may become payable in the future to former Zavante stockholders, including the Approval Milestone Payment which will be settled in our ordinary shares. We also now have the right to settle the Net Sales Milestone Payments in our ordinary shares, except as otherwise provided in the Merger Agreement.

Subject to the terms of the Merger Agreement, 10% of the Upfront Shares, or the Holdback Shares, will serve as a source for the satisfaction of indemnification and other obligations of the former Zavante stockholders and, subject to reduction in respect of these obligations, will be issued to the former Zavante stockholders following the first anniversary of the Closing.

In addition, we assumed certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by us upon closing of the Acquisition. Prior to the Acquisition Zavante was obligated to make milestone payments to the former stockholders of $3.0 million upon marketing approval by the FDA with respect to any oral, intravenous or other form of fosfomycin, or the Zavante Products, and milestone payments of up to $26.0 million in the aggregate upon the occurrence of various specified levels of net sales with respect to the Zavante Products. In addition, Zavante is obligated to make annual royalty payments of a mid-single-digit percentage of net sales of Zavante Products, subject to adjustment based on net sales thresholds and with such percentage reduced to low single-digits if generic fosfomycin products account for half of the applicable market on a product-by-product and country-by-country basis. Zavante will also pay a mid-single-digit percentage of transaction revenue in connection with

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the consummation of the grant, sale, license or transfer of market exclusivity rights for a qualified infectious disease product (within the meaning of the 21st Century Cures Act, or the Cures Act) related to a Zavante Product.

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

In connection with the closing of the Acquisition, we have assumed other agreements entered into by Zavante, including, among others, an R&D office lease, a collaboration agreement governing the supply and manufacturing agreements described above and a commercial packaging agreement.

We accounted for the Acquisition as an asset acquisition as the arrangement did not meet the definition of a business pursuant to the guidance prescribed in ASC Topic 805, Business Combinations . We concluded the Acquisition did not meet the definition of a business because the transaction principally resulted in the acquisition of the exclusive rights to IV fosfomycin in the U.S. which is a single identifiable asset and represents substantially all the fair value of the assets acquired.

We expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses. We recorded an in-process research and development expense of $31.9 million which represents $26.9 million for the fair value of the Upfront Shares, $4.8 million of transaction costs and $0.2 million of net liabilities assumed.

License Agreement with Sinovant Sciences, Ltd.

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

Under the Sinovant License Agreement, Sinovant and our subsidiaries have established a joint development committee, or the JDC, to review and oversee development and commercialization plans in the Territory. We received a $5.0 million upfront payment pursuant to the terms of the Sinovant License Agreement and will be eligible for up to an additional $91.5 million in milestone payments upon the achievement of certain regulatory and commercial milestone events related to lefamulin for CABP, plus an additional $4.0 million in milestone payments if any Licensed Product receives a second or any subsequent regulatory approval in the People’s Republic of China. The first milestone is a $1.5 million payment for the submission of a clinical trial application by Sinovant to the Chinese Food and Drug Administration, which is expected in the fourth quarter of 2018. The remaining milestone payments are tied to additional regulatory approvals and annual sales targets. In addition, we will be eligible to receive low double-digit royalties on sales, if any, of Licensed Products in the Territory.

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

Unless earlier terminated, the Sinovant License Agreement will expire upon the expiration of the last royalty term for the last Licensed Product in the Territory, which we expect will occur in 2033. Following the expiration of the last royalty term, the license granted to Sinovant will become non-exclusive, fully-paid, royalty-free and irrevocable. The Sinovant License Agreement may be terminated in its entirety by Sinovant upon 180 days’ prior written notice at any time. Either party may, subject to specified cure periods, terminate the Sinovant License Agreement in the event of the other party’s uncured material breach. Either party may also terminate the Sinovant License Agreement under specified circumstances relating to the other party’s insolvency. We have the right to

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terminate the Sinovant License Agreement immediately if Sinovant does not reach certain development milestones by certain specified dates (subject to specified cure periods). The Sinovant License Agreement contemplates that the we will enter into ancillary agreements with Sinovant, including clinical and commercial supply agreements and a pharmacovigilance agreement.

We have identified two performance obligations at inception: (1) the delivery of the licenses to Sinovant; and, (2) the participation in the JDC. The $5.0 million non-refundable upfront payment was allocated entirely to the delivery of the licenses as the JDC deliverable was deemed to be de minimis. In addition, since the first $1.5 million milestone payment related to the submission of the CTA is in the control of the parties and is scheduled for submission in the fourth quarter of this year, we recorded such milestone as variable consideration allocated to the licenses at the inception of the arrangement as we believe it is probable to be met and received. The future regulatory and commercial milestone payments will be accounted for on an “as incurred basis” and recorded during the period the milestone is achieved.

Financial Operations Overview

Revenue

Based on our current plans, we do not expect to generate significant revenue unless and until we obtain marketing approval for, and commercialize, lefamulin and CONTEPO. We do not expect to obtain marketing approval for either product candidate before 2019, if at all. If our development efforts result in clinical success and regulatory approval, we may also enter into collaboration agreements with third parties and we may generate revenue from those agreements.

Our revenue consists principally of t he collaboration revenues recorded from the Sinovant License Agreement we entered into in March 2018, and includes a $5.0 million non-refundable upfront payment received as consideration for entering into the Sinovant License Agreement as well as $1.5 million of variable consideration related to a future milestone payment that we believe is probable to be met and received. Revenue also includes governmental research premiums, non-refundable government grants and the benefit of government loans at below-market interest rates, which are more fully described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2017.

Research and Development Expenses

Research and development expenses represented 65.3% and 65.8% of our total operating expenses for the nine months ended September 30, 2017 and 2018, respectively.

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

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

	Nine Months Ended September 30,
(in thousands)	2017		2018
Direct Costs
Lefamulin	$	25,077	$	13,986
CONTEPO	—		491
Other programs and initiatives	79		53
Indirect Costs	11,215		14,340
In-process research and development	—		31,930
Total	$	36,371	$	60,800

We expect to continue to incur research and development expenses in connection with our activities related to our planned NDA and MAA filings for marketing approval of lefamulin for the treatment of CABP, our ongoing pediatric studies of lefamulin for the treatment of CABP and of CONTEPO for the treatment of cUTI, the pursuit of the clinical development of lefamulin and

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CONTEPO for additional indications and engagement in earlier stage research and development activities. It is difficult to estimate the duration and completion costs of our research and development programs.

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

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

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

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

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

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

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

General and Administrative Expenses

General and administrative expenses represented 34.7% and 34.2% of our total operating expenses for the nine months ended September 30, 2017 and 2018, respectively.

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

We expect to incur significant marketing, commercial and manufacturing supply chain costs if we obtain marketing approval of lefamulin for the treatment of CABP or of CONTEPO for the treatment of cUTI.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2017. During the nine months ended September 30, 2018, there were no material changes to our critical accounting policies.

Results of Operations

Comparison of Three Months Ended September 30, 2017 and 2018

	Three Months Ended September 30,
(in thousands)	2017			2018			Change
Consolidated Operations Data:
Revenues	$	1,468		$	461		$	(1,007	)
Costs and Expenses:
Research and development	(12,668		)	(40,804		)	(28,136		)
General and administrative	(9,525		)	(12,582		)	(3,057		)
Total operating expenses	(22,193		)	(53,386		)	(31,193		)
Loss from operations	(20,725		)	(52,925		)	(32,200		)
Other income (expense):
Other income (expense), net	301			(54		)	(355		)
Interest income (expense), net	27			3			(24		)
Loss before income taxes	(20,397		)	(52,976		)	(32,579		)
Income tax benefit (expense)	(1,872		)	151			2,023
Net loss	$	(22,269	)	$	(52,825	)	$	(30,556	)

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Revenues

Revenues decreased by $1.0 million from $1.5 million for the three months ended September 30, 2017 to $0.5 million for the three months ended September 30, 2018, primarily due a decrease of grant revenue from research premiums provided to us by the Austrian government by $0.8 million as a result of a decrease in our research and development expenses for which we can receive grant revenue.

Research and Development Expenses

Research and development expenses increased by $28.1 million from $12.7 million for the three months ended September 30, 2017 to $40.8 million for the three months ended September 30, 2018. The increase was primarily due to a $31.9 million increase for in-process research and development expenses associated with the acquisition of Zavante assets, a $3.3 million increase in research consulting fees, partly offset by a $5.4 million decrease in research materials and purchased services related to the development of lefamulin, a $1.4 million decrease in stock-based compensation expense, a $0.2 million decrease in staff costs and a $0.2 million decrease in travel and infrastructure costs.

General and Administrative Expenses

General and administrative expense increased by $3.1 million from $9.5 million for the three months ended September 30, 2017 to $12.6 million for the three months ended September 30, 2018. The increase was primarily due to a $0.2 million increase of advisory and external consultancy expenses primarily related to pre-commercialization activities and professional service fees, a $3.4 million increase in staff costs due to the addition of employees and a $1.2 million increase in stock-based compensation expense, partly offset by a $0.2 million decrease in infrastructure costs and a $0.3 million decrease in travel and other corporate costs, and a $1.2 million decrease in legal fees.

Other Income (Expense), net

Other income (expense), decreased by $0.4 million from $0.3 million income for the three months ended September 30, 2017, to $0.1 million expense for the three months ended September 30, 2018. The decrease was primarily due to foreign currency.

Income Tax Benefit (Expense)

Our income tax expense was $1.9 million for the three months ended September 30, 2017 compared to an income tax benefit of $0.2 million income tax benefit for the three months ended September 30, 2018. The change was primarily due to the recognition of a valuation allowance on deferred tax assets in 2017.

Comparison of Nine Months Ended September 30, 2017 and 2018

	Nine Months Ended September 30,
(in thousands)	2017			2018			Change
Consolidated Operations Data:
Revenues	$	4,197		$	8,859		$	4,662
Costs and Expenses:
Research and development	(36,371		)	(60,800		)	(24,429		)
General and administrative	(19,313		)	(31,555		)	(12,242		)
Total operating expenses	(55,684		)	(92,355		)	(36,671		)
Loss from operations	(51,487		)	(83,496		)	(32,009		)
Other income (expense):
Other income (expense), net	391			(172		)	(563		)
Interest income (expense), net	256			20			(236		)
Loss before income taxes	(50,840		)	(83,648		)	(32,808		)
Income tax expense	(1,254		)	(307		)	947
Net loss	$	(52,094	)	$	(83,955	)	$	(31,861	)

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Revenues

Revenues increased by $4.7 million from $4.2 million for the nine months ended September 30, 2017 to $8.9 million for the nine months ended September 30, 2018, primarily due to the $5.0 million upfront payment received from our Sinovant License Agreement as well as $1.5 million of variable consideration related to a future milestone payment that we believe is probable to be met and received. Grant revenue from research premiums provided to us by the Austrian government decreased by $1.8 million as a result of a decrease in our research and development expenses for which we can receive grant revenue.

Research and Development Expenses

Research and development expenses increased by $24.4 million from $36.4 million for the nine months ended September 30, 2017 to $60.8 million for the nine months ended September 30, 2018. The increase was primarily due to a $31.9 million increase for in-process research and development expenses associated with the acquisition of Zavante assets, a $4.1 million increase in research consulting fees, a $0.5 million increase in staff costs due to the addition of employees, a $0.2 million increase in travel and infrastructure costs, partly offset by a $10.7 million decrease in research materials and purchased services related to the development of lefamulin and a $1.7 million decrease in stock-based compensation expense.

General and Administrative Expenses

General and administrative expense increased by $12.3 million from $19.3 million for the nine months ended September 30, 2017 to $31.6 million for the nine months ended September 30, 2018. The increase was primarily due to a $4.7 million increase of advisory and external consultancy expenses primarily related to pre-commercialization activities and professional service fees, a $8.1 million increase in staff costs due to the addition of employees, a $0.6 million increase in stock-based compensation expense, a $0.3 million increase in infrastructure costs and a $0.4 million increase in travel and other corporate costs, partly offset by a $1.8 million decrease in legal fees.

Other Income (Expense), net

Other income (expense), net decreased by $0.6 million from $0.4 million income for the nine months ended September 30, 2017, to $0.2 million expense for the nine months ended September 30, 2018 due to foreign currency.

Income Tax Expense

Our income tax expense was $1.3 million for the nine months ended September 30, 2017 compared to $0.3 million for the nine months ended September 30, 2018. The change to income tax expense was primarily due to the recognition of a valuation allowance on deferred tax assets in 2017.

Liquidity and Capital Resources

Since our inception, we have incurred net losses and generated negative cash flows from our operations. To date, we have financed our operations through the sale of equity securities, including our initial public offering of ADSs, public offering of our ordinary shares and private placements of our equity securities, convertible debt financings and research and development support from governmental grants and loans.

As of September 30, 2018, we had cash and cash equivalents and short-term investments of $100.7 million.

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In March 2018, we entered into a Controlled Equity Offering SM Sales Agreement, or the ATM Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which, from time to time, we may offer and sell our ordinary shares having aggregate gross proceeds of up to $50.0 million through Cantor. As of September 30, 2018, we issued and sold an aggregate of 4,243,096 ordinary shares under the ATM Agreement, for gross proceeds of $22.8 million, and net proceeds of $22.2 million, after deducting commissions. From September 30, 2018 to the date of this filing, we have issued and sold an aggregate of 497,935 ordinary shares under the ATM Agreement, for gross proceeds of $1.4 million, and net proceeds of $1.3 million, after deducting commissions.

On July 31, 2018, we completed an underwritten public offering of 18,181,818 ordinary shares at a public offering price of $2.75 per share, resulting in gross proceeds of $50.0 million and net proceeds to us of $46.1 million, after deducting underwriting discounts and commissions and offering expenses.

Cash Flows

Comparison of Nine Months Ended September 30, 2017 and 2018

The following table summarizes our cash flows for the nine months ended September 30, 2017 and 2018:

	Nine Months Ended September 30,
(in thousands)	2017			2018
Net cash (used in) provided by:
Operating activities	$	(45,266	)	$	(50.492	)
Investing activities	49,361			(4,375		)
Financing activities	73,929			68,596
Effects of foreign currency translation on cash	1,356			(167		)
Net increase in cash	$	79,380		$	13,562

Operating Activities

Cash flow used in operating activities increased by $5.2 million from $45.3 million for the nine months ended September 30, 2017 to $50.5 million for the nine months ended September 30, 2018 primarily due to a $1.0 million increase in net loss, after adjustments for non-cash amounts included in net loss and higher working capital of $4.2 million primarily due to changes in accrued expenses and other current liabilities.

Investing Activities

Cash flow from investing activities decreased by $53.7 million from $49.4 million cash provided for the nine months ended September 30, 2017 to a use of $4.4 million for the nine months ended September 30, 2018 primarily due to proceeds from sale of available-for-sale financial assets to fund operational cash out flows and transaction costs related to the acquisition of Zavante assets.

Financing Activities

Cash flow generated from financing activities decreased by $5.3 million from $73.9 million cash inflow for the nine months ended September 30, 2017 to $68.6 million cash inflow for the nine months ended September 30, 2018 after taking into effect the $22.2 million of proceeds, net of commissions, related to our ATM Agreement and net proceeds from our July 2018 public offering of $46.1 million during the nine months ended September 30, 2018.

Operating and Capital Expenditure Requirements

As of the date of this filing, we assessed our ability to continue as a going concern and determined that we expect that our existing cash, cash equivalents and short-term investments, as well as anticipated near-term milestone payments under our license agreement with Sinovant Sciences, Ltd. and anticipated research premiums from the Austrian government for our qualified 2017 research and development expenditures, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2020, subject to a successful commercial launch in the United States of lefamulin for CABP and CONTEPO for cUTI in 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

We expect to continue to invest in critical pre-commercialization activities prior to receiving marketing approval and making lefamulin and CONTEPO available to patients.

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

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

· seek to discover and develop additional product candidates;

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

· continue to establish a medical affairs, sales, marketing and distribution infrastructure and build up inventory of finished product and its components to commercialize any product candidates for which we receive marketing approval;

· in-license or acquire other products, product candidates or technologies;

· maintain, expand and protect our intellectual property portfolio;

· establish and expand manufacturing arrangements with third parties;

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

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

We expect that our existing cash, cash equivalents and short-term investments, as well as anticipated near-term milestone payments under the Sinovant License Agreement and anticipated research premiums from the Austrian government for our qualified 2017 research and development expenditures, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2020, subject to a successful commercial launch in the United States of lefamulin for CABP and CONTEPO for cUTI in 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

We expect to seek additional funding in future periods for purposes of investment in our commercial and medical affairs organization, as well as investing in our supply chain, in an effort to enhance the potential commercial launch of lefamulin and CONTEPO.

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

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

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

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

· subject to receipt of marketing approval, revenue received from commercial sales of lefamulin and CONTEPO;

· the costs of developing lefamulin and CONTEPO for the treatment of additional indications;

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

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

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

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

· the continued availability of Austrian governmental grants;

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

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

Conducting clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. Our commercial revenues, if any, will be derived from sales of lefamulin, CONTEPO or any other products that we successfully develop, in-license or acquire, none of which we expect to be commercially available until 2019, if at all. In addition, if approved, lefamulin, CONTEPO or any other product candidate that we develop, in-license or acquire may not achieve commercial success. Accordingly, we will need to obtain substantial additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.

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

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

Contractual Obligations and Commitments

We enter into contracts in the normal course of business with clinical research organizations for clinical trials and clinical supply manufacturing and with vendors for pre-clinical research studies, research supplies and other services and products for operating purposes. We also lease our office and laboratory facilities. These contracts have generally provided for termination on notice and therefore we believe that our non-cancelable obligations as of September 30, 2018 under these agreements are not material.

During the nine months ended September 30, 2018, there were no material changes outside the ordinary course of our business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017 other than the supply agreements assumed as a result of the Zavante Acquisition. See “ Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Acquisition of Zavante” for further information regarding the agreements that were assumed.

We have no contingent liabilities in respect of legal claims arising in the ordinary course of business.

Capital Expenditures

Capital expenditures were $1.1 million and $0.2 million for the nine months ended September 30, 2017 and 2018, respectively. On July 24, 2018, we acquired Zavante, a biopharmaceutical company focused on developing CONTEPO (fosfomycin for injection) to improve the outcomes of hospitalized patients. We expensed the acquired in-process research and development as of the acquisition date.

Currently, there are no material capital projects planned in the next 12 to 18 months.

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Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Market Risk

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

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

Interest rate risk may arise from short-term or long-term debt. As of September 30, 2018, we had no debt that exposed us to interest rate risk. As of September 30, 2018, we had neither significant long-term interest-bearing assets nor significant long-term interest-bearing liabilities, other than a de minimis government loan we have received at a below-market rate of interest from the Austrian Research Promotion Agency ( Österreichische Forschungsförderungsgesellschaft, or FFG ). Due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase in interest rates would have a material effect on the fair market value of our portfolio, and accordingly we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

Liquidity Risk

Since our inception, we have incurred net losses and generated negative cash flows from our operations. Based on our current operating plans, we believe that our existing cash, cash equivalents and short-term investments as well as anticipated near-term milestone payments under the Sinovant License Agreement and anticipated research premiums from the Austrian government for our qualified 2017 research and development expenditures, will be sufficient to enable us to fund its operating expenses and capital expenditure requirements into the first quarter of 2020, subject to a successful commercial launch in the United States of lefamulin for CABP and CONTEPO for cUTI in 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

We expect to continue to invest in critical pre-commercialization activities prior to potentially receiving marketing approval and making lefamulin and CONTEPO available to patients. We expect to seek additional funding in future periods for purposes of investment in our commercial and medical affairs organization , as well as investing in our supply chain in an effort to enhance the potential commercial launch of lefamulin and CONTEPO.

If we obtain marketing approval for lefamulin, CONTEPO or any other product candidate that we develop, in-license or acquire, we expect to incur significant additional commercialization expenses related to product sales, marketing, distribution and manufacturing. Our expenses will increase if we suffer any delays in our clinical programs, including regulatory delays, or are required to conduct additional clinical trials to satisfy regulatory requirements. We have developed plans to mitigate this risk, which primarily consist of raising additional capital through a combination of equity or debt financings, new collaborations, and reducing cash expenditures.

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

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ITEM 4. CONTROLS AND PROCEDURES

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

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

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation of our disclosure controls and procedures as of September 30, 2018, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that occurred during the nine months ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

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

Risks Related to Our Recent Acquisition of Zavante

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

On July 24, 2018, we completed our acquisition, or the Acquisition, of Zavante Therapeutics, Inc., or Zavante, pursuant to an Agreement and Plan of Merger, or the Merger Agreement, dated July 23, 2018. Our ability to realize the anticipated benefits of the Acquisition will depend, to a large extent, on our ability to integrate Zavante and CONTEPO into our business and business strategy and realize anticipated growth opportunities and synergies. We expect that the integration process will be complex, costly and time-consuming. As a result, we will be required to devote significant management attention and resources to integrating Zavante into our business and CONTEPO into our business strategy. The integration process may be disruptive to our business and the expected benefits may not be achieved within the anticipated time frame, or at all. The failure to meet the challenges involved and to realize the anticipated benefits of the Acquisition could cause an interruption of, or a loss of momentum in, our development and commercialization efforts, including with respect to lefamulin and CONTEPO, and could adversely affect our business, financial condition and results of operations.

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

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

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

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

· challenges related to the perception by patients, the medical community and third-party payors of CONTEPO for the treatment of complicated urinary tract infections, or cUTIs;

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

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

· the diversion of management attention to integration matters;

· any challenges associated with our chief executive officer transition in connection with the Acquisition;

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

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

· difficulties in assimilating Zavante employees and in attracting and retaining key personnel; and

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

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

Upfront consideration for the Acquisition is comprised of 8,152,092 of our ordinary shares, including the 815,186 ordinary shares that are issuable upon release of the Holdback Shares subject to the terms of the Merger Agreement. Pursuant to the Merger Agreement, former Zavante stockholders are also entitled to receive from us, subject to the terms and conditions of the Merger Agreement, up to $97.5 million in contingent consideration, of which $25 million would become payable upon the first approval of a new drug application from the U.S. Food and Drug Administration, or the FDA, for CONTEPO for injection for any indication, or the Approval Milestone Payment, and an aggregate of up to $72.5 million would become payable upon the achievement of specified net sales milestones, or the Net Sales Milestone Payments. At our Extraordinary General Meeting of Shareholders held in October 2018, our shareholders approved the issuance of ordinary shares in settlement of potential milestone payment obligations that may become payable in the future to former Zavante stockholders, including the Approval Milestone Payment which will be settled in our ordinary shares. We also now have the right to settle the Net Sales Milestone Payments in ordinary shares, except as otherwise provided in the Merger Agreement. The issuance of our ordinary shares in connection with the closing of the Acquisition was dilutive to our existing shareholders, and the future issuance of our ordinary shares to satisfy our milestone payment obligations would be further dilutive to our then existing shareholders.

Also, following the Acquisition, we now possess certain liabilities and obligations, including contractual liabilities and obligations, that were assumed by us upon closing of the Acquisition. Prior to the Acquisition, former Zavante stockholders and SG Pharmaceuticals, Inc. entered into a stock purchase agreement, dated as of May 5, 2015, or the Stock Purchase Agreement, pursuant to which SG Pharmaceuticals, Inc. acquired all of the outstanding capital stock of Zavante from the Zavante selling stockholders and SG Pharmaceuticals, Inc., subsequently merged with and into Zavante, with Zavante as the surviving entity. Pursuant to the Stock Purchase Agreement, Zavante (as successor to SG Pharmaceuticals, Inc.) is obligated to make milestone payments to the selling stockholders of $3.0 million upon marketing approval by the FDA with respect to any oral, intravenous or other form of fosfomycin, or the Zavante Products, and milestone payments of up to $26 million in the aggregate upon the occurrence of various specified levels

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of net sales with respect to the Zavante Products. In addition, Zavante is obligated to make annual royalty payments to the Selling Stockholders of a mid single-digit percentage of net sales of Zavante Products, subject to adjustment based on net sales thresholds and with such percentage reduced to low single-digits if generic fosfomycin products account for half of the applicable market on a product-by-product and country-by-country basis. The Stock Purchase Agreement also provides that Zavante will pay to the Selling Stockholders a mid single-digit percentage of transaction revenue in connection with the consummation of the grant, sale, license or transfer of market exclusivity rights for a qualified infectious disease product (within the meaning of the 21st Century Cures Act, or the Cures Act) related to a Zavante Product.

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

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

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

Risks Related to Our Financial Position and Need for Additional Capital

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

Since inception, we have incurred significant operating losses. Our net losses were $ 84.0 million for the nine months ended September 30, 2018, $74.4 million for the year ended December 31, 2017, $54.9 million for the year ended December 31, 2016 and $47.0 million for the year ended December 31, 2015. As of September 30, 2018, we had an accumulated deficit of 363.2 million. Zavante has also incurred net operating losses since its inception. Zavante’s net losses were $12.4 million for the year ended December 31, 2017 and $23.5 million for the year ended December 31, 2016. To date, we have financed our operations primarily through the sale of our equity securities, convertible loans and research and development support from governmental grants and loans. We have devoted substantially all of our efforts to research and development, including clinical trials. We have not completed development of any drugs. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years, including in connection with our continued development, regulatory approval efforts and commercialization of lefamulin and CONTEPO. The net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year.

We expect to continue to invest in critical pre-commercialization activities prior to potentially receiving marketing approval and making lefamulin and CONTEPO available to patients.

We initiated our first Phase 3 global, pivotal clinical trial of lefamulin, which we refer to as Lefamulin Evaluation Against Pneumonia 1, or LEAP 1, in September 2015, and we initiated our second Phase 3 global, pivotal clinical trial of lefamulin, which we refer to as Lefamulin Evaluation Against Pneumonia 2, or LEAP 2, in April 2016. In September 2017, we announced positive topline results for LEAP 1. In May 2018, we announced positive topline results from LEAP 2. LEAP 2 evaluated the safety and efficacy of 5 days of oral lefamulin compared to 7 days of oral moxifloxacin in adult patients with moderate community-acquired bacterial pneumonia, or CABP. We expect to submit a new drug application, or NDA, for marketing approval of lefamulin for the treatment of CABP in adults in the United States in the fourth quarter of 2018. We also expect to submit a marketing authorization application, or MAA, for lefamulin for the treatment of CABP in adults in Europe a few months after our NDA filing. We also continue to characterize the clinical pharmacology of lefamulin. If we obtain marketing approval of lefamulin for CABP or another indication, we also expect to incur significant additional sales, marketing, distribution and manufacturing expenses.

In June 2016, the first patient was enrolled by Zavante in its pivotal ZTI-01 Efficacy and Safety Study of CONTEPO, which we refer to as the ZEUS Study. In April 2017, Zavante announced positive topline results of the ZEUS Study. The ZEUS Study was a

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multicenter, randomized, parallel-group, double-blind Phase 2/3, pivotal clinical trial designed to evaluate safety, tolerability, efficacy and pharmacokinetics of seven days of treatment, or up to 14 days of treatment for patients with concurrent bacteremia, with CONTEPO compared to piperacillin-tazobactam, or PIP-TAZ, in the treatment of hospitalized adults with cUTI or acute pyelonephritis, or AP. We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States, utilizing the FDA’s 505(b)(2) pathway, in October 2018. In June 2018, Zavante initiated a Phase 1, non-comparative, open-label study of the pharmacokinetics and safety of a single dose of CONTEPO in pediatric subjects less than 12 years of age receiving standard-of-care antibiotic therapy for proven or suspected infection or peri-operative prophylaxis. We anticipate completing enrollment in this study in late 2020. We also intend to continue to characterize the clinical pharmacology of CONTEPO. If we obtain marketing approval of CONTEPO for cUTI, including AP, or another indication, we also expect to incur significant additional sales, marketing, distribution and manufacturing expenses.

On July 24, 2018, we completed our Acquisition of Zavante. Upfront consideration in connection with the Acquisition is 8,152,092 of our ordinary shares, including the 815,186 ordinary shares that are issuable upon release of the Holdback Shares subject to the terms of the Merger Agreement. Pursuant to the Merger Agreement, former Zavante stockholders are also entitled to receive from us up to $97.5 million in contingent consideration, consisting of the Approval Milestone Payment and the Net Sales Milestone Payment, subject to the terms and conditions of the Merger Agreement. In connection with the Acquisition, we assumed certain payment obligations under the Stock Purchase Agreement and Zavante manufacturing agreements acquired in the Acquisition. See “— Risks Related to Our Recent Acquisition of Zavante—We may fail to realize the anticipated benefits of our Acquisition of Zavante, those benefits may take longer to realize than expected, and we may encounter significant integration difficulties. ”

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

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

· seek to discover and develop additional product candidates;

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

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

· continue to build a medical affairs, sales, marketing and distribution infrastructure and scale up manufacturing capabilities to commercialize any product candidates for which we receive marketing approval;

· in-license or acquire other products, product candidates or technologies;

· maintain, expand and protect our intellectual property portfolio;

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

· establish and expand manufacturing arrangements with third parties; and

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

Our ability to generate profits from operations, and to become and remain profitable, depends on our ability to successfully develop and commercialize drugs that generate significant revenue. Based on our current plans, we do not expect to generate significant revenue unless and until we obtain marketing approval for, and commercialize, lefamulin and CONTEPO. We do not expect to obtain marketing approval before 2019, if at all. This will require us to be successful in a range of challenging activities, including:

· applying for and obtaining marketing approval for lefamulin and obtaining marking approval for CONTEPO;

· expanding medical affairs, sales, marketing and distribution capabilities to effectively market and sell lefamulin and CONTEPO in the United States;

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

· protecting our rights to our intellectual property portfolio related to lefamulin and CONTEPO;

· establishing and maintaining arrangements for the manufacture of and obtaining commercial quantities of lefamulin and CONTEPO; and

· negotiating and securing adequate reimbursement from third-party payors for lefamulin and CONTEPO.

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

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

We expect to continue to incur substantial costs in connection with our ongoing activities, particularly as we seek marketing approval for lefamulin, CONTEPO and, possibly, other product candidates and continue our research activities. Our expenses will increase if we suffer any regulatory delays or are required to conduct additional clinical trials to satisfy regulatory requirements. If we obtain marketing approval for lefamulin, CONTEPO or any other product candidate that we develop, in-license or acquire, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing.

Furthermore, we expect to continue to incur additional costs associated with operating as a public company and as a larger company with a commercial rather than a research and development focus following the Acquisition. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

We expect that our existing cash, cash equivalents and short-term investments as well as anticipated near-term milestone payments under the Sinovant License Agreement and anticipated research premiums from the Austrian government for our qualified 2017 research and development expenditures, will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2020, subject to a successful commercial launch in the United States of lefamulin for CABP and CONTEPO for cUTI in 2019. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. This estimate assumes, among other things, that we do not obtain any additional funding through grants and clinical trial support, collaboration agreements, equity or debt financings.

We expect to seek additional funding in future periods for purposes of investment in our commercial and medical affairs organization, as well as investing in our supply chain in an effort to enhance the potential commercial launch of lefamulin and CONTEPO.

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

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

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

· subject to receipt of marketing approval, revenue received from commercial sales of lefamulin and CONTEPO;

· the costs of developing lefamulin and CONTEPO for the treatment of additional indications;

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

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

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

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

· the continued availability of Austrian governmental grants;

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

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

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

Our commercial revenues, if any, will be derived from sales of lefamulin, CONTEPO or any other products that we successfully develop, in-license or acquire, none of which we expect to be commercially available until 2019, if at all. In addition, if approved, lefamulin, CONTEPO or any other product candidate that we develop, in-license or acquire may not achieve commercial success. Accordingly, we will need to obtain substantial additional financing to achieve our business objectives.

Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.

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

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

On March 16, 2018, we entered into a Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co., or Cantor Fitzgerald, as agent, pursuant to which we may offer and sell ordinary shares, nominal value $0.01 per share, for aggregate gross sale proceeds of up to $50,000,000 from time to time through Cantor Fitzgerald under an “at-the-market” offering program. As of September 30, 2018, $27.2 million of ordinary shares remained available for sale under our ATM Agreement. As of the date of this filing, $25.9 million of ordinary shares remained available for sale under the ATM Agreement. If a large number of our ordinary shares is sold in the public market after they become eligible for sale or if we make additional sales under our “at-the-market” offering program, the sales could cause dilution to our security holders, reduce the trading price of our ordinary shares and impede our ability to raise future capital.

In addition, in connection with the closing of the Acquisition, we issued 7,336,906 of our ordinary shares to former Zavante stockholders as initial upfront consideration. An additional 815,186 of ordinary shares will be issued to former Zavante Stockholders upon release of the Holdback Shares, subject to reduction in respect of certain indemnification and other obligations pursuant to the Merger Agreement. While these shares are currently and, with respect to the Holdback Shares will be, restricted as a result of securities laws, following expiration of applicable holding periods, these shares will be able to be freely sold in the public market, subject to any requirements and restrictions, including any applicable volume limitations, imposed by Rule 144 under the Securities Act. In addition, the Merger Agreement provides that we may issue up to an additional $97.5 million in our ordinary shares to former Zavante stockholders upon the achievement of specified regulatory and commercial milestones in the future and obligates us to

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provide registration rights with respect to the registration for resale of such additional ordinary shares that may become issuable upon the achievement of such milestones. The issuance of our ordinary shares to satisfy the milestone payments could cause dilution to our equity holders, and the sale or resale of these shares in the public market, or the market’s expectation of such sales, may result in an immediate and substantial decline in our stock price. Such a decline would adversely affect our investors and also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

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

Our operations to date have been limited to organizing and staffing our company, developing and securing our technology, raising capital and undertaking preclinical studies and clinical trials of our product candidates. We have not yet demonstrated our ability to obtain marketing approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

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

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

As a company that carries out extensive research and development activities, we benefit from the Austrian research and development support regime, under which we are eligible to receive a research premium from the Austrian government equal to 14% (12% for the fiscal years 2016 and 2017 and 10%, in the case of fiscal years prior to 2016) of a specified research and development cost base. Qualifying expenditures largely comprise research and development activities conducted in Austria, however, the research premium is also available for certain related third-party expenses with additional limitations. We received research premiums of $5.9 million for the year ended December 31, 2016 and $4.3 million for the year ended December 31, 2015. We have not received any research premium for our qualified 2017 expenditures as of September 30, 2018. As we increase our personnel and expand our business outside of Austria, including as a result of the Acquisition, we may not be able to continue to claim research premiums to the same extent as we have in previous years, as some research and development activities may no longer be considered to occur in Austria. As research premiums that have been paid out already may be audited by the tax authorities, there is a risk that parts of the submitted cost base may not be considered as eligible and therefore repayments may have to be made.

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

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

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

Risks Related to Product Development and Commercialization

We depend heavily on the success of, lefamulin, which we are developing for CABP and other indications, and CONTEPO, which we are developing for cUTI, including AP. If we are unable to obtain marketing approvals for lefamulin or CONTEPO, or if thereafter we fail to commercialize lefamulin or CONTEPO or experience significant delays in doing so, our business will be materially harmed.

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

In September 2017, we announced positive topline results for LEAP 1. In May 2018, we announced positive topline results from LEAP 2. We expect to submit a new drug application, or NDA, for marketing approval of lefamulin for the treatment of CABP in adults in the United States in the fourth quarter of 2018. We also expect to submit a marketing authorization application, or MAA, for lefamulin for the treatment of CABP in adults in Europe a few months after our NDA filing.

In July 2016, Zavante initiated the ZEUS Study. In April 2017, Zavante announced positive topline results of the ZEUS Study. We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States, utilizing the FDA’s 505(b)(2) pathway, in October 2018. In June 2018, Zavante initiated a phase 1, non-comparative, open-label study of the pharmacokinetics and safety of a single dose of CONTEPO in pediatric subjects less than 12 years of age receiving standard-of-care antibiotic therapy for proven or suspected infection or peri-operative prophylaxis. We anticipate completing enrollment in this study in late 2020. We also intend to continue to characterize the clinical pharmacology of CONTEPO.

If we obtain marketing approval of lefamulin for CABP, or any other indication, and CONTEPO for cUTI, including AP, we also expect to incur significant additional sales, marketing, distribution and manufacturing expenses.

Our ability to generate product revenues, which may not occur for several years, if ever, will depend heavily on our obtaining marketing approval for and commercializing lefamulin and CONTEPO when and as we expect and our ability to successfully integrate Zavante into our business and CONTEPO into our business strategy. The success of lefamulin and CONTEPO will depend on a number of factors, including the following:

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

· receipt of marketing approvals from applicable regulatory authorities for lefamulin for the treatment of CABP and CONTEPO for the treatment of cUTI, including AP;

· launching commercial sales of lefamulin and CONTEPO, if and when approved, in collaboration with third parties;

· acceptance of lefamulin and CONTEPO, if and when approved, by patients, the medical community and third-party payors;

· effectively competing with other therapies;

· maintaining a continued acceptable safety profile of lefamulin and CONTEPO following approval;

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

· protecting our rights in our intellectual property portfolio.

Successful development of lefamulin and CONTEPO for the treatment of additional indications, if any, or for use in other patient populations and our ability, if it is approved, to broaden the labels for lefamulin and CONTEPO will depend on similar factors.

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If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize lefamulin for CABP or for any other indications or CONTEPO for cUTI, including AP, which would materially harm our business.

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

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

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

· be delayed in obtaining marketing approval for our product candidates;

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

· not obtain marketing approval at all;

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

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

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

· have the product removed from the market after obtaining marketing approval.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We may not be able to initiate or continue clinical trials for our product candidates, including with respect to lefamulin, CONTEPO or any other product candidate that we develop, if we are unable to locate and enroll a sufficient number of eligible patients to participate in these clinical trials. Some of our competitors have ongoing clinical trials for product candidates that could be competitive with lefamulin and CONTEPO, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment is affected by other factors including:

· severity of the disease under investigation;

· eligibility criteria for the clinical trial in question;

· perceived risks and benefits of the product candidate under study;

· approval of other therapies to treat the disease under investigation;

· efforts to facilitate timely enrollment in clinical trials;

· patient referral practices of physicians;

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

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· the geographic distribution of global trial sites, given the timing of pneumonia season globally, and the seasonal variation in the number of patients suffering from pneumonia, including a decline in the number of patients with CABP during the summer months;

· the ability to monitor patients adequately during and after treatment;

· proximity and availability of clinical trial sites for prospective patients;

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

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

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

If serious adverse or undesirable side effects are identified during the development of lefamulin, CONTEPO or any other product candidate that we develop, we may need to abandon or limit our development of that product candidate.

All of our product candidates are in clinical or preclinical development and their risk of failure is high. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive marketing approval. If our product candidates are associated with undesirable side effects or have characteristics that are unexpected, we may need to abandon their development or limit development to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in clinical or earlier stage testing have later been found to cause side effects or other safety issues that prevented further development of the compound.

In LEAP 1, lefamulin was generally well tolerated and exhibited a similar rate of treatment-emergent adverse events to the comparator drug. However, 104 patients in the lefamulin arm of the trial reported at least one treatment-emergent adverse event and eight patients withdrew from the trial following an adverse event. Furthermore, at least 2.0% of patients in LEAP 1 who were dosed with lefamulin reported the following adverse events: hypokalemia, nausea, insomnia, infusion site pain and infusion site phlebitis. Fewer than 2.0% of trial patients dosed with lefamulin also experienced hypertension and an increase in alanine aminotransaminase, although no patients met Hy’s Law criteria, which is an indicator for severe liver damage.

In LEAP 2, lefamulin was again generally well tolerated. However, 120 patients in the lefamulin arm of the trial reported at least one treatment-emergent adverse event and eleven patients withdrew from the trial following an adverse event. Furthermore, at least 2.0% of patients in LEAP 2 who were dosed with lefamulin reported the following adverse events: diarrhea, nausea and vomiting. Fewer than 2.0% of trial patients dosed with lefamulin also experienced hypertension and an increase in alanine aminotransaminase, although no patients met Hy’s Law criteria.

In addition, lefamulin was well tolerated in our Phase 2 clinical trial for ABSSSI. No patient in the trial suffered any serious adverse events that were found to be related to lefamulin, and no patient in the trial died. Some patients experienced adverse events that were assessed by the investigator as possibly or probably related to study medication. The majority of their symptoms were mild in severity. Four patients discontinued study medication following a drug-related event, three of whom were in a lefamulin treatment group: one patient experienced events of hyperhidrosis, vomiting and headache; one patient experienced infusion site pain; and one patient experienced dyspnea.

Because the potential for mild effect on electrocardiogram, or ECG, measurements was observed in preclinical studies of lefamulin, we have continued to assess this potential in all human clinical trials of lefamulin we have conducted. In the Phase 2 clinical trial, no change in ECG measurements was considered to be of clinical significance, and no drug-related cardiovascular adverse event was reported. Both lefamulin and vancomycin treatment were associated with a small increase in the QT interval. The QT interval is a measure of the heart’s electrical cycle, and a prolonged QT interval is a risk factor for a potential ventricular arrhythmia. In each of LEAP 1 and LEAP 2, while changes in QT that were of potential clinical concern were uncommon, one patient treated with lefamulin had an increase in absolute QT interval to greater than 500 msec.

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There were no systemic adverse events of clinical concern and no drug-related serious adverse events observed in any of our completed Phase 1 clinical trials of lefamulin. In these trials, the most commonly observed adverse effects with oral administration of lefamulin were related to the gastrointestinal tract, including nausea and abdominal discomfort, while the most commonly observed adverse effects related to IV administration were related to irritation at the infusion site. In addition, lefamulin produced a transient, predictable and reproducible prolongation of the QT interval based on the maximum concentration of the drug in the blood plasma. We did not observe any drug-related cardiac adverse events, such as increase in ectopic ventricular activity or other cardiac arrhythmia, or clinically relevant ECG findings during the conduct of any of our completed Phase 1 clinical trials.

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

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

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

While no significant cardiac adverse events were observed in the ZEUS Study, post-baseline QT intervals calculated using Fridericia’s formula, or QTcF, of greater than 450 to less than or equal to 480 msec (baseline QTcF of less than or equal to 450 msec) occurred at a higher frequency in CONTEPO patients (7.3%) compared to PIP-TAZ patients (2.5%). In the CONTEPO arm, these results appeared to be associated with the hypokalemia associated with the salt load of the IV formulation. Only one patient in the PIP-TAZ arm had a baseline QTcF of less than or equal to 500 msec and a post-baseline QTcF of greater than 500 msec.

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

Even if lefamulin, CONTEPO or any other product candidate receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success and the market opportunity for lefamulin, CONTEPO or any other product candidate may be smaller than we estimate.

If lefamulin, CONTEPO or any of our other product candidates receive marketing approval, it or they may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current treatments for pneumonia, including generic options, are well established in the medical community, and doctors may continue to rely on these treatments without lefamulin, CONTEPO or any of our other product candidates. In addition, our efforts to effectively communicate the differentiating characteristics and key attributes of lefamulin, CONTEPO or any of our other product candidates to clinicians and hospital pharmacies with the goal of establishing favorable formulary status for lefamulin, CONTEPO or any of our other product candidates may fail or may be less successful than we expect. If lefamulin, CONTEPO or any of our other product

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candidates does not achieve an adequate level of acceptance, we may not generate significant product revenues or any profits from operations. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

· the efficacy and potential advantages compared to alternative treatments;

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

· the prevalence and severity of any side effects;

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

· convenience and ease of administration compared to alternative treatments;

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

· our investment in and the strength of marketing, patient access and distribution support;

· the availability of third-party coverage and adequate reimbursement; and

· the timing of any marketing approval in relation to other product approvals.

Although we believe that the mechanism of action for pleuromutilin antibiotics may result in a low propensity for development of bacterial resistance to lefamulin or our other pleuromutilin product candidates, bacteria might nevertheless develop resistance to lefamulin or our other pleuromutilin product candidates more rapidly or to a greater degree than we anticipate. Likewise, we believe that because CONTEPO works differently than other IV antibiotics approved in the United States by inhibiting an early step in bacterial cell wall synthesis, it may have a low potential for developing bacterial resistance. If bacteria develop resistance or if lefamulin or CONTEPO is not effective against drug-resistant bacteria, the efficacy of these product candidates would decline, which would negatively affect our potential to generate revenues from these product candidates.

Our ability to negotiate, secure and maintain third-party coverage and reimbursement may be affected by political, economic and regulatory developments in the United States, the European Union and other jurisdictions. Governments continue to impose cost containment measures, and third-party payors are increasingly challenging prices charged for medicines and examining their cost effectiveness, in addition to their safety and efficacy. If the level of reimbursement is below our expectations, our revenue and gross margins would be adversely affected. Obtaining formulary approval from third-party payors can be an expensive and time-consuming process. We cannot be certain if and when we will obtain formulary approval to allow us to sell lefamulin, CONTEPO or any future product candidates into our target markets. Even if we do obtain formulary approval, third-party payors, such as government or private health care insurers, carefully review and increasingly question the coverage of, and challenge the prices charged for, drugs. These and other similar developments could significantly limit the degree of market acceptance of lefamulin, CONTEPO or any of our other product candidates that receive marketing approval.

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

We have only a very limited sales, marketing, patient access and distribution infrastructure, and as a company we have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any approved product, we must either establish an adequate sales, marketing, patient access and distribution organization or outsource these functions to third parties. If lefamulin or CONTEPO receives marketing approval, we plan to commercialize it in the United States with our own targeted hospital sales and marketing organization that we plan to expand, subject to our ability to raise additional capital. In addition, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize lefamulin in markets outside the United States. We do not intend to seek approval to commercialize CONTEPO in any markets outside the United States.

There are risks involved with establishing our own sales, marketing, patient access and distribution capabilities and entering into arrangements with third parties to perform these services. If we do not establish adequate sales, marketing, patient access and

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

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

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

· the inability 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 our sales representatives at a competitive disadvantage relative to sales representatives from companies with more extensive product lines; and

· unforeseen costs and expenses associated with creating an independent sales, marketing, patient access and distribution organization.

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

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

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

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

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

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their efficacy, safety, convenience, price and the availability of coverage and reimbursement from government and other third-party payors.

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

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

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

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

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

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

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

· reduced resources of our management to pursue our business strategy;

· decreased demand for any product candidates or products that we may develop;

· injury to our reputation and significant negative media attention;

· withdrawal of clinical trial participants;

· significant costs to defend the related litigation;

· substantial monetary awards to trial participants or patients;

· loss of revenue; and

· the inability to commercialize any products that we may develop.

We maintain clinical trial liability insurance that covers bodily injury to patients participating in our clinical trials up to a $10.0 million annual aggregate limit and subject to a per event deductible. This amount of insurance may not be adequate to cover all liabilities that we may incur. We will need to increase our insurance coverage when and if we begin commercializing lefamulin, CONTEPO or any other product candidate that receives marketing approval. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

Risks Related to Our Dependence on Third Parties

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

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

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

Another third-party manufacturer synthesizes lefamulin from the pleuromutilin starting material and provides our supply of the active pharmaceutical ingredient. We may engage a secondary supplier to synthesize lefamulin. However, our current operating plans do not include a secondary supplier unless we obtain additional funding. We engage separate manufacturers to provide tablets, sterile vials, and sterile diluent that we are using in our clinical trials of lefamulin. We have entered into commercial supply agreements with these same manufacturers to support the future commercialization of lefamulin, if approved.

In addition, Zavante has entered into a manufacturing and supply agreement with Ercros, S.A., pursuant to which Ercros, S.A. supplies to Zavante, on an exclusive basis, the API mixture for CONTEPO in support of filing an NDA and, if CONTEPO is approved, will supply the commercial API Mixture for CONTEPO in the United State. Zavante has also entered into a manufacturing and exclusive supply agreement with Laboratorios ERN, S.A., pursuant to which Laboratorios ERN, S.A. has agreed to supply Zavante with certain technical documentation and data as required for submission of an NDA for CONTEPO and certain regulatory support in connection

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with the commercial sale and use of CONTEPO in the United States. Zavante entered into a commercial packaging agreement with AndersonBrecon, Inc. for the commercial packaging and serialization of CONTEPO in addition to a manufacturing and supply agreement with Fisiopharma S.r.l. for the supply, on a minimum commitment basis, of a percentage of Zavante’s commercial requirements of CONTEPO in bulk drug vials for the United States as well as the supply of bulk drug vials of CONTEPO in connection with the submission of an NDA.

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

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

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

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

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

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

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

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

If the third parties that we engage to supply any materials or manufacture product for our non-clinical testing and clinical trials should cease to continue to do so for any reason, we likely would experience delays in advancing these trials while we identify and qualify replacement suppliers and we may be unable to obtain replacement supplies on terms that are favorable to us. For example, there are only a limited number of known manufacturers that produce the pleuromutilin starting material used in the synthesis of lefamulin. In early 2015, Novartis completed the sale of its animal health division, including its veterinary products, to a third party. As a result, we were required to identify an alternative supplier for pleuromutilin starting material for lefamulin. If we are not able to obtain adequate supplies of our product candidates or the drug substances used to manufacture them, it will be more difficult for us to develop our product candidates and compete effectively.

Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis.

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

We do not independently conduct clinical trials for our product candidates. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators, to perform this function. We expect to continue to rely on such third parties in conducting our clinical trials of lefamulin and CONTEPO, and expect to rely on these third parties to conduct clinical trials of any other product candidate that we develop. Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it would delay our product development activities.

Our reliance on these third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as Good Clinical Practices, or GCP, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We

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also are required to register ongoing clinical trials and post the results of completed clinical trials on a U.S. government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions. Similar GCP and transparency requirements apply in the European Union. Failure to comply with such requirements, including with respect to clinical trials conducted outside the European Union, can also lead regulatory authorities to refuse to take into account clinical trial data submitted as part of an MAA.

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

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

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

If lefamulin and CONTEPO receive marketing approval, we plan to commercialize them in the United States with our own targeted hospital sales and marketing organization. Outside the United States, we expect to utilize a variety of types of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize lefamulin. For example, we have entered into a license agreement with Sinovant pursuant to which we granted Sinovant certain rights to manufacture and commercialize lefamulin in the People’s Republic of China, Hong Kong, Macau and Taiwan. We also may seek third-party collaborators for development and commercialization of other product candidates or for lefamulin for indications other than CABP.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Risks Related to Our Intellectual Property

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

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States, Europe and in certain additional foreign jurisdictions related to our novel technologies and product candidates that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, if we license technology or product candidates from third parties in the future, these license agreements may not permit us to control the preparation, filing and prosecution of patent applications, or to maintain or enforce the patents, covering this intellectual property. These agreements could also give our licensors the right to enforce the licensed patents without our involvement, or to decide not to enforce the patents at all. Therefore, in these circumstances, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. We also may not pursue or obtain patent protection in all major markets or may not obtain protection that enables us to prevent the entry of third parties onto the market. Assuming the other requirements for patentability are met, currently, the first to file a patent application is generally entitled to the patent. However, prior to March 16, 2013, in the United States, the first to invent was entitled to the patent. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our U.S. patents or pending U.S. patent applications, or that we were the first to file for patent protection of such inventions.

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

Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or any future licensed patents by developing similar or alternative technologies or products in a non-infringing manner. In addition, other companies may attempt to circumvent any regulatory data protection or market exclusivity that we obtain under applicable legislation, which may require us to allocate significant resources to preventing such circumvention. Legal and regulatory developments in the European Union and elsewhere may also result in clinical trial data submitted as part of an MAA

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becoming publicly available. Such developments could enable other companies to circumvent our intellectual property rights and use our clinical trial data to obtain marketing authorizations in the European Union and in other jurisdictions. Such developments may also require us to allocate significant resources to prevent other companies from circumventing or violating our intellectual property rights. Our attempts to prevent third parties from circumventing our intellectual property and other rights may ultimately be unsuccessful. We may also fail to take the required actions or pay the necessary fees to maintain our patents.

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

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

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

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

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

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

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

Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.

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In addition, while we typically require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our business was founded as a spin-off from Sandoz. Although all patent applications are fully owned by us and were either filed by Sandoz with all rights fully transferred to us, or filed in our sole name, because we acquired certain of our patents from Sandoz, we must rely on their prior practices, with regard to the assignment of such intellectual property. Similarly, for any patent applications we acquired from Zavante in connection with the Acquisition, we must rely on Zavante’s prior practices with regard to the assignment of intellectual property. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. For example, US patent 9,345,717 claims priority to a provisional patent application. We are in the process of perfecting ownership of that provisional application and the applications claiming priority to the provisional application in the name of Zavante. If we are not able to effect a complete transfer of right, title and interest in such applications to Zavante, ownership of the invention claimed in the ‘717 patent and any other patent claiming priority to the provisional application may be subject to dispute.

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

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

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

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

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

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

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

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

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

Our product candidates, including lefamulin and CONTEPO, and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and, in the case of lefamulin, by comparable authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have not received approval to market lefamulin, CONTEPO or any of our other product candidates from regulatory authorities in any jurisdiction and we do not intend to seek approval to market CONTEPO outside the United States.

We have no experience in filing and supporting the applications necessary to obtain marketing approvals for product candidates and expect to rely on third-parties to assist us in this process. Securing marketing approval requires the submission of extensive non-clinical and clinical data and supporting information to various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Regulatory authorities may determine that lefamulin, CONTEPO or any of our other product candidates are not effective or only moderately effective, or have undesirable or unintended side effects, toxicities, safety profiles or other characteristics that preclude us from obtaining marketing approval or that prevent or limit commercial use.

The process of obtaining marketing approvals is expensive, may take many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. For example, on June 23, 2016, eligible members of the electorate in the United Kingdom decided by referendum to leave the European Union, commonly referred to as Brexit. On March 29, 2017, the United Kingdom formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty. Because a significant proportion of the regulatory framework in the United Kingdom is derived from European Union directives and regulations, the referendum could materially change the regulatory regime applicable to the approval of any of our product candidates in the United Kingdom. In addition, because the European Medicines Agency, or EMA, is currently located in the United Kingdom but expected to move to the Netherlands as a result of the Brexit, the implications for the regulatory review process in the European Union has not been fully clarified and could result in disruption to the EMA review process.

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

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

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

In order to market and sell lefamulin and our other product candidates in jurisdictions other than the United States and Europe, we must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval process varies among countries and can involve additional testing. The time required to obtain approval may differ from that required to obtain FDA approval or approvals from regulatory authorities in the European Union. The regulatory approval process outside the United States and Europe generally includes all of the risks associated with obtaining FDA approval or approvals from regulatory authorities in the European Union. In addition, some countries outside the United States and Europe require approval of the sales price of a drug

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before it can be marketed. In many countries, separate procedures must be followed to obtain reimbursement and a product may not be approved for sale in the country until it is also approved for reimbursement. We may not obtain marketing, pricing or reimbursement approvals outside the United States and Europe on a timely basis, if at all. Approval by the FDA or regulatory authorities in the European Union does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside the United States and Europe does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA or regulatory authorities in the European Union. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. Marketing approvals in countries outside the United States and Europe do not ensure pricing approvals in those countries or in any other countries, and marketing approvals and pricing approvals do not ensure that reimbursement will be obtained.

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

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

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

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

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

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

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

· litigation involving patients taking our products;

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· restrictions on such products, manufacturers or manufacturing processes;

· restrictions on the labeling or marketing of a product;

· restrictions on product distribution or use;

· requirements to conduct post-marketing studies or clinical trials;

· warning or untitled letters;

· withdrawal of the products from the market;

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

· recall of products;

· fines, restitution or disgorgement of profits or revenues;

· suspension or withdrawal of marketing approvals;

· damage to relationships with any potential collaborators;

· unfavorable press coverage and damage to our reputation;

· refusal to permit the import or export of our products;

· product seizure; or

· injunctions or the imposition of civil or criminal penalties.

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

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

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

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

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The FDA’s agreement to a Special Protocol Assessment, or SPA, with respect to the study design of our first Phase 3 clinical trial of lefamulin for CABP does not guarantee any particular outcome from regulatory review, including ultimate approval, and may not lead to a faster development or regulatory review or approval process.

We reached agreement with the FDA in September 2015 on a SPA, which was later amended in April 2016, regarding the study design of our first Phase 3 clinical trial of lefamulin for the treatment of CABP. The SPA process is designed to facilitate the FDA’s review and approval of drugs by allowing the FDA to evaluate the proposed design and size of Phase 3 clinical trials that are intended to form the primary basis for determining a product candidate’s efficacy and safety. Upon specific request by a clinical trial sponsor, the FDA will evaluate the protocol and respond to a sponsor’s questions regarding, among other things, primary efficacy endpoints, trial conduct and data analysis, within 45 days of receipt of the request. The FDA ultimately assesses whether the protocol design and planned analysis of the trial are acceptable to support regulatory approval of the product candidate with respect to the effectiveness in the indication studied.

Our agreement with the FDA regarding the SPA may not lead to faster development, regulatory review or approval for lefamulin. Once the FDA and an applicant reach an agreement under the special protocol assessment process regarding the design and size of a clinical trial, the agreement generally cannot be changed after the clinical trial begins. Nevertheless, the FDA may revoke or alter a SPA under defined circumstances, such as changes in the relevant data or assumptions provided by the sponsor or the emergence of new public health concerns. A revocation or alteration in our SPA could significantly delay or prevent approval of any marketing applications we submit for lefamulin.

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

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

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

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

Designation of each of lefamulin and CONTEPO as a Qualified Infectious Disease Product does not assure FDA approval of these product candidates.

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

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

We submitted an NDA for marketing approval of CONTEPO for the treatment of cUTI in adults in the United States in October 2018 utilizing Section 505(b)(2) of the Food, Drug and Cosmetic Act, or the FDCA, which was enacted as part of the Drug Price

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Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Act. Section 505(b)(2) permits the submission of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference.

For NDAs submitted under Section 505(b)(2) of the FDCA, the patent certification and related provisions of the Hatch-Waxman Act apply. In accordance with the Hatch-Waxman Act, such NDAs may be required to include certifications, known as Paragraph IV certifications, that certify any patents listed in the Orange Book publication in respect to any product referenced in the 505(b)(2) application are invalid, unenforceable and/or will not be infringed by the manufacture, use or sale of the product that is the subject of the 505(b)(2) application. Under the Hatch-Waxman Act, the holder of the NDA which the 505(b)(2) application references may file a patent infringement lawsuit after receiving notice of the Paragraph IV certification. Filing of a patent infringement lawsuit triggers a one-time automatic 30-month stay of the FDA’s ability to approve the 505(b)(2) application. Neither we nor Zavante have conducted a comprehensive freedom-to-operate review with regard to CONTEPO.

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

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

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

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

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

We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. For example, certain policies of the Trump administration may impact our business and industry. Namely, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. An under-staffed FDA could result in delays in the FDA’s responsiveness or in its ability to review submissions or applications, issue regulations or guidance, or implement or enforce regulatory requirements in a timely fashion or at all. Moreover, on January 30, 2017, President Trump issued an Executive Order, applicable to all executive agencies, including the FDA, which requires that for each notice of proposed rulemaking or final regulation to be issued in fiscal year 2017, the agency shall identify at least two existing regulations to be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. For fiscal years 2018 and beyond, the Executive Order requires agencies to identify regulations to offset any

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incremental cost of a new regulation and approximate the total costs or savings associated with each new regulation or repealed regulation. In interim guidance issued by the Office of Information and Regulatory Affairs within the Office of Management and Budget on February 2, 2017, the administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents. In addition, on February 24, 2017, President Trump issued an executive order directing each affected agency to designate an agency official as a “Regulatory Reform Officer” and establish a “Regulatory Reform Task Force” to implement the two-for-one provisions and other previously issued executive orders relating to the review of federal regulations, however it is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

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

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

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

· the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim;

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

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

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

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

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

If our operations are found to be in violation of any of the laws described above or any governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our financial results. We are developing and implementing a corporate compliance program designed to ensure that we will market and sell any future products that we successfully develop from our product candidates in compliance with all applicable laws and regulations, but we cannot guarantee that this program will protect us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in

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defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

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

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

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

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

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

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

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

· a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts (and 70% starting January 1, 2019) off negotiated prices;

· extension of manufacturers’ Medicaid rebate liability;

· expansion of eligibility criteria for Medicaid programs;

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

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

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

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

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include the Budget Control Act of 2011, which among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in April 2013 and, due to subsequent legislative amendments to the statutes, will stay in effect through 2027 unless additional Congressional action is taken, and the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other

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healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Further, there have been several recent U.S. congressional inquiries and proposed state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

We expect that these healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market. Reductions in reimbursement levels may negatively impact the prices we receive or the frequency with which our products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. Since enactment of the ACA, there have been numerous legal challenges and Congressional actions to repeal and replace provisions of the law. In May 2017, the U.S. House of Representatives passed legislation known as the American Health Care Act of 2017. Thereafter, the Senate Republicans introduced and then updated a bill to replace the ACA known as the Better Care Reconciliation Act of 2017. The Senate Republicans also introduced legislation to repeal the ACA without companion legislation to replace it, and a “skinny” version of the Better Care Reconciliation Act of 2017. In addition, the Senate considered proposed healthcare reform legislation known as the Graham-Cassidy bill. None of these measures was passed by the United States Senate.

With enactment of the legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, which was signed by the President on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, will become effective in 2019. According to the Congressional Budget Office, the repeal of the individual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise. Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, among other things, amends the ACA, effective January 1, 2019, to increase from 50 percent to 70 percent the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” Further, each chamber of the Congress has put forth multiple bills designed to repeal or repeal and replace portions of the ACA. Although none of these measures has been enacted by Congress to date, Congress may consider other legislation to repeal and replace elements of the ACA.

The Trump Administration has also taken executive actions to undermine or delay implementation of the ACA. In January 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. In October 2017, the President signed a second Executive Order allowing for the use of association health plans and short-term health insurance, which may provide fewer health benefits than the plans sold through the ACA exchanges. At the same time, the Administration announced that it will discontinue the payment of cost-sharing reduction, or CSR, payments to insurance companies until Congress approves the appropriation of funds for such CSR payments. The loss of the CSR payments is expected to increase premiums on certain policies issued by qualified health plans under the ACA. A bipartisan bill to appropriate funds for CSR payments was introduced in the Senate, but the future of that bill is uncertain. Further, in July 2018 following a federal district court decision from New Mexico, the Administration announced that it would be freezing payments to insurers under the ACA to cover sicker patients until it or Congress can address the appropriate methodology for calculating and making such payments. It remains to be seen how this action will affect the implementation of the ACA.

We will continue to evaluate the effect that the ACA and its possible repeal and replacement could have on our business. It is possible that repeal and replacement initiatives, if enacted into law, could ultimately result in fewer individuals having health insurance coverage or in individuals having insurance coverage with less generous benefits. While the timing and scope of any potential future legislation to repeal and replace ACA provisions is highly uncertain in many respects, it is also possible that some of the ACA provisions that generally are not favorable for the research-based pharmaceutical industry could also be repealed along with ACA coverage expansion provisions. Accordingly, such reforms, if enacted, could have an adverse effect on anticipated revenue from product candidates that we may successfully develop and for which we may obtain marketing approval and may affect our overall financial condition and ability to develop commercialize product candidates.

Further, there have been several recent U.S. congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug

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

In addition, on May 11, 2018, the Administration issued a plan to lower drug prices. Under this blueprint for action, the Administration indicated that the Department of Health and Human Services, or HHS, will take steps to end the gaming of regulatory and patent processes by drug makers to unfairly protect monopolies; advance biosimilars and generics to boost price competition; evaluate the inclusion of prices in drug makers’ advertisements to enhance price competition; speed access to and lower the cost of new drugs by clarifying policies for sharing information between insurers and drug makers; avoid excessive pricing by relying more on value-based pricing by expanding outcome-based payments in Medicare and Medicaid; work to give Part D plan sponsors more negotiation power with drug makers; examine which Medicare Part B drugs could be negotiated for a lower price by Part D plans, and improving the design of the Part B Competitive Acquisition Program; update Medicare’s drug-pricing dashboard to increase transparency; prohibit Part D contracts that include “gag rules” that prevent pharmacists from informing patients when they could pay less out-of-pocket by not using insurance; and require that Part D plan members be provided with an annual statement of plan payments, out-of-pocket spending, and drug price increases.

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

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

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

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

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

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

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

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

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

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

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

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

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

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

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

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and

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

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

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

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

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

Risks Related to Employee Matters and Managing Growth

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

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

Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel, including in the United States and Ireland where we plan to expand our physical presence, will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we cannot recruit and retain qualified personnel, we may be unable to successfully develop our product candidates, conduct our clinical trials and commercialize our product candidates.

We expect to expand our development, regulatory and, subject to obtaining marketing approval of lefamulin and CONTEPO, sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of drug development, regulatory affairs, technical operations, supply chain, medical affairs and, subject to obtaining marketing approval of lefamulin and CONTEPO, sales and marketing. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. In addition, our growth in connection with the Acquisition, including expansion of our business operations and employees who joined us in connection with the Acquisition, will impose added responsibilities on members of our management, including the need to recruit, hire, retain, motivate and integrate additional employees and business operations.

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Due to our limited financial resources and the limited experience of our management team in managing a company of our current size following the Acquisition, and with such anticipated growth, we may not be able to effectively integrate Zavante into our business and CONTEPO into our business strategy, manage the future expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Risks Related to Ownership of Our Ordinary Shares

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

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

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

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

· our ability to achieve the anticipated benefits of the Acquisition and to successfully implement our proposed business strategy following the Acquisition;

· market reception to the Acquisition and the transition of our chief executive officer in connection with the Acquisition;

· the success of competitive products or technologies;

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

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

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

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

· the recruitment or departure of key scientific or management personnel, including any personnel changes or integration issues in connection with the Acquisition;

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

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

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

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

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

· changes in the structure of healthcare payment systems;

· market conditions in the pharmaceutical and biotechnology sectors;

· general economic, industry and market conditions; and

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· the other factors described in this ‘‘Risk Factors’’ section.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. We also may face securities class-action litigation if we cannot obtain regulatory approvals for or if we otherwise fail to commercialize lefamulin, CONTEPO or any of our other product candidates or if our securities experience volatility for any reason. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources.

Our executive officers, directors and principal shareholders, if they choose to act together, have the ability to significantly influence most matters submitted to shareholders for approval.

Our executive officers and directors, combined with our shareholders, and their respective affiliates who owned more than 5% of our outstanding ordinary shares as of September 30, 2018 in the aggregate, beneficially owned approximately 46.0% of our share capital, assuming the issuance of all Holdback Shares under the Merger Agreement. As a result, if these shareholders were to choose to act together, they would be able to significantly influence most matters submitted to our shareholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, would significantly influence the election of directors and could, depending on the structure of the particular transaction, significantly influence the approval of a merger, consolidation or sale of all or substantially all of our assets.

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

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

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

Sales of a substantial number of our ordinary shares, or the perception in the market that these sales could occur, could reduce the market price of our ordinary shares. We had 66,484,159 ordinary shares outstanding as of September 30, 2018. To the extent any of these shares are sold into the market, particularly in substantial quantities, the market price of our ordinary shares could decline.

Future issuances of ordinary shares pursuant to our equity incentive plans could also result in a reduction in the market price of our ordinary shares. We have filed registration statements on Form S-8 registering all of the ordinary shares that we may issue under our equity compensation plans. These shares can be freely sold in the public market upon issuance and once vested, subject to volume, notice and manner of sale limitations applicable to affiliates. The majority of ordinary shares that may be issued under our equity compensation plans remain subject to vesting in tranches over a four-year period. As of September 30, 2018, an aggregate of 1,771,367 options to purchase our ordinary shares had vested and become exercisable.

In addition, in March 2018, we entered into a Controlled Equity OfferingSM Sales Agreement, or the ATM Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which, from time to time, we may offer and sell our ordinary shares having an aggregate offering price of up to $50.0 million through Cantor. As of September 30, 2018, we had issued and sold an aggregate of 4,243,096 ordinary shares under the ATM Agreement. From September 30, 2018 to the date of this filing, we issued and sold an aggregate of 497,935 ordinary shares under the ATM Agreement.

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

Upfront consideration for the Acquisition is comprised of 8,152,092 of our ordinary shares, including 815,186 ordinary shares that are issuable upon release of the Holdback Shares subject to the terms of the Merger Agreement. While these shares are currently, and in the case of the Holdback Shares will be, restricted as a result of securities laws, following expiration of applicable holding periods, these shares will be able to be freely sold in the public market, subject to any requirements and restrictions, including any applicable volume limitations, imposed by Rule 144 under the Securities Act. In addition, the Merger Agreement provides that we may issue up to an additional $97.5 million in our ordinary shares to former Zavante stockholders upon the achievement of specified regulatory and commercial milestones in the future and obligates us to provide registration rights with respect to the registration for resale of such additional ordinary shares that may become issuable upon the achievement of such milestones.

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

We are an ‘‘emerging growth company’’, and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary shares less attractive to investors.

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

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

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

· reduced disclosure about the company’s executive compensation arrangements; and

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

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

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

In addition, the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies that are not emerging growth companies.

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

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

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

As a public company we incur, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Global Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations have increased our legal and financial

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compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations have made it more expensive for us to obtain director and officer liability insurance, and if such insurance becomes prohibitively expensive, this could make it more difficult for us to attract and retain qualified members of our board.

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

Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, is designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us, as and when required, conducted in connection with Section 404 of the Sarbanes-Oxley Act, or Section 404, or any subsequent testing by our independent registered public accounting firm, as and when required, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. As a larger company following the Acquisition, implementing and maintaining effective controls may require more resources, and we may encounter internal control integration difficulties. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our ordinary shares.

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

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

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

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

· the judgment must be for a definite sum;

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

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

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

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

Even if the above requirements have been met, an Irish court may exercise its right to refuse to enforce the U.S. judgment if the Irish court is satisfied that the judgment (1) was obtained by fraud; (2) is in contravention of Irish public policy; (3) is in breach of natural justice; or (4) is irreconcilable with an earlier judgment. By way of example, a judgment of a U.S. court of liabilities predicated

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upon U.S. federal securities laws may not be enforced by Irish courts on the grounds of public policy if that U.S. judgment includes an award of punitive damages. Further, an Irish court may stay proceedings if concurrent proceedings are being brought elsewhere.

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

We have not paid any dividends on our ordinary shares since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that earnings, if any, will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. If we propose to pay dividends in the future, we must do so in accordance with Irish law, which provides that distributions including dividend payments, share repurchases and redemptions be funded from “distributable reserves.” Payment of future dividends to security holders will be at the discretion of our board, after taking into account various factors including our business prospects, cash requirements, financial performance, debt covenant limitations and new product development.

We are exposed to risks related to currency exchange rates .

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

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

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

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

· commercial pricing and profit margins are affected by currency fluctuations.

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

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

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

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

As with any publicly traded company, the ownership percentage of our shareholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we intend to continue to grant to our directors, officers and employees. From time to time, we may issue additional options or other share awards to our directors, officers and employees under our benefits plans. Our employees are also entitled, subject to certain conditions, to purchase our ordinary shares at a discount pursuant to our Employee Share Purchase Plan.

In addition, our articles of association authorize us to issue, without the approval of our shareholders, one or more classes or series of preferred shares having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our ordinary shares respecting dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred shares could dilute the voting power or reduce the value of our ordinary shares. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred shares could affect the residual value of the ordinary shares. Additionally, we may issue and sell our ordinary shares under our ATM

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Agreement from time to time, and we may issue additional ordinary shares as contingent consideration upon the achievement of certain regulatory and commercialization milestones, subject to the terms and conditions of the Merger Agreement. See “—Risks Related to Ownership of our Ordinary Shares— Substantial future sales of our ordinary shares in the public market, or the perception that these sales could occur, could cause the price of our ordinary shares to decline significantly, even if our business is doing well. ”.

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

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

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

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

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

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

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

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

Certain separate concert parties will also be presumed to be acting in concert. Our board of directors and their relevant family members, related trusts and ‘‘controlled companies’’ are presumed to be acting in concert with any corporate shareholder who holds

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20% or more of the company. The application of these presumptions may result in restrictions upon the ability of any of the concert parties and members of our board of directors to acquire more of our securities, including under the terms of any executive incentive arrangements. We may consult with the Irish Takeover Panel with respect to the application of this presumption and the restrictions on the ability to acquire further securities if necessary, although we are unable to provide any assurance as to whether the Irish Takeover Panel would overrule this presumption.

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

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

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

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

Comprehensive tax reform legislation could adversely affect our business and financial condition.

The Tax Cuts and Jobs Act of 2017, or the Tax Act, introduced significant changes to the United States Internal Revenue Code of 1986, as amended, or Code.

The Tax Act, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense, limitation of the deduction for net operating losses, one time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, and modifying or repealing many business deductions and credits.

We continue to examine the impact the Tax Act may have on our business. Notwithstanding the reduction in the federal corporate income tax rate, the overall impact of the Tax Act is uncertain and our business and financial condition could be adversely affected.

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

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

As a result of the Tax Act, all of our non-U.S. subsidiaries will be treated as CFCs. The legislative history under the Tax Act indicates that this change was not intended to cause these non-U.S. subsidiaries to be treated as CFCs with respect to a United States shareholder that is not related to the U.S. subsidiary of the Company. However, it is not clear whether the IRS or a court would interpret the change made by the Tax Act in a manner consistent with such indicated intent.

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

For tax years beginning after December 31, 2017, the Tax Act also requires such United States shareholders to include in their gross income for U.S. federal income tax purposes their pro rata share of a CFC’s “global intangible low tax income”, or GILTI.” In general terms, GILTI is the net income of the CFCs (other than income already included in United States shareholders’ taxable income) that exceeds 10% of the CFCs’ bases in depreciable tangible assets. GILTI is treated in a manner similar to subpart F income.

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

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

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

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

Irish capital acquisitions tax, or CAT, could apply to a gift or inheritance of our ordinary shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because our ordinary shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €320,000 in respect of taxable gifts or inheritances received from their parents.

We may be classified as a passive foreign investment company for our tax year ending December 31, 2018, which may result in adverse U.S. federal income tax consequence to U.S. holders.

Based on our estimated gross income and average value of our gross assets and the nature of our business, we do not believe that we were a ‘‘passive foreign investment company,’’ or PFIC, for U.S. federal income tax purposes for our tax years ended December 31, 2015, 2016 or 2017. A corporation organized outside the United States generally will be classified as a PFIC for U.S. federal income tax purposes (1) in any taxable year in which at least 75% of its gross income is passive income or on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income and (2) as to a given holder who was a holder in such year and regardless of such corporation’s income or asset composition, in any subsequent taxable year, unless certain elections are made by that holder that can discontinue that classification as to that holder, at the risk of imposing substantial tax costs to that holder. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. Our status in any taxable year will depend on our assets and activities in each year, and because this is a factual determination made annually after the end of each taxable year, there can be no assurance that we will not be considered a PFIC for the current taxable year or any future taxable year. The market value of our assets may be determined in large part by reference to the market price of our ordinary shares, which may fluctuate considerably given that market prices of biotechnology companies have been especially volatile. We have also not determined the extent to which the income and assets of Zavante, which will be included in the PFIC calculation following the Acquisition, may adversely affect this determination. If we were to be treated as a PFIC for the tax year ending December 31, 2018, or any other future taxable year during which a U.S. holder held our ordinary shares, however, certain adverse U.S. federal income tax consequences could apply to the U.S. holder. We currently intend to make available the information necessary to permit a U.S. holder to make a valid QEF election, which may mitigate some of the adverse U.S. federal income tax consequences that could apply to a U.S. holder of ordinary shares. However, we may choose not to provide such information at a future date.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

We did not sell any of our equity securities or any options, warrants, or rights to purchase our equity securities during the three months ended September 30, 2018 that were not registered under the Securities Act of 1933, as amended, or the Securities Act.

Purchase of Equity Securities

We did not purchase any of our registered equity securities during the period covered by this Quarterly Report on Form 10-Q.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Incorporated by Reference

Exhibit
Number

Description of Exhibit

Form

File Number

Date of
Filing

Exhibit
Number

Filed
Herewith

2.1*

Agreement and Plan of Merger dated as of July 23, 2018, by and among Nabriva Therapeutics plc, Zuperbug Merger Sub I, Inc., Zuperbug Merger Sub II, Inc., Zavante Therapeutics, Inc. and Cam Gallagher, solely in his capacity as Stockholder Representative

8-K

001-37558

07/25/2018

2.1

10.1

Transition, Separation and Release of Claims Agreement, by and between Nabriva Therapeutics US, Inc. and Colin Broom, dated as of July 23, 2018

8-K

001-37558

07/25/2018

10.1

10.2

Employment Agreement, by and between Nabriva Therapeutics US, Inc. and Theodore Schroeder, dated as of July 23, 2018

8-K

001-37558

07/25/2018

10.2

10.3

Consulting Agreement, by and between Nabriva Therapeutics US, Inc. and Colin Broom, dated as of July 24, 2018 (included as Attachment A to Exhibit 10.1)

8-K

001-37558

07/25/2018

10.3

10.4

Stock Purchase Agreement by and among SG Pharmaceuticals, Inc., the Sellers named on Annex A, and Julia Feliciano, as Sellers’ Representative, dated as of May 5, 2015

10.5**

License Agreement by and between ICPD Holdings, LLC and Evelyn J. Ellis-Grosse and Zavante Therapeutics, Inc., dated as of March 1, 2014

10.6

Office Lease by and between AGP Sorrento R&D, LP and Zavante Therapeutics, Inc., dated as of June 16, 2016

10.7**

Manufacturing and Supply Agreement by and between Zavante Therapeutics, Inc. and Ercros, S.A., dated as of July 28, 2016

10.8**

Amended and Restated Three-Way Agreement by and between Laboratorios ERN, S.A, Ercros, S.A., and Zavante Therapeutics, Inc., dated as of July 28, 2016

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10.9**

Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement by and between Laboratorios ERN, S.A. and Zavante Therapeutics, Inc. dated as of July 28, 2016, as amended

10.10**

Manufacturing and Supply Agreement by and between Zavante Therapeutics, Inc. and Fisiopharma, S.r.l., dated as of April 14, 2017

10.11**

Commercial Packaging Agreement by and between Zavante Therapeutics, Inc. and AndersonBrecon Inc., d/b/a PCI of Illinois, dated as of December 26, 2017

10.12**

Packaging and Supply Agreement by and between Sharp Corporation and Nabriva Therapeutics US, Inc., dated as of August 30, 2018

10.13

Second Amended and Restated Employment Agreement by and between Nabriva Therapeutics US, Inc. and Steven Gelone, dated as of July 24, 2018

10.14

2018 Employee Share Purchase Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on June 19, 2018).

DEF 14A

001-37558

06/19/2018

99.1

10.15

2017 Share Incentive Plan, as Amended (incorporated by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on June 19, 2018).

DEF 14A

001-37558

06/19/2018

99.2

31.1

Certification of principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of principal executive officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of principal financial officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following materials from the Company’s Quarterly Report on Form10-Q for the quarter ended September 30, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2017 and September 30, 2018, (ii) Consolidated Statements of Operations for the nine months ended September 30, 2017 and 2018, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2018 and (v) Notes to Unaudited Consolidated Financial Statements.

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* Confidential treatment was granted for certain portions that are omitted from this exhibit. The omitted information has been filed separately with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the registrant’s application for confidential treatment. In addition, schedules have been omitted from this exhibit pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the registrant may request confidential treatment for any document so furnished.

**Confidential treatment has been requested as to certain portions, which portions have been omitted and separately filed with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NABRIVA THERAPEUTICS plc
Date: November 6, 2018
	By:	/s/ Theodore Schroeder
		Theodore Schroeder
		Chief Executive Officer
		(Principal Executive Officer)


Date: November 6, 2018	By:	/s/ Gary Sender
		Gary Sender
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Exhibit 10.4

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

by and among

SG PHARMACEUTICALS, INC.,

THE SELLERS NAMED ON ANNEX A

AND

JULIA FELICIANO

AS SELLERS’ REPRESENTATIVE

Dated as of May 5, 2015

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		Page

ARTICLE I. DEFINITIONS		1

ARTICLE II. THE STOCK PURCHASE		11

2.1	The Stock Purchase	11
2.2	The Closing	11
2.3	Allocation Certificate	12
2.4	Payments to Sellers	12
2.5	Milestone Payments	13
2.6	Royalty Payments	14
2.7	Payments Under Sections 2.5 and 2.6	15
2.8	Sellers’ Closing Deliverables	16
2.9	Buyer’s Closing Deliverables	16
2.10	Legend	17
2.11	Further Action	17

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLERS		17

3.1	Organization; Standing and Power; Charter Documents; Subsidiaries; Sellers’ Title	18
3.2	Capital Structure	19
3.3	Authority	20
3.4	Non-Contravention	20
3.5	Necessary Consents	21
3.6	Financial Statements	21
3.7	Undisclosed Liabilities	21
3.8	Absence of Certain Changes or Events	21
3.9	Taxes	22
3.10	Intellectual Property	24
3.11	Compliance; Permits	28
3.12	Litigation	29
3.13	Brokers’ and Finders’ Fees; Fees and Expenses	29
3.14	Employee Benefit Plans	29
3.15	Real Property	32
3.16	Assets	33
3.17	Environmental Matters	33
3.18	Contracts	34

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(Continued)

		Page

3.19	Regulatory Compliance	37
3.20	Insurance	38
3.21	Indebtedness with Affiliates	38
3.22	Certain Payments	38
3.23	Minute Books	38
3.24	Related Party Transactions	39
3.25	Customers, Licensees and Suppliers	39
3.26	Complete Copies of Materials	39
3.27	Investment Representations	39
3.28	Disclosure	40

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER		41

4.1	Organization; Standing and Power; Charter Documents	41
4.2	Authority	41
4.3	Non-Contravention	42
4.4	Investigation	42
4.5	Necessary Consents	42

ARTICLE V. ADDITIONAL AGREEMENTS		43

5.1	Confidentiality	43
5.2	Public Disclosure	43
5.3	Company Directors and Officers	43
5.4	Tax Matters	43
5.5	FIRPTA Compliance	45

ARTICLE VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; ESCROW		45

6.1	Survival of Representations and Warranties	45
6.2	Escrow	46
6.3	Indemnification; Escrow Fund; Right of Setoff	46
6.4	Limitation on Remedies	47
6.5	Sellers’ Representative	48
6.6	Third-Party Claims	50
6.7	Notice of Indemnity Claims Other than Third-Party Claims	52

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(Continued)

		Page

6.8	No Circular Recovery	53
6.9	Determination of Indemnifiable Losses	53
6.10	Tax Consequences of Indemnification Payments	53

ARTICLE VII. AMENDMENT AND WAIVER		53

7.1	Fees and Expenses	53
7.2	Amendment	54
7.3	Waiver	54

ARTICLE VIII. GENERAL PROVISIONS		54

8.1	Notices	54
8.2	Interpretation; Knowledge	55
8.3	Counterparts	57
8.4	Entire Agreement; Third-Party Beneficiaries	57
8.5	Governing Law; Arbitration	57
8.6	Severability	59
8.7	Other Remedies	59
8.8	Waiver of Jury Trial	60
8.9	Rules of Construction	60
8.10	Assignment	60
8.11	No Waiver	60

iii

Exhibits

Exhibit A		Form of Escrow Agreement
Exhibit B		Form of Employment Agreement
Exhibit C		Form of Non-Competition Agreement

Annexes

Annex A		Capital Stock Owned by Sellers
Annex B		Sellers to Deliver Non-Competition Agreements
Annex C		Allocation of Buyer Common Stock to Certain Sellers

INDEX OF DEFINED TERMS

Terms		Cross Reference in Agreement
Affiliate		Article I
Agreement		Preamble
Allocation Certificate		2.3
Balance Sheet Date		3.6
Board of Directors		Recitals
Business Day		Article I
Buyer Common Stock		Article I
Buyer Equity Transaction		Article I
Buyer Related Entity		Article I
Buyer Shares		3.27(a)
Certificates		2.8(a)
Change in Control Payments		Article I
Claim Notice		6.6(a)
Closing		2.2
Closing Cash Consideration		Article I
Closing Consideration		Article I
Closing Date		2.2
Closing Stock Consideration		2.4(a)(ii)
COBRA		Article I
Code		Article I
Company		Preamble
Company Balance Sheet		3.6
Company Business		Article I
Company Capital Stock		2.4(a)
Company Charter Documents		3.1(b)
Company Common Stock		2.4(a)
Company Disclosure Letter		Article III
Company Employee Plan		Article I
Company Intellectual Property		Article I
Company IP Contract		Article I
Company Material Contract		3.18(a)
Company Owned Intellectual Property		Article I
Company Patent Rights		Article I
Company Permits		3.11(b)
Company Products		Article I

Terms		Cross Reference in Agreement
Company Registered Intellectual Property		3.10(a)
Confidentiality Agreement		5.1
Contract		Article I
Controlling Party		6.6(d)
Disqualification Events		3.27(f)
Employee		Article I
Employee Agreement		Article I
Employment Agreement		2.8(c)
Environmental Laws		3.17
Environmental Permits		3.17
ERISA		Article I
ERISA Affiliate		Article I
Escrow Agent		Article I
Escrow Agreement		Recitals
Escrow Amount		Article I
Escrow Fund		Article I
Escrow Termination Date		Article I
Financial Statements		3.6
Fundamental Representations		Article I
Governmental Entity		3.5
Hazardous Materials		3.17
include, includes, including		8.2(a)
Indebtedness		Article I
Indemnification Demand		6.7(a)
Indemnification Dispute Notice		6.7(b)
Indemnified Parties		Article I
Intellectual Property		Article I
International Employee Plan		Article I
IRS		Article I
Knowledge of the Sellers		8.2(b)
Leased Real Property		3.15
Leases		3.15
Legal Requirements		Article I
Liens		Article I
Losses		Article I
Material Adverse Effect		8.2(c)
Milestone Event or Milestone Events		2.5(a)

Terms		Cross Reference in Agreement
Milestone Payment or Milestone Payments		2.5(a)
Multiemployer Plan		Article I
Necessary Consents		3.5
Non-Competition Agreements		2.8(d)
Non-controlling Party		6.6(d)
Outstanding Shares		Article I
Patent Rights		Article I
Pension Plan		Article I
Per Share Closing Cash Consideration		Article I
Permits		3.11(b)
Permitted Liens		Article I
Person		8.2(d)
Pre-Closing Tax Period		Article I
Pro Rata Portion		Article I
Regulation D		3.27(d)
Related Party		Article I
Release		3.17
Right of Setoff		6.3(b)
Safety Notices		3.19(d)
Stock Purchase		2.1
Stock Restriction Agreement		2.8(c)
Sellers		Preamble
Sellers’ Representative		6.5(a)
Shares		Recitals
Straddle Period		Article I
Subsidiary		3.1(c)
Tax or Taxes		Article I
Tax Authority		Article I
Tax Contest		5.4(b)
Tax Return		Article I
the business of		8.2(a)
Third-Party Claim		6.6(a)
Third Party Intellectual Property		Article I
Third Party Patent Rights		Article I
Trade Secrets		Article I
Transaction Documents		Article I
Transaction Expenses		7.1

vii

Terms		Cross Reference in Agreement
Transfer Taxes		5.4(d)

viii

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “ Agreement ”) is made and entered into as of May 5, 2015, by and among SG Pharmaceuticals, Inc., a Delaware corporation (“ Buyer ”), the persons listed as stockholders on Annex A hereto (collectively referred to herein as the “ Sellers ” and individually as a “ Seller ”), and Julia Feliciano, as Sellers’ Representative (as defined in Section 6.5(a) ).

RECITALS

A. The Sellers own beneficially and of record all of the issued and outstanding capital stock of Zavante Therapeutics, Inc., a Delaware corporation (the “ Company ”), as set forth on Annex A hereto (the “ Shares ”), and each of the Sellers desire to sell to the Buyer, and Buyer desires to purchase from each of the Sellers, all of such Seller’s right, title and interest in and to the Shares on the terms and conditions contained herein.

B. The Board of Directors of Buyer (the “ Board of Directors ”) has deemed it advisable and in the best interests of Buyer and its stockholders that Buyer and the Sellers enter into this Agreement to effect the transactions contemplated hereby.

C. Concurrently with the completion of the transactions contemplated by this Agreement, and as a condition and inducement to Buyer’s willingness to consummate the transactions contemplated by this Agreement, Buyer, the Sellers’ Representative and the Escrow Agent (as defined in Article I ) shall enter into an escrow agreement, substantially in the form attached hereto as Exhibit A (with such changes as the Escrow Agent may reasonably request, the “ Escrow Agreement ”), pursuant to which a portion of the aggregate Closing Cash Consideration (as defined in Article I ) shall be placed in an escrow account to satisfy and secure the obligations set forth in Article VI .

D. The parties desire to make certain representations, warranties and agreements in connection with the transactions contemplated by this Agreement and also to prescribe certain conditions to such transactions.

NOW, THEREFORE , in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I.
DEFINITIONS

For the purposes of this Agreement, the following terms have the following meanings:

“ Affiliate ” shall mean, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person.

“ Business Day ” shall mean any day that is not Saturday or Sunday or any other day on which banks are required or authorized by law to close in the State of California.

“ Buyer Common Stock ” shall mean the common stock of Buyer, par value $0.0001 per share.

“ Buyer Equity Transaction ” shall mean the closing of any sale of equity securities by Buyer to any third Person for cash consideration after the Closing Date, and excluding amounts received pursuant to any convertible note financing completed prior to the Closing Date.

“ Buyer Related Entity ” shall mean Buyer, its Affiliates, or its sublicensees.

“ Change in Control Payments ” shall mean any amounts that are payable to any current or former director, officer, Employee or consultant of the Company as a result of the execution and delivery of this Agreement or the consummation of the Stock Purchase, whether pursuant to any Company Employee Plan or any other employment, severance or change-in-control Contract or otherwise, including any payroll, employment and other Taxes payable in connection with any such payments, or any other amounts, arising out of the payment of the foregoing or the Closing Consideration.

“ Closing Cash Consideration ” shall mean:

(i) $400,000, minus

(ii) an amount equal to the Company’s aggregate current liabilities in excess of assets as of the Closing which are greater than $20,000 (other than deferred Tax liabilities that reflect timing differences between book and Tax accounting and without duplication for Transaction Expenses or Change in Control Payments that are to be paid at the Closing), and applying the same accounting principles and methodologies used to prepare the Company Balance Sheet, minus

(iii) the Indebtedness, minus

(iv) the Company’s Transaction Expenses that are unpaid as of the Closing, minus

(v) any Change in Control Payments that are unpaid as of the Closing, minus

(vi) the Escrow Amount.

“ Closing Consideration ” shall mean the Closing Cash Consideration and the Closing Stock Consideration.

“ COBRA ” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and as codified in Section 4980B of the Code and Section 601 et. seq. of ERISA.

“ Code ” shall mean the United States Internal Revenue Code of 1986, as amended.

“ Company Business ” shall mean the businesses conducted by the Company as of the date hereof.

“ Company Employee Plan ” shall mean any plan, program, policy, practice, contract, agreement or other arrangement providing for compensation, bonuses, pension, retirement, post-employment, profit-sharing, severance, termination pay, incentive or deferred compensation, performance awards, stock or stock-related awards, health, disability and fringe benefits, vacation, insurance (including self-insured arrangements) or other employee benefits or remuneration of any kind, whether written or unwritten or otherwise, funded or unfunded, including without limitation, each “employee benefit plan,” within the meaning of Section 3(3) of ERISA which is currently maintained, contributed to, or required to be contributed to, by the Company or any ERISA Affiliate for the benefit of any current or former employee, officer, director or consultant of the Company, or with respect to which the Company or any ERISA Affiliate has or may have any liability or obligation, including all International Employee Plans, Employee Agreements and consulting agreements with independent contractors.

“ Company Intellectual Property ” shall mean the Company Owned Intellectual Property together with any Third Party Intellectual Property.

“ Company IP Contract ” shall mean any Contract to which the Company is a party and pursuant to which (i) the Company has granted a license (including any sublicense) under Company Intellectual Property to any third Person, or any option with respect thereto, or (ii) any third Person has granted a license (including any sublicense) to the Company to any Company Intellectual Property; provided that Company IP Contracts shall not include (A) “shrink wrap” and similar off-the-shelf software licenses or (B) other non-material agreements and licenses ancillary to the purchase or use of equipment, reagents or other materials.

“ Company Owned Intellectual Property ” shall mean all Intellectual Property, whether registered or not, which has been assigned to the Company, for which there exists an obligation to assign to the Company or which was invented by an Employee, Founder or independent contractor of the Company, and which is either used in the conduct of the Company’s Business or the Company currently intends to use in the conduct of the Company’s Business, whether or not reduced to practice.

“ Company Patent Rights ” shall mean all Patent Rights which have been assigned to the Company, for which there exists an obligation to assign to the Company or which are owned by an Employee, Founder or independent contractor of the Company, and which are either used in the conduct of the Company’s Business or the Company currently intends to be used in the conduct of the Company’s Business.

“ Company Products ” shall mean ZTI-01 (Fosfomycin IV) and ZTI-02 (Fosfomycin oral), and all other forms, derivatives, reformulations or modifications thereof, used now or developed in the future by the Company and/or any of its Affiliates; provided that the term “Company Products” shall (i) include any oral or intravenous Fosfomycin molecule or formulation that may rely upon market exclusivity rights for a Qualified Infectious Disease Product pursuant to the 21st Century Cures Act (as currently contemplated and as may be revised or amended prior to adoption) generated by or related to ZTI-01 (Fosfomycin IV) and ZTI-02 (Fosfomycin oral) or otherwise references or relies upon the confidential and/or non-public portions of any ZTI-01 (Fosfomycin IV) or ZTI-02 (Fosfomycin oral) regulatory filings or submissions, and (ii) exclude any Fosfomycin molecule or formulation that is acquired or in-licensed by Buyer, the Company or their Affiliates, or in the case of any subsequent acquirer, assignee or licensee of Buyer, the Company or their Affiliates, any Fosfomycin molecule or formulation that was already owned or controlled by such party or is developed independently from, and without reference to, the Company Intellectual Property.

“ Contract ” shall mean any written or oral agreement, contract, subcontract, settlement agreement, lease, instrument, note, warranty, purchase order, license, sublicense or other legally binding commitment.

“ Employee ” shall mean any current or former or retired employee of the Company and any Person who currently or formerly provided services to the Company. For the avoidance of doubt, nothing in this Agreement shall be deemed to give any Person any claim to be treated as an employee of the Company.

“ Employee Agreement ” shall mean each written employment, severance, consulting, independent contracting, or relocation agreement or contract between the Company and any Employee under which the Company has any outstanding obligation.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” shall mean any individual or entity treated as a single employer with the Company under Section 414(b), (c), (m) or (o) of the Code.

“ Escrow Agent ” shall mean SunTrust Bank, a Georgia banking corporation, or any successor as determined in accordance with the Escrow Agreement.

“ Escrow Amount ” shall mean $50,000.

“ Escrow Fund ” shall mean the fund in which the Escrow Amount is held by the Escrow Agent in accordance with this Agreement and the Escrow Agreement.

“ Escrow Termination Date ” shall mean the date that is six (6) months following the Closing Date.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ FDA ” means the U.S. Food and Drug Administration of the United States Department of Health and Human Services or any successor agency thereof.

“ FDCA ” means the Federal Food, Drug and Cosmetic Act.

“ First Commercial Sale ” shall mean the first sale of any Company Product by any Buyer Related Entity following Marketing Approval of such Company Product by the appropriate Regulatory Authority for the country in which the sale is to be made.

“ Founder ” shall mean any of Evelyn J. Ellis-Grosse and Steve Manogue.

“ Fundamental Representations ” shall mean, with respect to the Company, the representations and warranties of the Company set forth in Section 3.1 (Organization; Standing and Power; Charter Documents; Subsidiaries) and Section 3.2 (Capital Structure), Section 3.3 (Authority), Section 3.4 (Non-Contravention), Section 3.5 (Necessary Consents), Section 3.9 (Taxes) Section 3.10 (Intellectual Property), Section 3.13 (Brokers’ and Finders’ Fees; Fees and Expenses), and Section 3.17 (Environmental Matters).

“ GAAP ” means generally accepted accounting principles in the United States as in effect from time to time

“ Indebtedness ” shall mean (i) all indebtedness of the Company for borrowed money or indebtedness issued or incurred in substitution or exchange for borrowed money, (ii) amounts owing by the Company as deferred purchase price for property or services (excluding obligations to creditors for goods and services incurred in the ordinary course of business and reflected as current liabilities on the Company Balance Sheet), (iii) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security for the payment of which the Company is responsible or liable, (iv) commitments or obligations by which the Company assures a creditor against Loss (including contingent reimbursement obligations with respect to letters of credit), (v) indebtedness secured by a Lien on any assets and properties of the Company, (vi) obligations to repay deposits or other amounts advanced by and owing by the Company to third parties, (vii) obligations of the Company under any interest rate, currency or other hedging agreement, (viii) obligations of the Company under capital leases in respect of which the Company is liable as obligor or guarantor, or (ix) guarantees under which the Company is liable with respect to any indebtedness, obligations, claim or liability of any other Person of a type described in clauses (i) through (viii) above, and (x) any accrued interest, prepayment penalties, premiums, fees and expenses due and payable in respect of any of the foregoing.

“ Indemnified Parties ” shall mean Buyer and its respective officers and directors.

“ Intellectual Property ” shall mean any or all United States and foreign intellectual property rights, arising under statutory, common or other law and whether or not perfected or registered, and all rights associated therewith, including: (i) all patents and patent applications (including United States provisional patent applications, United States non-provisional patent applications, PCT patent applications, and foreign patent applications), and all reissues, reexaminations, divisionals, renewals, extensions, continuations and continuations-in-part thereof, whether or not patentable, anywhere in the world; (ii) all data and documentation (including all laboratory notebooks); (iii) all rights relating to Trade Secrets, including Knowledge of the Sellers related to the manufacture and development of Company Products and any cell lines utilized in the manufacture and development of Company Products; (iv) all rights associated with works of authorship, including copyrights and moral rights in both published and unpublished works and registrations and applications for registration thereof, and all other rights corresponding thereto throughout the world; and (v) all registered and unregistered trademarks, service marks, trade names, corporate names, domain names and other names and slogans, logos, common law trademarks and service marks, trade dress, industrial designs, including all registrations and applications therefor throughout the world and the goodwill associated therewith.

“ IRS ” shall mean the Internal Revenue Service.

“ Legal Requirements ” shall mean any federal, state, local, municipal or foreign law, statute, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.

“ Liens ” shall mean any or all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever.

“ Losses ” shall mean any and all losses, liabilities, damages, judgments, settlements, awards, fines, penalties, Taxes, costs and expenses (including reasonable attorneys’ fees and expenses and costs of investigation paid to Third Parties), whether involving a third-party claim or a claim solely between the parties hereto.

“ Marketing Approval ” means, with respect to a Company Product in any regulatory jurisdiction and for any indication, the approval of a Regulatory Authority required to authorize the marketing of such Company Product in such jurisdiction for such indication.

“ Multiemployer Plan ” shall mean any Pension Plan which is a “multiemployer plan,” as defined in Section 3(37) of ERISA.

“ Net Sales ” means the gross amounts billed or invoiced by any Buyer Related Entity to third parties (for the avoidance of doubt, excluding sales among Buyer and any of its affiliates or sublicensees) for the sale of Company Products, less the following deductions calculated in accordance with GAAP and as determined from the books and records of the applicable Buyer Related Entity maintained in accordance with GAAP: (a) normal and customary trade, quantity and cash discounts allowed and taken, refunds, chargebacks and any other allowances given and, in each case, taken by the third party customer, which effectively reduce the gross amounts billed or invoiced; (b) product returns, credits and allowances; (c) rebates, reimbursements, fees, taxes or similar payments to (i) wholesalers and other distributors, pharmacies and other retailers, buying groups (including group purchasing organizations), health care insurance carriers, pharmacy benefit management companies, health maintenance organizations, governmental entities, or other institutions or health care organizations to the extent actually paid or credited or (ii) patients and other third parties arising in connection with any program that provides low income, uninsured or other patients the opportunity to obtain discounted Company Products; (d) discounts mandated by, or granted to meet the requirements of, applicable laws, including required chargebacks and retroactive price reductions; (e) actual uncollectible or bad debts; (f) reasonable sales commissions; (g) shipping, handling, freight, postage, insurance and transportation charges; and (h) taxes,

excises or other governmental charges imposed upon or measured by the production, sale, transportation, delivery or use of goods (excluding taxes imposed on or measured by the net income or profits of the Buyer Related Entities), in each case not reimbursable, refundable or creditable to the Buyer Related Entities.

“ NDA ” means a New Drug Application filed in the United States with the FDA in accordance with the FDCA with respect to a pharmaceutical product or any analogous application or filing with any Regulatory Authority outside of the United States (including any supra-national agency such as the European Union) for the purpose of obtaining regulatory approval to market and sell a pharmaceutical product in such jurisdiction

“ Outstanding Shares ” shall mean, without duplication, the total number of shares of Company Common Stock issued and outstanding as of immediately prior to the Closing.

“ Patent Rights ” shall mean all (i) issued patents; (ii) pending patent applications and any related patent applications filed in the future claiming priority thereto, including all provisional applications, non-provisional applications, international (PCT) applications, substitutions, continuations, continuations in part, divisions, renewals and all patents granted thereon or issuing therefrom; (iii) all patents of addition, reissues, re-examinations and extensions or restorations by existing or future extension or restoration mechanisms, including supplementary protection certificates or the equivalent thereof; (iv) registration patents, inventor’s certificates or confirmation patents; and (v) any form of government-issued right substantially similar to any of the foregoing, in each case in any country or patent examining or granting jurisdiction.

“ Pension Plan ” shall mean each Company Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

“ Per Share Closing Cash Consideration ” shall mean the quotient of (i) the Closing Cash Consideration divided by (ii) the Outstanding Shares.

“ Permitted Liens ” shall mean the following, in each case as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (i) statutory liens for current Taxes not yet due and payable or delinquent, or for Taxes the validity or amount of which is being contested in good faith by appropriate proceedings and for which appropriate reserves have been established on the Company Balance Sheet in accordance with GAAP; (ii) materialmen’s, mechanics’, carriers’, workmen’s, and repairmen’s liens and other similar liens arising in the ordinary course of business for securing obligations that are not yet due (unless the validity or amount is being contested in good faith by appropriate proceedings and appropriate reserves have been established therefor on the Company Balance Sheet); (iii) pledges or deposits to

secure obligations under Legal Requirements or similar legislation or to secure public or statutory obligations; (iv) liens on leases, subleases, easements, licenses, rights of use, rights to access and rights of way arising from the provisions of such agreements or benefiting or created by any superior estate, right or interest that do not or would not materially impair the use or occupancy of the real property and improvements in respect of which the Company has a right to use; (v) any Liens set forth in any title policies, endorsements, title commitments, title certificates and/or title reports or any other minor survey exemptions, reciprocal easement agreements and other customary encumbrances on title relating to the Company’s interests in real property, in each case, that (a) were not incurred in connection with any indebtedness for borrowed money and (b) do not materially impair the present use of the properties or assets of the Company; and (vi) any lien arising under any Contract evidencing indebtedness for borrowed money that will be released at or prior to the Closing .

“ Pre-Closing Tax Period ” shall mean any Tax period ending on or before the Closing Date and that portion of any Straddle Period ending on (and including) the Closing Date.

“ Pro Rata Portion ” shall mean, with respect to each Seller, the quotient (expressed as a percentage and calculated to four decimal points (e.g., 5.4321%)) obtained by dividing (x) the portion of the Closing Cash Consideration to be received by such Seller for all Outstanding Shares held by such Seller by (y) the aggregate Closing Cash Consideration payable to all such Sellers for all Outstanding Shares held by all such Sellers.

“ Property Taxes ” shall mean all real property Taxes, personal property Taxes and similar ad valorem Taxes.

“ Qualified Transaction ” shall mean the grant, sale, license or transfer by a Buyer Related Entity of market exclusivity rights for a Qualified Infectious Disease Product pursuant to the 21 st Century Cures Act (as currently contemplated and as may be revised or amended prior to adoption) generated by or related to a Company Product; provided that such grant, sale, license or transfer is separate from the grant, sale, license or transfer of other development or commercialization rights for such Company Product and, provided further that a Qualified Transaction shall not include a sale of the Company (by stock purchase, merger, or otherwise), or a sale of all or substantially all of the assets of the Company.

“ Regulatory Authorities ” means the FDA and comparable regulatory or Governmental Entities in the world.

“ Related Party ” shall mean each of the following: (i) each Person holding in excess of five percent (5%) of the Company Capital Stock, on a fully-diluted, as-converted basis; (ii) each individual who is, or who has at any time been, an officer or director of the Company; (iii) each member of the immediate family of each of the individuals referred to in clause (i) or (ii) above; and (iv) any trust or other Person (other than the Company) in which any one of the Persons referred to in clause (i), (ii) or (iii) above holds (or in which more than one of such Persons collectively hold), beneficially or otherwise, a material voting, proprietary, equity or other financial interest.

“ SEC ” shall mean the U.S. Securities and Exchange Commission.

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Straddle Period ” shall mean any Tax period beginning before or on the Closing Date and ending after the Closing Date.

“ Tax or Taxes ” shall mean any and all federal, state, local and foreign taxes and other like governmental charges, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value-added, alternative, add-on minimum, estimated, ad valorem, transfer, franchise, branch profits, windfall profit, registration, license, withholding, payroll, recapture, employment, social security, disability, severance, stamp, occupation, capital stock, municipal, environmental, excise, real and personal property taxes, custom duty or other tax of any kind whatsoever, together with all interest, penalties and additions imposed with respect to such amounts, whether disputed or not.

“ Tax Authority ” shall mean any governmental agency, board, bureau, body, department or authority of any United States federal, state or local jurisdiction or any foreign jurisdiction, having or purporting to exercise jurisdiction with respect to any Tax.

“ Tax Return ” shall mean any return, declaration, statement, report, claim for refund, filing or form relating to Taxes (including estimated Tax, withholding Tax and information returns and reports), including any schedule or attachment thereto and any amendment thereof.

“ Third Party Intellectual Property ” shall mean all Intellectual Property that (i) relates to the Company Products, and (ii) is either (a) licensed from a third Person to the Company, (b) otherwise used by the Company, or (c) Intellectual Property the Company intends to acquire the right to use pursuant to a Company IP Contract with a third Person.

“ Third Party Patent Rights ” shall mean the Patent Rights included within the Third Party Intellectual Property.

“ Trade Secrets ” shall mean all rights relating to trade secrets and other confidential business information, including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, including know-how related to the manufacture and development of Company Products and any cell lines utilized in the manufacture and development of Company Products, manufacturing and production processes and techniques, secret formulas, compositions, formulations, research and development information, drawings, specifications, designs, plans, charts, diagrams, proposals, technical data, databases, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information.

“ Transaction Documents ” shall mean, collectively, this Agreement, the Escrow Agreement, the Employment Agreement, the Non-Competition Agreements, and all other agreements to be executed by the Sellers, on the one hand, and the Buyer, on the other hand, in connection with the transactions contemplated hereby.

“ Transaction Revenue ” shall mean the aggregate cash consideration (and the fair market value of any non-cash consideration) received by a Buyer Related Entity in connection with a Qualified Transaction.

ARTICLE II.
THE STOCK PURCHASE

2.1 The Stock Purchase . Upon the terms and subject to the conditions of this Agreement, each Seller hereby agrees to sell, transfer, convey, assign and deliver to Buyer, and Buyer hereby agrees to purchase, acquire and accept from each Seller, all right, title and interest in and to the number of Shares set forth opposite such Seller’s name on Annex A hereto, which Shares constitute all of the Shares owned by such Seller, free and clear of any Lien, in exchange for the Closing Consideration set forth in Section 2.4 hereof (the “ Stock Purchase ”).

2.2 The Closing . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Latham & Watkins LLP, located at 12670 High Bluff Drive, San Diego, California 92130, on the date hereof, simultaneously with the execution of this Agreement. The date on which the Closing occurs is referred to herein as the “ Closing Date .”

2.3 Allocation Certificate . At least two (2) Business Days prior to the Closing, the Company and the Sellers shall deliver to Buyer a certificate (the “ Allocation Certificate ”) of the Company signed by the Chief Executive Officer of the Company certifying, in each case as of the Closing, (a) the identity of each Seller and the number of shares of Company Common Stock held by such Seller, including each Seller’s Pro Rata Portion, expressed as a percentage; (b) the address of record of each Seller; (c) wire instructions for an account of each Seller to which payments should be made; and (d) the Closing Cash Consideration, the Closing Stock Consideration and Escrow Amount allocable to each such Seller, which Allocation Certificate when approved by Buyer shall be deemed the definitive allocation of the Closing Consideration among the Sellers in accordance with the transactions contemplated by this Agreement, including with respect to the Escrow.

2.4 Payments to Sellers . Upon the terms and subject to the conditions of this Agreement, at the Closing, the following shall occur:

(a) Company Common Stock . Each share of Company’s common stock, par value $0.0001 per share (the “ Company Common Stock ”), issued and outstanding immediately prior to the Closing and held by a Seller will be purchased by the Buyer in exchange for the right to receive the following consideration:

(i) Closing Date Cash Payment . Payable no later than the tenth (10 th ) day after the Closing Date, subject to Section 6.2 , cash, without interest, in an amount equal to the Per Share Closing Cash Consideration.

(ii) Closing Date Stock Payment . Payable on the Closing Date, a number of shares of Buyer Common Stock, in the aggregate amount as set forth next to each such Seller’s name on Annex C hereto (the “ Closing Stock Consideration ”).

(iii) Escrow Payment . A non-transferable, contingent right to distributions of funds (together with earnings thereon) to be held in one or more escrow accounts pursuant to the Escrow Agreement from and after the Closing, to secure indemnification obligations to the Indemnified Parties attributable to such Company Capital Stock, such distributions to be paid in accordance with Section 6.2 .

Upon each Seller’s sale of such Seller’s Shares to Buyer, each holder of a certificate representing any share of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the consideration set forth in this Section 2.4(a) .

(b) Per Share Closing Cash Consideration . For the avoidance of doubt, the aggregate Per Share Closing Cash Consideration payable to any Seller pursuant to this Section 2.4 shall be rounded down to the nearest whole cent ($0.01).

(c) Buyer and the Escrow Agent shall be entitled to deduct and withhold, or cause to be deducted and withheld, from any consideration payable or other payment pursuant to this Agreement to any Seller or any other Person such amounts as are required to be deducted or withheld therefrom under the Code or otherwise under any other applicable Legal Requirement. To the extent such amounts are so deducted or withheld and timely paid to the appropriate Tax Authority, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person in respect of whom such deduction and withholding was made.

(d) Notwithstanding anything to the contrary in this Agreement, neither Buyer nor any other party hereto shall be liable to a Seller for any amount properly paid to a public official pursuant to any applicable abandoned property, escheat or similar law.

2.5 Milestone Payments .

(a) In accordance with the terms and conditions of this Agreement, the Buyer will pay to each Seller, after the achievement of each of the following events (each, a “ Milestone Event ,” and collectively, the “ Milestone Events ”) in accordance with the time periods set forth in Section 2.5(b) , the following milestone payments (each, a “ Milestone Payment ,” and collectively, the “ Milestone Payments ”) in accordance with each Seller’s Pro Rata Portion:

(i) $1,500,000, upon the first to occur of one of the following events: (A) receipt by Buyer of an aggregate of $20,000,000 in one or more Buyer Equity Transactions or (B) acceptance by the FDA of an NDA submission for any Company Product in the United States;

(ii) $3,000,000, upon the grant of Marketing Approval by the FDA for any Company Product in the United States;

(iii) $3,000,000 if Net Sales of the Company Products exceed, on a cumulative basis, $50,000,000 in the first thirty (30) months following the First Commercial Sale of a Company Product;

(iv) $6,000,000 if Net Sales of the Company Products equals or exceeds $100,000,000 in a single calendar year;

(v) $7,000,000 if Net Sales of the Company Products equals or exceeds $500,000,000 in a single calendar year; and

(vi) $10,000,000 if Net Sales of the Company Products equals or exceeds $700,000,000 in a single calendar year.

(b) Notwithstanding the foregoing, each Milestone Payment is only payable the first time such Milestone Event is achieved. For the avoidance of doubt, the maximum aggregate amount of Milestone Payments payable under this Agreement is $30,500,000. Milestone Payments pursuant to Subsections 2.5(a)(i) and 2.5(a)(ii) will be due and payable ten (10) days following the occurrence of the event triggering such payment obligation. Milestone Payments pursuant to Subsections 2.5(a)(iii) through 2.5(a)(vi) will be due and payable forty-five (45) days following the end of the applicable time period triggering such payment obligation. Buyer shall make all payments, in accordance with each Seller’s Pro Rata Portion, to the account of each Seller set forth on the Allocation Certificate, unless a Seller provides updated account information to Buyer at least two (2) Business Days prior to the scheduled date of such Milestone Payment.

2.6 Royalty Payments .

(a) From and after the Closing, Buyer shall pay to the Sellers, in accordance with each Seller’s Pro Rata Portion, a royalty on Net Sales and Transaction Revenue as follows:

(i) 4.5% of annual Net Sales up to $50,000,000 in a single calendar year;

(ii) 6.0% of annual Net Sales over $50,000,000 in a single calendar year; and

(iii) 5.0% of Transaction Revenue in connection with the consummation of a Qualified Transaction, provided , that in the event that Transaction Revenue consists of non-cash consideration, the Company shall have the right, at its sole option, to defer payment of the portion of such Transaction Revenue consisting of non-cash consideration under this Section 2.6(a)(iii) for a period of up to (24) months from the date that such payment would otherwise become due and payable, provided , further that at the time such payment is finally made to the Sellers in accordance with this Section 2.6(a)(iii) , it shall be subject to simple interest from the date initially due through and including the date upon which payment is received, with such interest calculated, over the period between the date due and the date paid, at an annual rate of interest equal to the United States Dollar LIBOR 12 month rate, as such rate is published by the Wall Street

Journal for the period in question (or any comparable replacement rate agreed to by the Parties), plus five (5) percentage points.

(b) Notwithstanding the foregoing, on a product-by-product and country-by-country basis, in the event that sales of generic fosfomycin products account for half of the market for such product in such country, then the applicable royalty rate set forth in Sections 2.6(a)(i) and (ii) shall be reduced by fifty percent (50%).

(c) Buyer shall make royalty payments, in accordance with each Seller’s Pro Rata Portion, to the account of each Seller set forth on the Allocation Certificate, unless a Seller provides updated account information to Buyer at least two (2) Business Days prior to the scheduled date of such royalty payment. Such payments shall be made (i) in the case of payments set forth in Sections 2.6(a)(i) and (ii) , within forty-five (45) days following the end of each quarter, and (ii) in the case of payments set forth in Section 2.6(a)(iii) , within ten (10) days following the receipt by Buyer of such Transaction Revenue.

2.7 Payments Under Sections 2.5 and 2.6 .

(a) Late Payments . Any amounts due pursuant to Sections 2.5 and 2.6 above which are not paid within thirty (30) days after the date due under this Agreement are subject to simple interest from the date due through and including the date upon which payment is received. Interest is calculated, over the period between the date due and the date paid, at an annual rate of interest equal to the United States Dollar LIBOR 12 month rate, as such rate is published by the Wall Street Journal for the period in question (or any comparable replacement rate agreed to by the Parties), plus two (2) percentage points, or the maximum rate permitted by applicable law, whichever is less.

(b) Audit Rights . Buyer (and its Buyer Related Entities) shall maintain accurate books and records that enable the calculation of amounts payable hereunder to be verified. Buyer (and its Buyer Related Entities) shall retain such books and records related to all such payments for three (3) years after payment and/or calculation of the applicable amount. Sellers’ Representative may request an inspection of the books and records of any Buyer Related Entity for the purpose of verifying the accuracy of the payments made under this Agreement, and for this purpose shall use the independent certified accountants of the applicable Buyer Related Entity, assisted by an independent certified public accountants designated by the Sellers’ Representative and reasonably acceptable to the Buyer Related Entity; such accountants shall be given access, upon thirty (30) days prior written notice, to the books and records of the Buyer Related Entity being inspected and its Affiliates and sublicensees during normal business hours to conduct such review or audit, solely to the extent necessary for the purpose of verifying the accuracy of the payments made under this

Agreement. The foregoing right of inspection may be exercised only once per year and only once with respect to each such payment. If the inspection shows an underpayment, the owing Party shall promptly pay the amount due to the Sellers with interest as set forth in Section 2.7(a) from the date such amounts were due. In any such inspection, the Sellers’ Representative shall pay the fees and expenses of the accountants it designates, and the Buyer Related Entity shall pay the fees and expenses of its accountants; provided however , that if an inspection reveals an underpayment of five percent (5%) or more in any period being inspected, the Buyer Related Entity shall pay (in addition to the underpayment) the reasonable fees and expenses of the accountants designated by the Sellers’ Representative.

2.8 Sellers’ Closing Deliverables .

(a) Stock Certificates . At the Closing, each Seller shall deliver to Buyer original stock certificates representing all Shares held by such Seller, along with instruments of transfer sufficient to transfer title of the Shares (the “ Certificates ”), in a form reasonably satisfactory to Buyer.

(b) Resignations . At the Closing, the Sellers shall deliver to Buyer resignations of Evelyn J. Ellis-Grosse and Steve Manogue, which constitute all of the directors and officers of the Company, confirming that those individuals have no receivables or other claims against the Company.

(c) Employment Agreement . At the Closing, Evelyn J. Ellis-Grosse shall deliver to Buyer (i) an executed employment agreement with the Company, in the form attached hereto as Exhibit B (the “ Employment Agreement ”) and (ii) an executed stock restriction agreement with the Company, in a form mutually acceptable to the Company and Evelyn J. Ellis-Grosse (the “ Stock Restriction Agreement ”).

(d) Non-Competition Agreements . At the Closing, each of the Sellers listed on Annex B hereto shall deliver to Buyer an executed non-competition and non-solicitation agreement, in the form attached hereto as Exhibit C (the “ Non-Competition Agreements ”).

(e) No Further Ownership Rights in Company Capital Stock . All consideration paid upon the sale of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Capital Stock.

2.9 Buyer’s Closing Deliverables . At the Closing, Buyer shall deliver an executed Employment Agreement, executed Stock Restriction Agreement and executed

Non-Competition Agreements. Promptly following (and in no event more than ten (10) days after) the Closing, the Buyer will deliver to each Seller (a) such Seller’s Pro Rata Portion, as set forth on the Allocation Certificate, of the Closing Cash Consideration (by wire transfer of immediately available federal funds to the account set forth next to such Seller’s name on the Allocation Certificate) and (b) stock certificates evidencing the issuance of Buyer Common Stock as the Closing Stock Consideration, in the amounts set forth on Annex C hereto, against delivery to the Buyer of the Certificates.

2.10 Legend . The stock certificate evidencing the shares of Buyer Common Stock issued hereunder shall be endorsed with the following legends:

(a) THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT.

(b) THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE CORPORATION.

2.11 Further Action . At and after the Closing, the officers and directors of the Buyer will be authorized to execute and deliver, in the name and on behalf of the Company, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company and Buyer, any other actions and things to vest, perfect or confirm of record or otherwise in Buyer any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by Buyer as a result of, or in connection with, the transactions contemplated by this Agreement.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers severally (and not jointly and severally) represent and warrant to Buyer, except as set forth in the disclosure letter supplied by the Sellers to Buyer dated as of the date hereof which, subject to Section 8.2 , identifies exceptions by specific Section references (the “ Company Disclosure Letter ”), as follows, provided that any information

disclosed under any section of the Company Disclosure Letter shall be deemed disclosed and incorporated into any other section of the Company Disclosure Letter to the extent it is readily apparent from a reading of the disclosure that such disclosure is applicable to such other section:

3.1 Organization; Standing and Power; Charter Documents; Subsidiaries; Sellers’ Title .

(a) Organization; Standing and Power . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware, (ii) has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted, and (iii) is duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing, individually or in the aggregate, would not have, and would not reasonably be expected to have, a Material Adverse Effect on the Company.

(b) Charter Documents . The Company has delivered or made available to Buyer: a true and correct copy of the Certificate of Incorporation and Bylaws of the Company, each as amended as of the date hereof (collectively, the “ Company Charter Documents ”) and as in full force and effect. The Company is not in violation of any of the provisions of the Company Charter Documents.

(c) Subsidiaries . The Company does not have and has not had any Subsidiaries and does not own or control, directly or indirectly, any capital stock of, or other equity or voting interests of any nature in, or any interest convertible, exchangeable or exercisable for, capital stock of, or other equity or voting interests of any nature in, any other Person. For purposes of this Agreement, “ Subsidiary ,” when used with respect to any party, shall mean any corporation or other entity at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other entity is directly or indirectly owned or controlled by such party.

(d) Sellers’ Title . Each Seller owns such Seller’s Shares set forth opposite such Seller’s name on Section 3.1(d) of the Company Disclosure Letter, free and clear of any and all Liens other than restrictions on transfers under applicable securities laws.

3.2 Capital Structure .

(a) Capital Stock . As of the date of this Agreement, the authorized capital stock of the Company consists of 4,000,000 shares, all of which are Common Stock, each with a par value of $0.0001 per share, of which 2,120,000 were issued and outstanding. No shares of Company Common Stock are held by the Company in its treasury. All of the outstanding shares of Company Capital Stock are, and all shares of Company Capital Stock which may be issued as contemplated or permitted by this Agreement will be, when issued, duly authorized and validly issued, fully paid and nonassessable and not issued in violation of any preemptive rights. There are no accrued or unpaid dividends with respect to any issued and outstanding shares of capital stock of the Company. The Allocation Certificate expresses the definitive allocation of the Closing Consideration among the Sellers.

(b) Other Securities . Except as otherwise set forth in this Section 3.2 , as of the date hereof, there are no securities, options, warrants, calls, rights, contracts, commitments, agreements, instruments, arrangements, understandings, obligations or undertakings of any kind to which the Company is a party or by which it is bound obligating the Company to (including on a deferred basis) issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock, voting debt or other voting securities of the Company, or obligating the Company to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, instrument, arrangement, understanding, obligation or undertaking.

(c) Legal Requirements . All outstanding shares of Company Capital Stock have been issued and granted in compliance in all material respects with all applicable securities laws and all other applicable Legal Requirements. There are not any outstanding Contracts requiring the Company to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Company. The Company is not a party to any voting agreement with respect to shares of the capital stock of, or other equity or voting interests in, the Company and, to the Knowledge of the Sellers, there are no irrevocable proxies and no voting agreements, voting trusts, rights plans or anti-takeover plans with respect to any shares of the capital stock of, or other equity or voting interests in, the Company.

(d) Sellers’ Shares . Each Seller has not entered into any Contract or commitment or granted or agreed to grant any rights to subscribe for, acquire or purchase any equity interests, equity securities or other securities of the Company or any Subsidiary, or entered into any Contract or commitment granting or agreeing to grant any options, warrants, “phantom” stock rights, convertible or exchangeable securities, stock or equity appreciation rights, or other Contract (other than this Agreement) granting to any Person any interest in or right to acquire at any time, or upon the happening of any event, any equity interests of the Company (including the Shares) or the Subsidiaries, or any

preemptive rights, exchange rights, preferential rights, rights of first refusal or rights of first purchase with respect to any of the equity interest of the Company or the Subsidiaries. There are no Contracts or commitments to which any Seller is a party restricting the transfer or other disposition of any Shares. Each Seller is not a party to any voting trust or agreement, proxy, shareholders agreement, investors rights agreement or similar agreement or any pledge agreement relating to such Seller’s Shares.

3.3 Authority . If an individual, such Seller is legally competent to execute and deliver this Agreement. If not an individual, such Seller has the organizational power to enter into this Agreement and such Seller’s execution, delivery and performance of this Agreement has been duly authorized by all necessary organizational action. This Agreement has been duly executed and delivered by the Sellers and, assuming due execution and delivery by Buyer and the Sellers’ Representative, constitutes a valid and binding obligation of each Seller, enforceable against each Seller in accordance with its terms, except (a) as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting the rights of creditors generally and general equitable principles (whether considered in a proceeding in equity or at law), and (b) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of a court of competent jurisdiction before which any proceeding may be brought.

3.4 Non-Contravention .

(a) Subject to compliance with the requirements set forth in Section 3.5 , the execution and delivery, and the performance and compliance of this Agreement by the Sellers, does not and will not: (a) conflict with or violate the Company Charter Documents, (b) conflict with or violate any Legal Requirement applicable to the Company or by which the Company or any of its respective properties is bound or affected, or (c) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company’s rights or alter the rights or obligations of any Person under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of the Company (other than a Permitted Lien) pursuant to any Company Material Contract except in each of the foregoing clauses (b) and (c) as would not reasonably be expected to have a Material Adverse Effect on the Company.

(b) Each Seller’s execution, delivery and performance of this Agreement will not result in any violation of, be in conflict with or constitute a default under such Seller’s organizational documents, any Legal Requirement or any material contract binding upon such Seller, except for any such violation, conflict or default that

would not have a material adverse effect on such Seller’s ability to sell the Seller’s Shares to Buyer pursuant to the terms of this Agreement

3.5 Necessary Consents . No consent, approval, waiver, order or authorization of, or registration, declaration or filing with any supranational, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other governmental authority or instrumentality (a “ Governmental Entity ”) is required to be obtained or made by the Company or the Sellers in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for: (a) such consents, approvals, waivers, orders, authorizations, registrations, declarations and filings as may be required under applicable federal, foreign (or related) laws and satisfaction of such other requirements of the comparable laws of other jurisdictions, (b) as are necessary as a result of any facts or circumstances relating solely to Buyer or any of its Affiliates, and (c) such other consents, approvals, waivers, orders, authorizations, registrations, declarations and filings set forth in Section 3.5 of the Company Disclosure Letter. The consents, approvals, waivers, orders, authorizations, registrations, declarations and filings set forth in the foregoing clauses (a) and (b) are referred to herein as the “ Necessary Consents .”

3.6 Financial Statements . The Company has delivered to Buyer a complete copy of the Company’s unaudited balance sheet and income statement as of and for the year ended December 31, 2014, and as of March 2, 2015 (collectively, the “ Financial Statements ”). The Financial Statements have been prepared on a consistent basis throughout the periods indicated and with each other. The Financial Statements present fairly in all material respects the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments. The Company’s unaudited balance sheet as of March 2, 2015, is referred to as the “ Company Balance Sheet ” and the date thereof the “ Balance Sheet Date .”

3.7 Undisclosed Liabilities . There are no liabilities of the Company that would be required by GAAP, as consistently applied by the Company, to be reflected on or reserved against or disclosed in the notes to a consolidated balance sheet of the Company, other than liabilities (a) reflected or properly reserved against in the Financial Statements, or (b) incurred since the Balance Sheet Date in the ordinary course of business of the Company consistent with past practice.

3.8 Absence of Certain Changes or Events . Since the Balance Sheet Date:

(a) a Material Adverse Effect on the Company has not occurred;

(b) the Company has conducted its business in the ordinary course consistent with past practice;

(c) the Company has not made or changed any Tax election; settled or compromised any claim, notice, audit report or assessment in respect of Taxes; changed any annual Tax accounting period; adopted or changed any method of Tax accounting; filed any amended Tax Return; entered into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any Tax; surrendered any right to claim a Tax refund; or consented to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment; and

(d) there has not been any material revaluation by the Company of any of its assets, including writing down the value of capitalized inventory or writing off notes or accounts receivable other than in the ordinary course of business consistent with past practice.

3.9 Taxes .

(a) Tax Returns and Audits .

(i) The Company has prepared and timely filed all Tax Returns relating to any and all Taxes concerning or attributable to the Company and such Tax Returns are true, complete and accurate in all material respects. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. No written claim has ever been made by a Tax Authority in a jurisdiction where the Company does not file a Tax Return that the Company is or may be subject to Tax by that jurisdiction. All Taxes due and owing by the Company (whether or not shown on any Tax Return) have been timely paid.

(ii) The Company has withheld and paid all Taxes required to be withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholders of the Company or other Person.

(iii) The Company has not executed or agreed to any outstanding waiver of any statute of limitations in respect of any Tax or outstanding extension of the period for the assessment or collection of any Tax, nor has any request been made in writing for any such waiver or extension.

(iv) No deficiencies for Taxes with respect to the Company have been claimed, proposed or assessed by any Tax Authority. There are no pending or threatened audits, assessments or other actions for or relating to any liability in respect of

Taxes of the Company. There are no matters under discussion with any Tax Authority, or known to the Company, with respect to Taxes that are likely to result in material additional liability for Taxes with respect to the Company. No issues relating to Taxes of the Company were raised by the relevant Tax Authority in any completed audit or examination that would reasonably be expected to result in a material amount of Taxes in a later taxable period.

(v) The unpaid Taxes of the Company did not, as of the Balance Sheet Date, exceed the reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Company Balance Sheet (rather than in any notes thereto), and the Company has not incurred any liability for Taxes since the Balance Sheet Date other than in the ordinary course of business consistent with past practice.

(vi) There are no Liens on the assets of the Company relating to or attributable to Taxes other than Permitted Liens.

(vii) The Company is not, nor has it been: (A) during the five-year period ending on the Closing Date, a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code, and (B) engaged in a trade or business, had a permanent establishment (within the meaning of an applicable Tax treaty), or otherwise become subject to Tax jurisdiction in a country other than the country of its formation.

(viii) The Company (A) has never been a member of an affiliated group (within the meaning of Section 1504(a) of the Code) filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or any similar group for federal, state, local or foreign Tax purposes, (B) has never been party to or bound by any Tax sharing, Tax indemnification or Tax allocation agreement or other similar Contract relating to Taxes (other than a commercial agreement that is entered into in the ordinary course of business and the principal purpose of which is not the sharing or allocation of Taxes), or (C) has no liability for the Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by Contract or otherwise.

(ix) The Company has never constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

(x) The Company is not a partner for Tax purposes with respect to any joint venture, partnership or other arrangement which is treated as a partnership for Tax purposes.

(xi) The Company has delivered or made available to Buyer complete and accurate copies of all federal, state, local and foreign income Tax Returns of the Company (and any predecessor of the Company) for all taxable years remaining open under the applicable statute of limitations, including, promptly upon their availability, for the most recent taxable year, and complete and accurate copies of all audit or examination reports and statements of deficiencies assessed against or agreed to by the Company (or any predecessors of the Company), and all private letter rulings, determination letters, closing agreements and other correspondence issued by or received from the IRS or any Tax Authority with respect to Tax matters of the Company, since the Company’s incorporation.

(xii) The Company has never been a party to a transaction that is a “reportable transaction” as such term is defined in Treasury Regulations Section 1.6011-4(b)(1), or any other transaction requiring disclosure under analogous provisions of state, local or foreign Tax law.

(xiii) The Company has never made an election to be treated as an “S corporation” within the meaning of Sections 1361 and 1362 of the Code or under any corresponding provision of applicable state or local Tax laws.

(xiv) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any period (or any portion thereof) ending after the Closing Date as a result of any installment sale or other transaction on or prior to the Closing Date, any accounting method change or agreement with any Tax Authority filed or made on or prior to the Closing Date or any prepaid amount received on or prior to the Closing.

3.10 Intellectual Property .

(a) Registered Company Intellectual Property . Section 3.10(a)(i) of the Company Disclosure Letter lists all applications and registrations for the Company Owned Intellectual Property, including any Company Patent Rights, and specifies, where applicable, the jurisdictions in which each such item of Company Intellectual Property has been issued, filed or registered. Buyer has been provided copies of all non-public Company Patent Rights. Section 3.10(a)(ii) of the Company Disclosure Letter lists all applications and registrations for Third Party Intellectual Property, including any Third Party Patent Rights, and specifies, where applicable, the assignee or registrant of such Third Party

Intellectual Property, jurisdictions in which each such item of Third Party Patent Rights has been issued, filed or registered (the applications and registrations to be disclosed under Section 3.10(a)(i) and 3.10(a)(ii) , hereinafter the “ Company Registered Intellectual Property ”).

(b) Validity and Enforceability . None of the Company Registered Intellectual Property, including the Company Patent Rights or the Third Party Patent Rights, and no issued claims of any such Company Patent Rights or the Third Party Patent Rights, are or have been: (i) lapsed, abandoned, disclaimed or passed into the public domain (other than U.S. Provisional Applications and Patent Cooperation Treaty Applications as identified in the Company Disclosure Letter); (ii) canceled, revoked or adjudicated invalid (including through a court Action or through the initiation or written threat of institution of an interference, opposition, nullity or similar invalidity proceedings before the United States Patent and Trademark Office or any analogous Governmental Entity patent or trademark office in other countries or regions); or (iii) adjudicated to be unenforceable.

(c) Litigation . Section 3.10(c) of the Company Disclosure Letter lists any litigation, opposition, reexamination, interference proceeding, nullity action, reissue proceeding, cancellation, objection, claim or other equivalent proceeding or action pending (other than with respect to proceedings or communications with national or regional patent offices) or asserted with respect to any Company Intellectual Property.

(d) No Order . To the Knowledge of the Sellers, none of the Company Intellectual Property is subject to any proceeding or outstanding order by any Governmental Entity restricting the use, transfer or licensing thereof by Company.

(e) Registration . All necessary registration, maintenance and renewal fees for each item of Company Registered Intellectual Property has been made and all necessary documents, recordations and certificates in connection with such Company Registered Intellectual Property have been filed with the relevant Governmental Entities for the purposes of prosecuting, maintaining or perfecting such Company Patent Rights and Third Party Patent Rights. To the Knowledge of the Sellers, all applications and registrations for the Company Registered Intellectual Property are in good standing and in force.

(f) Conduct of Business . The Company owns or otherwise possesses sufficient rights to exploit and use all the Intellectual Property which is either used in the conduct of the Company’s Business or the Company currently intends to use in the conduct of the Company’s Business, except as set forth on Section 3.10(f) of the Company Disclosure Letter.

(g) Encumbrances . The Company Intellectual Property is free and clear of any Liens, except as set forth on Section 3.10(g) of the Company Disclosure Letter.

(h) Company IP Contracts .

(i) Section 3.10(h) of the Company Disclosure Letter lists all Company IP Contracts. The Company has delivered to Buyer a complete and accurate copy of each such Company IP Contract, including any exhibits, schedules or appendices thereof in effect, and all amendments or modifications thereto. Except for compliance with the Company IP Contracts set forth on Section 3.10(h) of the Company Disclosure Letter, the Company has not provided, licensed, or transferred any ownership interest in any of the Company Intellectual Property or Company Patent Rights to any third Person.

(ii) (A) All of the Company IP Contracts are in full force and effect and are binding and enforceable against any Person party to such Company IP Contract, (B) to the Knowledge of the Sellers, no party thereto is in material violation, breach or default thereof, and (C) to the Knowledge of the Sellers, no event has occurred that with notice or lapse of time would constitute a material breach or material default thereunder by the Company or any other party to such Company IP Contract, or would permit the modification or premature termination of such Company IP Contract by any other party thereto.

(iii) The consummation of the Stock Purchase will not result in the breach or other violation of any Company IP Contract that would allow any other Person thereto to modify, cancel, terminate or otherwise suspend the operation thereof.

(iv) Following the Closing, the Buyer will be permitted to exercise all of the Company’s rights under all Company IP Contracts (including, without limitation, the right to receive royalties), to the same extent the Company would have been able to had the Stock Purchase not occurred and without being required to pay any additional amounts or consideration other than fees, royalties or payments which the Company would otherwise be required to pay had the Stock Purchase not occurred.

(v) The transactions contemplated by this Agreement will not reasonably result in any Company Intellectual Property or the Company Business (as conducted or currently intended to be conducted by the Sellers) being subject to any non-compete or exclusivity restriction to which the Company Intellectual Property or the Company Business was not subject prior to the Stock Purchase.

(i) No Infringement . To the Knowledge of the Sellers, (i) the Company has never infringed (directly, contributorily, by inducement or otherwise) or

misappropriated, or otherwise violated or made unlawful use of any Intellectual Property right of any third Person, nor has the Company ever engaged in unfair competition or unfair trade practices under the laws of any jurisdiction, and (ii) the Company has obtained a license to any and all Intellectual Property which is either used in the conduct of the Company’s Business or the Company currently intends to use in the conduct of the Company’s Business, without taking into consideration the validity or invalidity of said Intellectual Property.

(j) No Notice of Infringement . The Company has never received written notice from any third Person that the Company has infringed, misappropriated, or otherwise violated or made unlawful use of any Intellectual Property of such third Person or engaged in unfair competition or unfair trade practices under the laws of any jurisdiction.

(k) No Third Person Infringement . To the Knowledge of the Sellers, no Person is infringing or misappropriating any Company Intellectual Property, including Company Patent Rights, or Third Party Intellectual Property, including Third Party Patent Rights.

(l) Proprietary Information Agreements . The Company has taken all reasonable steps and precautions to maintain and protect the secrecy, confidentiality, value and the Company’s rights in all confidential information and Trade Secrets.

(m) Protection of Intellectual Property . Each current or former officer, Founder or Employee of, and each individual who is a consultant or independent contractor to, the Company who is or has been involved in the creation or development of any Company Owned Intellectual Property, including Company Patent Rights, during such individual’s relationship with, employment by or consulting or contracting relationship with the Company has executed and delivered to the Company a written agreement (containing no exceptions or exclusions from the scope of its coverage) providing for the protection of the Company’s proprietary information and assigning to the Company all right, title and interest in and to any Intellectual Property, including Patent Rights, made in the course of work or services performed by such current or former officer, Founder, Employee or consultant or independent contractor, to the extent legally permissible, the past and current forms of which have been made available to Buyer. To the Knowledge of the Sellers, no current or former officer, Founder, Employee or consultant or independent contractor of the Company is in violation of any term of any such agreement with respect to protecting any such proprietary information or assigning any such Intellectual Property, including Patent Rights, to the Company. No current or former officer, Founder, Employee or consultant or independent contractor of the Company has any right, title or interest in, to

or under any Company Owned Intellectual Property, including Company Patent Rights, that has not been fully assigned to the Company.

(n) Disputes . No inventorship or ownership disputes exist with respect to any Company Intellectual Property Rights, including Company Patent Rights, or, to the Knowledge of the Sellers, Third Party Intellectual Property, including Third Party Patent Rights.

(o) Prior Art . To the Knowledge of the Sellers, all relevant prior art applicable to the Third Party Patent Rights that exists at the date hereof has been identified or otherwise disclosed to the United States Patent & Trademark Office in accordance with the duty of candor. The Company has made no public disclosures which would constitute prior art against any Company Patent Rights, whether registered or not.

(p) Government Funding . Except as set forth in Section 3.10(p) of the Company Disclosure Letter, (i) no government funding, facilities or resources of a university, college, other educational institution or research center or funding from third parties was used in the development of any Company Intellectual Property, (ii) to the Knowledge of the Sellers, no Governmental Entity, university, college, other educational institution or research center has any claim or right in or to such Company Intellectual Property and (iii) no rights have been granted to any Governmental Entity with respect to any Company Product, or Company Intellectual Property

3.11 Compliance; Permits .

(a) Compliance . Except with respect to Taxes (which are covered exclusively by Section 3.9 ), Employee Benefit Plans (which are covered exclusively by Section 3.14 ), Environmental Laws (which are covered exclusively by Section 3.17 ), Regulatory Compliance (which are covered exclusively by Section 3.19 ) and Certain Payments (which are covered exclusively by Section 3.22 ), the Company is not, nor has it been, in conflict with, or in default or in violation of, any Legal Requirement applicable to the Company or by which the Company or any of its respective businesses or properties is bound or affected, except for those conflicts, defaults or violations that, individually or in the aggregate, would not cause the Company to lose any material benefit or incur any material liability. The Company has not received any notice of or been charged with any material default or violation of any such Legal Requirements. There is no judgment, injunction, order or decree binding upon or outstanding against the Company which has or would reasonably be expected to have the effect of prohibiting or materially impairing the Company Business as conducted or intended to be conducted by the Sellers. The Company has not received notice of any pending or threatened claim, suit, proceeding, hearing, enforcement, audit, investigation, arbitration, or other action from the FDA or other

Governmental Entity alleging that any operation or activity of the Company is in default or violation of any applicable Legal Requirement.

(b) Permits . The Company holds all permits, licenses, variances, clearances, consents, registrations, listings, exemptions, authorizations and approvals (“ Permits ”) from Governmental Entities, including, without limitation, the FDA, that are required to lawfully conduct the Company Business (collectively, “ Company Permits ”). The Company has fulfilled and performed all of their material obligations with respect to the Company Permits, and no event has occurred which allows, or after notice or lapse of time would allow, suspension, cancellation, revocation, or material adverse modification thereof or results in any other material impairment of the rights of the holder of any Company Permit. As of the date hereof, no suspension, cancellation, revocation or material adverse modification of any of the Company Permits is pending or, to the Knowledge of the Sellers, threatened. Each of the Company Permits is in full force and effect, and the Company is in material compliance with the terms of the Company Permits.

3.12 Litigation . There are no claims, suits, actions, proceedings or investigations of any nature pending or, to the Knowledge of the Sellers, threatened in writing against, relating to or affecting the Company, or the assets or properties of the Company, before any court, governmental department, commission, agency, instrumentality or authority or arbitrator that seek to restrain or enjoin the consummation of the transactions contemplated hereby or which would reasonably be expected, either singularly or in the aggregate with all such claims, suits, actions, proceedings or investigations, to result in a material liability to the Company, nor, to the Knowledge of the Sellers, is there any reasonable basis therefor, or any facts, threats, claims or allegations that would reasonably be expected to result in any such threatened or pending action, suit, proceeding or investigation. There is no legal proceeding brought by the Company currently pending or that the Company intends to initiate.

3.13 Brokers’ and Finders’ Fees; Fees and Expenses . The Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement and the transactions contemplated hereby.

3.14 Employee Benefit Plans .

(a) Schedule . Section 3.14(a) of the Company Disclosure Letter sets forth a list of each Company Employee Plan. Neither the Company nor any ERISA Affiliate has any commitment to establish any new Company Employee Plan, to materially modify any Company Employee Plan (except to the extent required by law or to conform any such Company Employee Plan to the requirements of any applicable Legal

Requirements or as required by this Agreement), or to adopt or enter into any Company Employee Plan.

(b) Documents . The Company has provided to Buyer correct and complete copies of: (i) all documents embodying each Company Employee Plan, including (without limitation) all amendments thereto and all related trust documents, administrative service agreements, group annuity contracts, group insurance contracts, and policies pertaining to fiduciary liability insurance covering the fiduciaries for each Company Employee Plan; (ii) the most recent annual actuarial valuations, if any, prepared for each Company Employee Plan; (iii) the most recent annual report (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each Company Employee Plan; (iv) if the Company Employee Plan is funded, the most recent annual and periodic accounting of Company Employee Plan assets; (v) the most recent summary plan description together with the summary or summaries of material modifications thereto, if any, required under ERISA with respect to each Company Employee Plan; (vi) the most recent IRS determination or opinion letters; (vii) all non-routine material correspondence to or from any governmental agency in the last three (3) years relating to any Company Employee Plan; and (viii) the three (3) most recent plan years’ discrimination tests for each Company Employee Plan for which such test is required.

(c) Benefit Plan Compliance . Each Company Employee Plan has been established and maintained in accordance with its terms and in compliance with all applicable Legal Requirements, including but not limited to ERISA and the Code. No Company Employee Plan is intended to be qualified under Section 401(a) of the Code. There are no current actions, suits or claims pending, or, to the Knowledge of the Sellers, threatened or reasonably anticipated (other than routine claims for benefits) against any Company Employee Plan or against the assets of any Company Employee Plan. There are no audits, inquiries or proceedings pending or, to the Knowledge of the Sellers, threatened by any Governmental Entity with respect to any Company Employee Plan. Neither the Company nor any ERISA Affiliate is subject to any penalty or tax with respect to any Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code. The Company and each ERISA Affiliate have timely made or otherwise provided for all contributions and other payments required by and due under the terms of each Company Employee Plan.

(d) No Pension or Welfare Plans . Neither the Company nor any ERISA Affiliate has ever maintained, established, sponsored, participated in or contributed to any (i) Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code; (ii) Multiemployer Plan; (iii) “multiple employer plan” as defined in ERISA or the Code; or (iv) a “funded welfare plan” within the meaning of Section 419 of the Code. No

Company Employee Plan provides health benefits that are not fully insured through an insurance contract.

(e) No Post-Employment Obligations . No Company Employee Plan provides, or reflects or represents any liability to provide, post-termination or retiree welfare benefits to any person for any reason, except as may be required by COBRA or other applicable statute.

(f) Effect of Transaction .

(i) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any Company Employee Plan that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect to any Employee or other Person.

(ii) No payment or benefit that could be received (whether in cash, property, the vesting of property or otherwise) as a result of or in connection with the consummation of the transactions contemplated by this Agreement (either alone or upon the occurrence of any additional or subsequent events) or by any of the other agreements referenced herein, by any person who is a “disqualified individual” (as defined in Code Section 280G and the regulations thereunder) could be characterized as a parachute payment within the meaning of Code Section 280G(b)(2). There is no contract, agreement, plan or arrangement to which the Company or any ERISA Affiliates is a party or by which it is bound to compensate any Employee, officer, director or consultant for excise taxes paid pursuant to Section 4999 of the Code.

(g) Employment Matters . The Company is in compliance with all applicable foreign, federal, state and local law respecting employment, employment practices, including, without limitation, terms and conditions of employment, Tax withholding, prohibited discrimination, equal employment, fair employment practices, employee safety and health, and wages and hours. The Company has properly classified all individuals providing services to the Company as employees or non-employees for all relevant purposes and the Company has no liabilities for the payment of material taxes, fines, penalties or other amounts, however designated, for any failure to properly classify such individuals.

(h) Labor . The Company is not a party to any collective bargaining agreement or union contract with respect to Employees. No collective bargaining agreement is currently being negotiated by the Company and the Company has not

experienced any attempt by organized labor to cause the Company to comply with or conform to demands of organized labor relating to its employees. There is no labor dispute, strike or work stoppage against the Company pending or, to the Knowledge of the Sellers, threatened or reasonably anticipated. Neither of the Company, nor any of its representatives, Employees, officers or directors has committed any material unfair labor practice in connection with the operation of the respective businesses of the Company. There are no actions, suits, claims, labor disputes or grievances pending, or, to the Knowledge of the Sellers, threatened, relating to any labor, safety or discrimination matters involving any Employee, including, without limitation, charges of unfair labor practices or discrimination complaints.

(i) International Employee Plans . The Company does not have, nor has it ever had, the obligation to maintain, establish, sponsor, participate in, or contribute to any Company Employee Plan that provides compensation or benefits to current or former Employees who reside or perform services outside the United States.

(j) Nonqualified Deferred Compensation Plans . Each Company Employee Plan or other contract, plan, program, agreement, or arrangement maintained by the Company that is a “nonqualified deferred compensation plan” (within the meaning of Section 409A(d)(1) of the Code) complies in form with and has been operated in good faith compliance with Section 409A of the Code and the then applicable guidance issued by the IRS thereunder.

(k) Section 3.14(k) of the Company Disclosure Letter sets forth for each current employee or independent contractor of the Company, a true and complete list of the individual’s position, base compensation (or consulting rate), date of hire, target bonus opportunity, classification as an employee or consultant and any Employee Agreement to which such individual is a party.

3.15 Real Property . The Company does not own, nor has it ever owned, any real property. Section 3.15 of the Company Disclosure Letter sets forth a list of the real property currently leased, subleased or licensed by or from the Company (the “ Leased Real Property ”). The Company has provided or otherwise made available to Buyer true, correct and complete copies of all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of the Leased Real Property, including all amendments, terminations and modifications thereof (the “ Leases ”). The Company has good and marketable title to the leasehold estates in all Leases in each case free and clear of all Liens, except for Liens incurred in the ordinary course of business consistent with past practice which would not impair the Company’s use of such property in any material way. The Sellers have no reason to believe that such title would not be insurable subject to customary exceptions. There is not, under any of the Leases, any material default by the

Company, nor, to the Knowledge of the Sellers, by any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a material default thereunder. There has not been any sublease or assignment entered into by the Company with respect to any Leased Real Property. The Leased Real Property is in good repair and operating condition (normal wear and tear excepted). Each of the Leases is valid and enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting the rights of creditors generally and general equitable principles (whether considered in a proceeding in equity or at law). With respect to those Leases that were assigned or subleased to the Company by a third party, all necessary consents to such assignments or subleases have been obtained.

3.16 Assets . With respect to the material machinery, equipment, furniture, fixtures and other tangible property and assets purported to be owned, leased or used by the Company, the Company has good, legal and marketable title to all such assets free and clear of all Liens, except Permitted Liens, and such assets are in good repair and operating condition (normal wear and tear excepted). All such items of tangible property and assets which, individually or in the aggregate, are material to the operation of the business of the Company are suitable for the purposes used for the operation of the business of the Company. For purposes of clarity, this Section 3.16 does not relate to real property (such items being the subject of Section 3.15 ) or Intellectual Property (such items being the subject of Section 3.10 ).

3.17 Environmental Matters . The Company is not, nor at any relevant time has been, in any material respect, in violation of any applicable Environmental Law (as defined below). The Company holds, to the extent legally required, all Permits required pursuant to Environmental Laws that are material to the operation of the business of the Company taken as a whole (“ Environmental Permits ”). The Company is in compliance in all material respects with the terms of the Environmental Permits. The Company has not received any written notice alleging any claim, violation of or liability under any Environmental Law which has not heretofore been cured or for which there is any remaining material liability. For the purposes of this Section 3.17 , (i) “ Environmental Laws ” shall mean all applicable Legal Requirements relating to pollution or protection of the environment, including laws and regulations relating to Releases (as defined below) or threatened Releases of Hazardous Materials (as defined below), (ii) “ Hazardous Materials ” shall mean chemicals or substances which are designated by a Governmental Entity as a “pollutant,” “contaminant,” “toxic,” “hazardous” or “radioactive,” including without limitation friable asbestos, petroleum and petroleum products or any fraction thereof, and (iii) “ Release ” shall have the same meaning as under the Comprehensive Environmental Response Compensation and Liability Act of 1980, 42 U.S.C.

Section 9601(22). To the Knowledge of the Sellers: (a) all real property now or previously owned or leased by the Company and all surface water, groundwater and soil associated with or adjacent to such property, is free of any chemicals, pollutants, contaminants, wastes, toxic substances or material environmental contamination of any nature; (b) none of the real property now or previously owned or leased by the Company contains any underground storage tanks, asbestos, equipment using PCBs or underground injection wells; and (c) none of the real property now or previously owned or leased by the Company contains any septic tanks in which process wastewater or any chemicals, pollutants, contaminants, wastes or toxic substance have been released. To the Knowledge of the Sellers, any location to which the Company has sent or otherwise arranged for the disposal of any of its Hazardous Materials is not the subject of any investigation or remediation activity under applicable environmental laws, and the Company does not have any material liabilities arising under any applicable Environmental Laws (including without limitation, any liabilities arising from any predecessor Person or any liabilities assumed by the Company through any agreement or by operation of law). The parties agree that the only representation and warranties related to Environmental Laws, Environmental Permits, and Hazardous Materials are those included in this Section 3.17 of this Agreement.

3.18 Contracts .

(a) Material Contracts . For purposes of this Agreement, “ Company Material Contract ” shall mean any Contract:

(i) containing (i) any covenant (A) limiting in any material respect the right of the Company to engage in any line of business, engage in business in any location, or compete with, or solicit any customer of, any other Person, (B) limiting the right of the Company to solicit, hire or retain any Person as an employee, consultant or independent contractor, or (C) granting any exclusive distribution rights with respect to Company Products, or (ii) any “most favored nation” provision for the benefit of any other Person;

(ii) pursuant to which the Company has licensed from any third party any patent, trademark registration, service mark registration, trade name or copyright registration, other than any nonexclusive license that is available to the public generally, or providing for royalty or other similar payments by the Company;

(iii) granting exclusive rights to any third party to any patents, trademark registrations, service mark registrations, trade names or copyright registrations owned by the Company;

(iv) evidencing Indebtedness that is in effect;

(v) that is a Lease;

(vi) that is a sales representative, marketing or advertising agreement;

(vii) creating or involving any agency relationship, distribution arrangement or franchise relationship;

(viii) creating any partnership or joint venture between the Company and any third party or providing for any sharing of material profits or losses by the Company with any third party;

(ix) involving the acquisition or divestiture of any business or asset by the Company other than in the ordinary course of business consistent with past practice or investments in any Person by the Company or that provides for payment obligations by or to the Company (whether contingent or otherwise) that are in effect on the date hereof in respect of earn-outs, deferred purchase price arrangements or similar arrangements that have arisen in connection with any such transactions;

(x) pursuant to which the Company has continuing material obligations to develop any Intellectual Property that will not be owned, in whole or in part, by the Company;

(xi) that constitutes any material transfer agreement, research and development agreement, clinical trial agreement, clinical research agreement, manufacture or supply agreement or similar Contract;

(xii) that is a settlement agreement of any nature (other than settlement agreements that do not provide for any future payment or performance obligations on behalf of the Company);

(xiii) in which the other party is a healthcare practitioner;

(xiv) that relates to the purchase or sale of any asset by or to, or the performance of any services by or for, or otherwise involving as a counterparty, any Related Party;

(xv) that provides for the indemnification of any Person by the Company, except for Contracts entered into in the ordinary course of business consistent with past practice;

(xvi) that result in any Person holding a power of attorney from the Company; or

(xvii) that has involved, or the Company expects to involve, a payment to or from the Company in excess of $25,000 on its face in any given year in any individual case.

For purposes of clarification, no Company Employee Plans set forth in Section 3.14(a) of the Company Disclosure Letter under which future expenditures required to be made by the Company will not exceed $25,000 in any given year, shall be considered a Company Material Contract.

(b) Schedule . Section 3.18 of the Company Disclosure Letter sets forth a list of all Company Material Contracts to which the Company is a party or is bound by, subdivided in accordance with categories set forth in Section 3.18(a) . The Company has made available to Buyer a true and complete copy of each Company Material Contract (including any amendments thereto). Unless otherwise noted in Section 3.18(a) of the Company Disclosure Letter, all Company Material Contracts listed in Section 3.18(a) of the Company Disclosure Letter may be terminated by the Company at will on no more than thirty (30) days’ notice without material liability or financial obligation to the Company.

(c) No Breach . All Company Material Contracts are in full force and effect and constitute legal, valid and binding agreements of the Company, enforceable in accordance with their terms against the Company and against the other parties thereto, except in each case (i) as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting the rights of creditors generally and general equitable principles (whether considered in a proceeding in equity or at law), and (ii) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of a court of competent jurisdiction before which any proceeding may be brought. Neither the Company nor, to the Knowledge of the Sellers, any other party to any Company Material Contract, has violated any provision of, or committed or failed to perform any act which, with or without notice, lapse of time or both, would constitute a default under the provisions of any Company Material Contract, except in each case for those violations and defaults which, individually or in the aggregate, would not reasonably be expected to be material to the Company taken as a whole. The Company has not waived any of its rights under any Material Contract.

3.19 Regulatory Compliance .

(a) The operation of the Company Business, including, without limitation, the manufacture, import, export, testing, development, processing, packaging, labeling, storage, marketing, advertising, promotion and distribution of all Company Products, is in material compliance with all applicable Legal Requirements, Company Permits, and orders administered or enforced by the FDA or any other Governmental Entity.

(b) Except as set forth in Section 3.19(b) of the Company Disclosure Letter, during the three (3) year period ending on the date of this Agreement, the Company has not had any product or manufacturing site subject to a Governmental Entity (including the FDA) shutdown or import or export prohibition, nor received any Governmental Entity notice of inspectional observations, “warning letters,” “untitled letters,” other requests or requirements to make changes to the Company Products that if not complied with would reasonably be expected to result in a material liability to the Company, or similar notice from the FDA or other Governmental Entity alleging or asserting noncompliance with any applicable Legal Requirements, Company Permits or such requests or requirements of a Governmental Entity. To the Knowledge of the Sellers, none of the FDA or any other Governmental Entity is considering any such action.

(c) All applications, notifications, submissions, information, claims, reports and statistics, and other data and conclusions derived therefrom, utilized as the basis for or submitted in connection with any and all requests for a Permit from the FDA or other Governmental Entity relating to the Company, the Company Business or the Company Products, when submitted to such Governmental Entity, were true, complete and correct in all material respects as of the date of submission and any necessary or required updates, changes, corrections or modification to such applications, notifications, submissions, information, claims, reports, statistics, and data have been submitted to the FDA or other Governmental Entity, as applicable.

(d) Section 3.19(d) of the Company Disclosure Letter sets forth a list of (i) all recalls, field notifications, field corrections, market withdrawals or replacements, safety alerts or other notice of action relating to an alleged lack of safety, efficacy or regulatory compliance of the Company Products (“ Safety Notices ”) during the three (3) year period ending on the date of this Agreement, (ii) the dates such Safety Notices, if any, were resolved or closed, and (iii) to the Knowledge of the Sellers, any material safety complaints with respect to the Company Products that are currently unresolved. To the Knowledge of the Sellers, there are no facts that would reasonably be likely to result in (A) a material Safety Notice with respect to the Company Products, (B) a material, adverse change in labeling of any the Company Products, or (C) a termination or suspension of marketing or testing of any the Company Products.

(e) All preclinical and clinical trials conducted by or on behalf of the Company are being or have been conducted with the required experimental protocols, procedures and controls and all applicable Legal Requirements. None of the FDA or any other Governmental Entity has commenced or, to the Knowledge of the Sellers, threatened to initiate, any action to terminate, delay or suspend any proposed or ongoing clinical trial conducted or proposed to be conducted by or on behalf of the Company.

(f) All manufacturing operations conducted by or on behalf of the Company with respect to Company Products are being, and have been, conducted in material compliance with all applicable Legal Requirements.

3.20 Insurance . The Company maintains insurance of the type and in amounts customarily carried by organizations conducting businesses or owning assets similar to those of the Company and in a similar stage of development. All premiums due and payable under all such policies have been paid, and the Company is otherwise in compliance in all material respects with the terms of such policies. The Company has no Knowledge of any threatened termination of, or premium increase with respect to, any such policy, except in accordance with the terms thereof. There is no pending claim that would reasonably be expected to exceed the policy limits of such policies. Section 3.20 of the Company Disclosure Letter sets forth all insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations and employees of the Company, including the type of coverage and the carrier of such policies.

3.21 Indebtedness with Affiliates . Except as set forth on Section 3.21 of the Company Disclosure Letter, the Company is not indebted to any director, officer, employee or Affiliate of the Company (except for amounts due as salaries and bonuses, other amounts due under Employment Agreements or employee benefit plans and amounts payable in reimbursement of expenses), and no such director, officer, employee or Affiliate is indebted to the Company.

3.22 Certain Payments . Neither the Company nor, to the Knowledge of the Seller, any director, officer, agent or employee of the Company, nor any other Person acting for or on behalf of the Company, has directly or indirectly, on behalf of the Company, made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any Person, private or public, regardless of form, whether in money, property or services in material violation of any applicable Legal Requirement.

3.23 Minute Books . The Company’s minute books have been made available to Buyer and accurately and fairly reflect all minutes of meetings, resolutions and other material actions and proceedings of the Company and its stockholders and the Board of

Directors of the Company and all committees thereof and, to the Knowledge of the Sellers, all issuances, transfers and redemptions of capital stock of the Company.

3.24 Related Party Transactions . Except as disclosed in Section 3.24 of the Company Disclosure Letter, (a) no Related Party has, and no Related Party has at any time during the prior three (3) fiscal years had, any direct or indirect interest in any material asset used in or otherwise relating to the Company Business; (b) no Related Party is, or has been during the prior three (3) fiscal years, indebted to the Company; (c) to the Knowledge of the Sellers, no Related Party is competing with, or has at any time during the prior three (3) fiscal years competed directly with, the Company; and (d) to the Knowledge of the Sellers, no Related Party has any claim or right against the Company.

3.25 Customers, Licensees and Suppliers . Section 3.25 of the Company Disclosure Letter sets forth a list of (a) each customer or licensee that accounted for more than 1% of the consolidated revenues of the Company during the last full fiscal year or the interim period through the Balance Sheet Date and the amount of revenues accounted for by such customer or licensee during each such period and (b) each supplier that is the sole supplier of any significant product or service to the Company. No such customer, licensee or supplier has indicated within the past year that it will stop, or decrease the rate of, buying or licensing products or services or supplying products or services, as applicable, to the Company. No purchase order or commitment of the Company is in excess of normal requirements, nor are prices provided therein in excess of current market prices for the products or services to be provided thereunder.

3.26 Complete Copies of Materials . Each document that the Company has delivered to Buyer (or made available in an electronic “data room” for review by Buyer or provided directly to Buyer’s legal counsel for review), other than documents that have been redacted, is a true and complete copy of each such document, and in each case where a representation and warranty of Company in this Agreement requires the listing of documents and agreements, a true and complete copy of all such documents and agreements have been delivered to Buyer (or made available in an electronic “data room” for review by Buyer or provided directly to Buyer’s legal counsel for review).

3.27 Investment Representations . In connection with the issuance of the Closing Stock Consideration, each Seller (on behalf of himself, herself, or itself, or with respect to the entity in which such Seller will acquire the Buyer Shares in connection with this Agreement as set forth on Annex C hereto) represents to the Company the following:

(a) The shares of Buyer Common Stock to be issued to the Sellers hereunder (the “ Buyer Shares ”) will be acquired for investment for each such Seller’s

own account and not with a view to the public resale or distribution thereof within the meaning of the Securities Act.

(b) Each Seller has received or has had full access to all the information such Seller considers necessary or appropriate to make an informed investment decision with respect to the Buyer Shares.

(c) Each Seller understands that the receipt of the Buyer Shares involves substantial risk. Each Seller: (i) has experience as an investor in securities of companies in the development stage and acknowledges that such Seller is able to fend for itself, can bear the economic risk of such Seller’s investment in the Buyer Shares and has such knowledge and experience in financial or business matters that such Seller is capable of evaluating the merits and risks of such Seller’s investment in the Buyer Shares and protecting such Seller’s investment; and/or (ii) has a preexisting business relationship with the Company and/or certain of its other officers, directors or controlling persons of a nature and duration that enables such Seller to be aware of the character, business acumen and financial circumstances of such persons.

(d) Each Seller is an accredited investor within the meaning of Regulation D promulgated under the Securities Act (“ Regulation D ”)

(e) No Seller has been solicited to offer to purchase or to purchase any Buyer Shares by means of any general solicitation or advertising within the meaning of Regulation D.

(f) No Seller is subject to any to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act (“ Disqualification Events ”), except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act.

(g) Each Seller understands that the Buyer Shares are characterized as “restricted securities” under the Securities Act, in a transaction not involving a public offering and that under the Securities Act and applicable regulations thereunder such securities may be resold without registration under the Securities Act only in certain limited circumstances. Each Seller represents that such Seller is familiar with Rule 144 of the Securities and Exchange Commission and understands the resale limitations imposed thereby and by the Securities Act. Each Seller understands that the Company is under no obligation to register any of the securities sold hereunder.

3.28 Disclosure . To the Knowledge of the Sellers, no representation or warranty by the Sellers contained in this Agreement, and no statement contained in the Company

Disclosure Letter or any other document, certificate or other instrument delivered or to be delivered by the Sellers or the Company pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was or will be made, in order to make the statements herein or therein not misleading. To the Knowledge of the Sellers, the Buyer has received all material information relating to the business of the Company or the transactions contemplated by this Agreement.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to the Sellers as follows:

4.1 Organization; Standing and Power; Charter Documents . Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer has the requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified or licensed to do business and in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing, individually or in the aggregate, would not have, and would not reasonably be expected to have, a Material Adverse Effect on Buyer.

4.2 Authority . Buyer has all requisite corporate power and authority to enter into this Agreement and the other agreements, certificates and documents contemplated hereby, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement, the performance by Buyer of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Buyer and no other corporate or other proceedings or actions on the part of Buyer are necessary to authorize the execution and delivery of this Agreement, to perform their obligations hereunder or to consummate the Stock Purchase and the other transactions contemplated hereby. This Agreement has been duly executed and delivered by Buyer and, assuming due execution and delivery by the Sellers and the Sellers’ Representative, constitutes a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except (A) as enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws affecting the rights of creditors generally and general equitable principles (whether considered in a proceeding in equity or at law), and (B) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of a court of competent jurisdiction before which any proceeding may be brought.

4.3 Non-Contravention . Subject to compliance with the requirements set forth in Section 4.5 , the execution and delivery of this Agreement by Buyer does not, and the performance and compliance of this Agreement by Buyer, and the consummation by Buyer of the Stock Purchase and the other transactions contemplated hereby, does not and will not: (a) conflict with or violate the Certificate of Incorporation or Bylaws of Buyer; (b) conflict with or violate any Legal Requirement applicable to Buyer or by which Buyer or any of its properties or assets is bound or affected; or (c) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair Buyer’s rights or alter the rights or obligations of any Person under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of Buyer (other than a Permitted Lien) pursuant to any material Contract to which Buyer is a party, except in each of the foregoing clauses (b) and (c) as would not reasonably be expected to have a Material Adverse Effect on Buyer.

4.4 Investigation . Buyer acknowledges that it has conducted an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties, products, prospects, employees and projected operations of the Company and, in making its determination to proceed with the transactions contemplated by this Agreement, Buyer is relying and has relied only on the results of its own independent investigation and verification and the representations and warranties of the Company expressly and specifically set forth in Article III . Buyer acknowledges that, except as expressly provided in Article III , Buyer is not relying and has not relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied. The representations and warranties of the Company set forth in Article III constitute the sole and exclusive representations and warranties to Buyer in connection with the transactions contemplated by this Agreement, and Buyer understands, acknowledges and agrees that all other representations and warranties of any kind or nature, express or implied are specifically disclaimed by the Company. Buyer acknowledges and agrees that no current or former stockholder, director, officer, employee, Affiliate or advisor of the Company has made or is making, in such Person’s individual capacity, any representations, warranties or commitments whatsoever regarding the subject matter of this Agreement, express or implied.

4.5 Necessary Consents . No consent, approval, waiver, order or authorization of, or registration, declaration, filing or registration with, or notification to, any Governmental Entity is required to be obtained or made by Buyer in connection with the execution and delivery of this Agreement, the performance by Buyer of its obligations hereunder or the consummation of the Buyer and other transactions contemplated hereby, except for the Necessary Consents.

ARTICLE V.
ADDITIONAL AGREEMENTS

5.1 Confidentiality . The parties acknowledge that the Company and Garner Investments, LLC have previously executed the Mutual Non-Disclosure Agreement, dated June 18, 2014 (the “ Confidentiality Agreement ”), which Confidentiality Agreement will continue in full force and effect in accordance with its terms and each of Buyer and the Company will hold, and will cause its respective directors, officers, Employees, agents and advisors (including attorneys, accountants, consultants, bankers and financial advisors) to hold, any Proprietary Information (as defined in the Confidentiality Agreement) confidential in accordance with the terms of the Confidentiality Agreement.

5.2 Public Disclosure . Without limiting any other provision of this Agreement, Buyer and the Sellers’ Representative will consult with each other before issuing, and provide each other the opportunity to review, comment upon and concur with, and will agree on any press release or public statement with respect to this Agreement and the transactions contemplated hereby, including the Stock Purchase, and will not issue any such press release or make any such public statement prior to such consultation and agreement, except as may be required by applicable Legal Requirements. Notwithstanding the foregoing, each of the Company and Buyer may make internal announcements to its employees as reasonably necessary to communicate the relevant details of the Stock Purchase.

5.3 Company Directors and Officers . Immediately following the Closing, Buyer shall take all action necessary to ensure the appointment of at least the minimum number of directors to the Board of Directors of the Company and at least the minimum number of officers to serve as officers of the Company, as required under applicable Legal Requirements and the Company Charter Documents, with such appointments to be effective immediately.

5.4 Tax Matters .

(a) Tax Returns .

(i) Buyer shall ensure that the Company prepares and timely files, or causes to be prepared and timely filed, on a basis consistent with past practice unless otherwise required by applicable Legal Requirements, all Tax Returns of the Company for any periods ending on or prior to the Closing Date that are filed after the Closing Date and all Tax Returns for the Company for any Straddle Periods. Buyer shall deliver to the Sellers’ Representative for the Sellers’ Representative’s review and comment a copy of each such Tax Return at least fifteen (15) Business Days prior to the due date for

the filing of such Tax Return (taking into account any extension). Buyer shall consider in good faith any reasonable comments provided by the Sellers’ Representative with respect to any such Tax Return ( provided that, in the case of a Tax Return for any Straddle Period, such comment relates to the Pre-Closing Tax Period) at least five (5) Business Days prior to the due date for the filing of such Tax Return.

(ii) For purposes of this Agreement, in the case of Straddle Period, the portion of any Taxes allocable to the Pre-Closing Tax Period will be (i) in the case of Property Taxes for assets held by the Company at Closing and that were already subject to such Property Taxes prior to Closing, deemed to be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days of such Straddle Period in the Pre-Closing Tax Period and the denominator of which is the number of calendar days in the entire Straddle Period and (ii) in the case of all other Taxes, determined as though the taxable year of the Company terminated at the close of business on the Closing Date.

(b) Tax Contests . Buyer, on the one hand, and the Sellers’ Representative, on the other hand, shall promptly notify each other upon receipt by such party of written notice of any inquiries, claims, assessments, audits or similar events with respect to Taxes of the Company relating to a Pre-Closing Tax Period (any such inquiry, claim, assessment, audit or similar event, a “ Tax Contest ”). Any failure to so notify the other party of any Tax Contest shall not limit any of the indemnification obligations under Article VI (except to the extent such failure materially prejudices the defense of such Tax Contest). Buyer shall have the right to control the conduct of all Tax Contests, including any settlement or compromise thereof; provided , however , that Buyer shall keep the Sellers’ Representative reasonably informed of the progress of any Tax Contest and Buyer shall not resolve such Tax Contest in a manner that could reasonably be expected to have an adverse impact on any indemnification obligations under Article VI without the Sellers’ Representative’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Each party shall bear its own costs for participating in such Tax Contest, except that Buyer may be entitled to indemnification for its costs pursuant to this Agreement. In the event of any conflict or overlap between the provisions of this Section 5.4(b) and Section 6.6 , the provisions of this Section 5.4(b) shall control.

(c) Cooperation on Tax Matters . Buyer and the Sellers’ Representative shall cooperate fully, as and to the extent reasonably requested by the other party, in connection with the filing of Tax Returns pursuant to this Agreement and any Tax Contest. Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which may be reasonably relevant to any such Tax Return or Tax Contest and making appropriate persons available on a mutually convenient

basis to provide additional information and explanation of any material provided hereunder.

(d) Transfer Taxes . All transfer, stamp, documentary, sales, use, registration, value-added and other similar Taxes (including all applicable real estate transfer Taxes) incurred in connection with this Agreement and the transactions contemplated hereby (“ Transfer Taxes ”) will be borne by the Sellers. The Sellers’ Representative hereby agrees to file, or cause to be filed, in a timely manner all necessary documents (including, but not limited to, all Tax Returns) with respect to such Transfer Taxes. The Sellers’ Representative shall provide Buyer with evidence satisfactory to Buyer that such Transfer Taxes have been paid by the Sellers.

5.5 FIRPTA Compliance . On the Closing Date, the Sellers shall deliver, or cause to be delivered, to Buyer all necessary forms and certificates, dated as of the Closing Date, properly executed and in a form reasonably acceptable to Buyer, certifying that the transactions contemplated hereby are exempt from withholding under Section 1445 of the Code.

ARTICLE VI.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; ESCROW

6.1 Survival of Representations and Warranties .

(a) All representations and warranties of the Sellers contained in this Agreement shall survive the consummation of the Stock Purchase and continue until the Escrow Termination Date, after which time such representations and warranties shall terminate; provided , however , that the Fundamental Representations shall survive indefinitely; provided , further , that if at any time prior to the termination of any specific representation or warranty, an Indemnified Party has duly delivered to the Sellers a valid Indemnification Demand or Claim Notice (with such Indemnification Demand or Claim Notice satisfying the requirements set forth in Sections 6.6(a) or 6.7(a) , as applicable) relating to such representation or warranty, then the representation or warranty underlying the claim asserted in such Indemnification Demand or Claim Notice shall survive solely with respect to the claim (and only to the extent reasonably within the scope of the claim) in such notice until such time as such claim is resolved. Sellers and Buyer expressly agree pursuant to this Section 6.1 to shorten the statutes of limitation applicable to all claims and causes of action based directly or indirectly upon inaccuracies in or breaches of the representations and warranties made by the Sellers in this Agreement. The respective covenants, agreements and obligations of the parties contained in this Agreement shall survive (A) until fully performed or fulfilled, unless non-compliance with such covenants,

agreements or obligations is waived in writing by the party or parties entitled to such performance or (B) if not fully performed or fulfilled, until the later of the end of the applicable statute of limitations and any extensions thereof.

(b) The representations, warranties, agreements, obligations and covenants of the Sellers, and the rights and remedies that may be exercised by the Indemnified Parties, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or knowledge of, the Indemnified Parties or their representatives.

6.2 Escrow . Promptly following (and in no event more than ten (10) days after) the Closing, and without any act of any Seller, Buyer shall deposit the Escrow Amount with the Escrow Agent. For purposes of determining the reduction in the amount of Closing Cash Consideration payable to each Seller pursuant to Section 2.4(a) , Buyer will be deemed to have contributed on behalf of each Seller, his, her or its Pro Rata Portion of the Escrow Amount to the Escrow Fund to be governed under the terms set forth in this Agreement and in the Escrow Agreement. If any payment is required to be made to Buyer pursuant this Article VI , Buyer and the Sellers’ Representative shall promptly provide written instructions to the Escrow Agent, pursuant to the terms of the Escrow Agreement, to deliver to Buyer out of the Escrow Fund an amount of cash that is equal in value to such required payment. The Buyer and the Sellers’ Representative agree that they shall cause the Escrow Agent to disburse the funds in the Escrow Fund in accordance with the terms of the Escrow Agreement.

6.3 Indemnification; Escrow Fund; Right of Setoff .

(a) From and after the Closing Date (but subject to Section 6.1 and the limitations set forth in Section 6.4(a) , each Indemnified Party shall be defended and held harmless by the Sellers and shall be indemnified by the Sellers on a several (and not joint and several) basis from and against any Losses which are suffered or incurred by any Indemnified Party or to which any Indemnified Party may otherwise become subject (regardless of whether or not such Losses relate to any Third-Party Claim) and which arise from or as a result of:

(i) any inaccuracy in or breach of or (in the case of a Third-Party Claim that, if determined in favor of the applicable third party, would result in an inaccuracy or breach) alleged breach of any representation or warranty of the Sellers contained in this Agreement or the Allocation Certificate; and

(ii) any failure by the Sellers to perform or comply with any agreement, obligation or covenant of the Sellers contained in this Agreement;

(iii) (A) any Taxes of the Company with respect to any Pre-Closing Tax Period, (B) any Taxes for which the Company (or a predecessor of the Company) is held liable under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) by reason of such entity being included in any consolidated, affiliated, combined or unitary group at any time on or before the Closing Date, (C) the Taxes of any Person (other than the Company) imposed on the Company as a transferee or successor, by Contract or otherwise, and (D) any Taxes imposed on Buyer in connection with the issuance of Buyer Common Stock as the Closing Stock Consideration under this Agreement; and

(iv) fraud, intentional misrepresentation or willful misconduct on the part of the Company or its Affiliates.

(b) In the event any Indemnified Party shall suffer any Losses for which such Indemnified Party is entitled to indemnification under this Article VI , subject to Section 6.4(b) , such Indemnified Party shall be entitled to recover such Losses by (i) obtaining the amount from the Escrow Fund equal in value to the aggregate amount of such Losses, and/or (ii) with respect to Losses which arise from or as a result of any inaccuracy in or breach of or (in the case of a Third-Party Claim that, if determined in favor of the applicable third party, would result in an inaccuracy or breach) alleged breach of a Fundamental Representation of the Sellers or arising out of or resulting from Section 6.3(a)(iii) or Section 6.3(a)(iv) , any amounts otherwise payable on account of the Milestone Payments (the “ Right of Setoff ”). Subject to the limitations set forth in this Article VI , if, at the time a Milestone Payment becomes due and payable, there shall be any outstanding claim pursuant to Section 6.3(a) and (A) such claim shall be subject to the Right of Setoff, (B) with respect to such claim, the amount of Losses shall not have been finally determined, and (C) Buyer has elected to exercise the Right of Setoff with respect to such Milestone Payment, then the amounts otherwise payable pursuant to the Milestone Payment shall be reduced by the amount of Losses the Indemnified Party reasonably and in good faith estimates to be subject to such indemnification claim and that is set forth in the Indemnification Demand or Claim Notice until such time as the actual Losses can be determined when the actual Losses will be either further subject to the Right of Setoff (in the event the estimate was less than the actual amount of Losses) or promptly reimbursed to the Sellers (in the event the estimate was greater than the actual amount of Losses).

6.4 Limitation on Remedies .

(a) Notwithstanding anything to the contrary contained herein: (i) any Losses recoverable hereunder shall be reduced in amount by any insurance proceeds actually realized by any Indemnified Party that are directly attributable to such Losses ( provided that the Indemnified Party shall not be required to litigate any dispute, or

otherwise bring any claim, lawsuit or other proceeding to obtain such insurance proceeds); and (ii) no Losses (other than Losses from Third-Party Claims) shall be recoverable hereunder that constitute punitive or consequential damages. Subject to Section 6.4(c) , the Indemnified Parties shall not have the right to be indemnified pursuant to Section 6.3(a)(i) for breaches of representations and warranties unless and until the Indemnified Parties shall have incurred on a cumulative basis since the Closing Date aggregate Losses in an amount exceeding $5,000, in which event the right to be indemnified shall apply to all Losses including any amounts which would not otherwise be required to be indemnified pursuant to this Section 6.4(a) .

(b) All claims for recovery for any Loss or Losses from the Escrow Fund shall be made pursuant to and in accordance with, and be governed by the terms of, this Agreement and the Escrow Agreement.

(c) Recovery from the Escrow Fund shall be the sole and exclusive remedies of the Indemnified Parties for any Losses incurred by any Indemnified Party (other than claims for injunctive relief and/or specific performance of covenants that require performance after the Closing), provided , however , that the foregoing shall not apply to (i) a breach of the Fundamental Representations or (ii) Losses arising out of or resulting from Section 6.3(a)(iii) or Section 6.3(a)(iv) , and the Sellers’ liability for each of the matters set forth in clause (i) and (ii) above shall not exceed the amount of total consideration received by the Sellers in connection with this Agreement and no individual Seller’s portion will exceed such Seller’s Pro Rata Portion, based upon that individual Seller’s percentage of Company stock ownership, of the total amount of consideration received in connection with this Agreement, and provided , further , that the Sellers’ liability for fraud, intentional misrepresentation or willful misconduct shall not be limited by the baskets and other limitations set forth in Section 6.4(a) , this Section 6.4(c) or Section 6.4(d) .

(d) Any obligation of the Sellers to indemnify an Indemnified Party shall be satisfied (i) first, in cash, by recourse to the Escrow Fund until such funds are depleted or otherwise unavailable and (ii) thereafter, from the Sellers through the Right of Setoff.

6.5 Sellers’ Representative .

(a) By virtue of the approval and adoption of this Agreement by the requisite consent of the Sellers, each of the Sellers shall be deemed to have agreed to appoint Julia Feliciano as its agent and attorney-in-fact (the “ Sellers’ Representative ”) for and on behalf of the Sellers to give and receive notices and communications, to authorize payment to any Indemnified Party from the Escrow Fund in satisfaction of claims by any

Indemnified Party, to object to such payments, to agree to, negotiate, enter into settlements and compromises of and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, to assert, negotiate, enter into settlements and compromises of and demand arbitration and comply with orders of courts and awards of arbitrators with respect to any other claim by any Indemnified Party against any Seller or by any such Seller against any Indemnified Party or any dispute between any Indemnified Party and any such Seller, in each case relating to this Agreement or the transactions contemplated hereby, and to take all other actions that are either (i) necessary or appropriate in the judgment of the Sellers’ Representative for the accomplishment of the foregoing or (ii) specifically mandated by the terms of this Agreement or the Escrow Agreement. Such agency may be changed by the Sellers with the right to at least a majority of the Pro Rata Portions of the Escrow Fund from time to time. Notwithstanding the foregoing, the Sellers’ Representative may resign at any time by providing written notice of intent to resign to the Sellers, which resignation shall be effective upon the earlier of (A) thirty (30) days following delivery of such written notice or (B) the appointment of a successor by the holders of a majority in interest of the Escrow Fund. No bond shall be required of the Sellers’ Representative, and the Sellers’ Representative shall not receive any compensation for its services.

(b) The Sellers’ Representative shall not be liable to any Seller for any act done or omitted hereunder as Sellers’ Representative while acting in good faith, even if such act or omission constitutes negligence on the part of such Sellers’ Representative. The Sellers’ Representative shall only have the duties expressly stated in this Agreement and shall have no other duty, express or implied. The Sellers’ Representative may engage attorneys, accountants and other professionals and experts. The Sellers’ Representative may in good faith rely conclusively upon information, reports, statements and opinions prepared or presented by such professionals, and any action taken by the Sellers’ Representative based on such reliance shall be deemed conclusively to have been taken in good faith. The Sellers shall severally (and not jointly and severally) indemnify the Sellers’ Representative and hold the Sellers’ Representative harmless against any loss, liability or expense incurred on the part of the Sellers’ Representative (so long as the Sellers’ Representative was acting in good faith in connection therewith) and arising out of or in connection with the acceptance or administration of the Sellers’ Representative’s duties hereunder, including the reasonable fees and expenses of any legal counsel retained by the Sellers’ Representative. In the event that the Sellers receive a written notice from the Sellers’ Representative of expenses either incurred or expected to be incurred by the Sellers’ Representative arising out of or in connection with the acceptance or administration of the Sellers’ Representative’s duties hereunder, then each Seller agrees to advance or reimburse, as applicable, such Seller’s Pro Rata Portion of such expenses to the Sellers’ Representative within thirty (30) days of receiving such notice. In the event that

the Sellers’ Representative determines that any portion of advance payments will not be needed or utilized by the Sellers’ Representative, the Sellers’ Representative will promptly return such advanced payments to the Sellers (based on each Seller’s Pro Rata Portion). A decision, act, consent or instruction of the Sellers’ Representative, including an amendment, extension or waiver of this Agreement pursuant to Sections 7.2 or 7.3 hereof, shall constitute a decision of the Sellers and shall be final, binding and conclusive upon the Sellers.

(c) Each Seller hereby agrees to promptly provide written notice to the Sellers’ Representative in the event that such Seller’s address, phone number or primary email address changes following Closing.

6.6 Third-Party Claims .

(a) In the event that an Indemnified Party becomes aware of a third-party claim (a “ Third-Party Claim ”) that the Indemnified Party reasonably believes may result in a demand against the Right of Setoff or the Escrow Fund or for other indemnification pursuant to this Article VI , Buyer shall promptly notify the Sellers’ Representative and the Escrow Agent, if the Escrow Fund has not ceased to exist, of such claim (a “ Claim Notice ”); provided , however , that no delay or failure on the part of an Indemnified Party in delivering any Claim Notice shall relieve the Sellers from any liability hereunder except and to the extent the Sellers have been actually prejudiced by such delay or failure.

(b) Buyer may, at its election, undertake and conduct the defense of such Third-Party Claim upon written notice of such election to the Sellers’ Representative within thirty (30) days after delivery of the Claim Notice. The Sellers’ Representative shall be entitled to participate in, but not to determine or conduct, the defense of such Third-Party Claim, unless such participation would affect any privilege of Buyer in respect of such Third-Party Claim; provided , however , that Buyer shall have the right in its reasonable discretion to settle any such claim; provided , further , that except with the prior written consent of the Sellers’ Representative (which consent shall not be unreasonably withheld, delayed or conditioned), no settlement of any such Third-Party Claim with third-party claimants shall be determinative of any Losses relating to such matter.

(c) If Buyer does not so elect to undertake and conduct the defense of such Third-Party Claim, the Sellers’ Representative may undertake the defense of and use all reasonable efforts to defend such claim and shall consult with Buyer regarding the strategy for defense of such claim, including with respect to the Sellers’ Representative choice of legal counsel; provided , however , that the Sellers’ Representative shall have the right in their reasonable discretion to settle any such claim; provided , further , that except

with the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), no settlement of any such Third-Party Claim with third-party claimants shall be determinative of any Losses relating to such matter. Notwithstanding the foregoing, in the event that (i) the control of the defense by the Sellers’ Representative would be inappropriate due to a conflict of interest or because the Indemnified Party has been advised by counsel that in such counsel’s opinion it has claims or defenses that are unavailable to the Sellers which the Sellers’ Representative is unable or unwilling to assert, (ii) such Third-Party Claim (or the facts or allegations related to such Third-Party Claim) involves criminal allegations or seeks equitable or injunctive relief, or (iii) the Sellers’ Representative fail at any time to conduct the defense of such proceeding, claim or demand in a reasonably active and diligent manner, then Buyer shall have the right to assume the control of such defense. Until the Sellers’ Representative assumes the defense of any such Third-Party Claim, the Indemnified Party may defend against such Third-Party Claim in any manner the Indemnified Party reasonably deems appropriate at cost and expense of the Sellers if the Sellers are liable for indemnification hereunder. Notwithstanding any other provision of this Article VI , the Sellers’ Representative shall not enter into any compromise, settlement agreement or consent decree with respect to any such Third-Party Claim without the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned) unless such compromise, settlement agreement or consent decree (x) provides solely for the payment of money in an amount that is less than the amount of the Escrow Amount then remaining in the Escrow Fund, (y) contains a complete and unconditional release by the third party asserting the Third-Party Claim of the Indemnified Party and (z) does not contain any direct or indirect requirements upon or provisions for or impose any obligations on the Indemnified Party.

(d) The party controlling the defense of a Third-Party Claim (the “ Controlling Party ”) shall (i) keep the other party (the “ Non-controlling Party ”) advised of the status of such claim and the defense thereof (including all material developments and events relating thereto) and shall consider in good faith recommendations made by the Non-controlling Party with respect thereto and (ii) make available to the Non-controlling Party any documents or materials in its possession or control that may be necessary to understand the defense of such claim (subject to protection of the attorney-client privilege). If requested by the Controlling Party, the Non-controlling Party shall furnish the Controlling Party with such information as it may have with respect to such Third-Party Claim (including copies of any summons, complaints or other pleadings which may have been served on such party and any written claim, demand, invoice, billing or other document evidencing or asserting the same) and shall otherwise reasonably cooperate with and assist the Controlling Party in the defense of such Third-Party Claim.

6.7 Notice of Indemnity Claims Other than Third-Party Claims .

(a) In order to seek indemnification under this Article VI other than with respect to a Third-Party Claim, the applicable Indemnified Party shall deliver a written demand (an “ Indemnification Demand ”) to the Sellers’ Representative and to the Escrow Agent, if the Escrow Fund has not ceased to exist. The Indemnification Demand shall contain (i) a description and the amount of any Losses incurred or reasonably expected to be incurred by the Indemnified Party, (ii) a statement that the Indemnified Party is entitled to indemnification under Section 6.3(a) for such Losses and a reasonable explanation of the basis therefor and (iii) a demand for payment in the amount of such Losses.

(b) The Sellers’ Representative may object to any liability claim set forth in an Indemnification Demand by delivering written notice to Buyer of the Sellers’ Representative’s objection (an “ Indemnification Dispute Notice ”). Such Indemnification Dispute Notice will describe the grounds (to the extent known) for such objection in reasonable detail. If the Sellers’ Representative fails to deliver an Indemnification Dispute Notice to the Indemnified Party within thirty (30) days following receipt of an Indemnification Demand from a Indemnified Party that it disputes the indemnity claimed therein, the indemnity claim set forth in the Indemnification Demand shall be conclusively deemed a liability to be indemnified under this Article VI , and such Indemnified Party shall, subject to the limitations contained in this Article VI , be indemnified for the amount of the Losses stated in such Indemnification Demand on demand. If an Indemnification Dispute Notice is delivered, the parties shall thereafter comply with the following dispute resolution provisions:

(i) The Sellers’ Representative and the Indemnified Party shall attempt to resolve such dispute promptly by negotiation in good faith. Each such party shall give the other party involved written notice of any dispute not so resolved within thirty (30) days following delivery of an Indemnification Dispute Notice. Within fifteen (15) days following delivery of such notice, the party receiving notice shall submit to the other a written response thereto. The notice and response shall include the name and title of the Person who will represent the Indemnified Party and any other Person who will accompany that Person, in the case of the Indemnified Party, or the name of the agent, if other than Sellers’ Representative, who will represent the Sellers and any other Person who will accompany that agent, in the case of the Sellers’ Representative.

(ii) Within ten (10) days following delivery of the notice pursuant to Section 6.7(b)(i) , the designated officer of the Indemnified Party and the Sellers’ Representative or other designated agent of the Sellers shall meet at a mutually agreed time and place, and thereafter, as often as they reasonably deem necessary, to attempt to resolve the dispute. All negotiations conducted pursuant to this Section 6.7(b)

(and any of the parties’ submissions in contemplation thereof) shall be kept confidential by the parties.

(c) In the event the Sellers’ Representative and the Indemnified Party are unable to resolve any dispute identified in an Indemnification Dispute Notice in accordance with provisions (i) and (ii) of this Section 6.7(b) within thirty (30) days after delivery of any Indemnification Dispute Notice, either the Indemnified Party or the Sellers’ Representative may seek to resolve the matter through arbitration in accordance with Section 8.5 .

6.8 No Circular Recovery . After the Closing, the Sellers shall not have any right of contribution, right of indemnity or other right or remedy against the Buyer, or any of their directors, officers or employees, for any breach of any representation, warranty, covenant or agreement of the Sellers or the Company.

6.9 Determination of Indemnifiable Losses . For the purpose of calculating the amount of the Losses resulting from a breach or inaccuracy of a representation or warranty (but not for the purpose of determining the existence of such breach or inaccuracy), any “material,” “materiality” or “Material Adverse Effect” qualifiers or words of similar import contained in such representation or warranty giving rise to the claim of indemnity hereunder shall in each case be disregarded and without effect (as if such standard or qualification were deleted from such representation or warranty).

6.10 Tax Consequences of Indemnification Payments . Any payments made to an Indemnified Party pursuant to any indemnification obligations under this Article VI will be treated as adjustments to the purchase price for all federal, state, local and foreign Tax purposes, and the parties shall file their respective Tax Returns accordingly and such agreed treatment will govern for purposes of this Agreement, unless otherwise required by law.

ARTICLE VII.
AMENDMENT AND WAIVER

7.1 Fees and Expenses . Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including fees and expenses of financial advisors, financial sponsors, legal counsel and other advisors (“ Transaction Expenses ”), shall be paid by the party incurring such expenses whether or not the Stock Purchase is consummated. With respect to the Company, Transaction Expenses unpaid as of the Closing shall be deducted in the calculation of the Closing Cash Consideration.

7.2 Amendment . This Agreement may be amended by the parties hereto by action duly authorized by the parties. Without limiting the foregoing, this Agreement may not be amended except by execution of an instrument in writing signed on behalf of each of Buyer and the Sellers’ Representative, acting for the Sellers. Any such amendment shall be binding on each of the parties hereto, including the Sellers, provided that any amendment that does not impact all Sellers in an equal manner must be signed by any Seller who is disproportionately impacted.

7.3 Waiver . Any agreement on the part of a party hereto to any waiver shall be valid only if set forth in an instrument in writing signed on behalf of (i) Buyer, if such waiver is on behalf of Buyer or (ii) the Sellers’ Representative, if such waiver is on behalf of the Sellers, provided that any waiver that does not impact all Sellers in an equal manner must be signed by any Seller who is disproportionately impacted. Delay in exercising any right under this Agreement shall not constitute a waiver of such right.

ARTICLE VIII.
GENERAL PROVISIONS

8.1 Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly given (i) on the date of delivery if delivered personally, (ii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date is not a Business Day) of transmission by pdf, or (iii) on the date of confirmation of receipt (or, the first Business Day following such receipt if the date is not a Business Day) if delivered by a nationally recognized courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(a) if to Buyer, to:

SG Pharmaceuticals, Inc.

c/o Latham & Watkins LLP

12670 High Bluff Drive

San Diego, CA 92130

Attention: Theodore R. Schroeder

Telephone No.: (858) 442-2772

Email: tschroederhome@yahoo.com

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: Cheston J. Larson
Telephone No.: (858) 523-5435
Email: cheston.larson@lw.com

(b) if to the Sellers, to:

Julia Feliciano

28968 Jana Lane

Valley Center, CA 92082

Phone: (858) 784-1570

Email: julia.feliciano@yahoo.com

in each case with a copy (which shall not constitute notice) to:

Evelyn Ellis-Grosse
2785 Carillon Crossing

Marietta, GA 30066
Telephone No.: (484) 597-0232
Email: evelyn@e2gconsulting.com

8.2 Interpretation; Knowledge .

(a) When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. When a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference shall be to an Article, Section, Exhibit or Schedule of this Agreement unless otherwise indicated. For purposes of this Agreement; (i) the words “ include ,” “ includes ” and “ including ,” when used herein, shall be deemed in each case to be followed by the words “without limitation”; (ii) “hereof”, “hereto”, “hereby”, “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement; (iii) “date hereof” refers to the date of this Agreement; (iv) “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase does not mean simply “if;” (v) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (vi) references to an agreement or instrument mean such agreement or instrument as from time to time amended, modified or supplemented; (vii) references to a Person are also to its permitted successors and assigns; (viii) words importing the masculine gender include the feminine or neuter and, in each case, vice

versa ; and (ix) references to a law or Legal Requirement include any amendment or modification to such law or Legal Requirement and any rules or regulations issued thereunder, if such amendment or modification, or such rule or regulation is effective, on or before the date on which the compliance with such law or Legal Requirement is at issue. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When reference is made herein to “ the business of ” an entity, such reference shall be deemed to include the business of such entity and its Subsidiaries, taken as a whole. The Company Disclosure Letter shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Agreement. An exception or disclosure made in the Company Disclosure Letter with regard to a representation of the Company in any section or subsection of the Company Disclosure Letter shall qualify only the corresponding section or subsection of Article III .

(b) For purposes of this Agreement, the term “ Knowledge of the Sellers ” shall mean that one or more of the Sellers or directors of the Company (i) has actual knowledge of the fact or other matter at issue or (ii) should have had actual knowledge of such fact or other matter assuming reasonable inquiry through the diligent exercise of such individual’s duties as an officer or employee of the Company.

(c) For purposes of this Agreement, the term “ Material Adverse Effect ,” when used in connection with an entity, shall mean any change or effect that has occurred prior to the date of determination of the occurrence of the Material Adverse Effect, that is materially adverse to such entity taken as a whole with its Subsidiaries, or to such entity’s business, assets, Liabilities, capitalization, condition (financial or otherwise) or results of operations; provided , however , in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has been or will be, a Material Adverse Effect on any entity: (i) any change or effect resulting from compliance with the terms and conditions of this Agreement; (ii) any change or effect resulting from changes in Legal Requirements or the interpretation thereof (which change or effect does not disproportionately affect such entity in any material respect); (iii) any change or effect resulting from changes affecting any of the industries in which such entity or its Subsidiaries operates generally or the United States or worldwide economy generally, financial markets or political conditions (which changes in each case do not disproportionately affect such entity in any material respect); (iv) any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared) or any escalation or worsening thereof (which change or effect does not disproportionately affect such entity in any material respect); (v) failure to meet internal forecasts or financial projections (it being understood that the facts and circumstances giving rise to such failure may be deemed to constitute, and may be taken

into account in determining whether there has been, a Material Adverse Effect); (vi) any change or effect resulting from the announcement or pendency of the Stock Purchase, including loss of any employees, customers, suppliers, partners or distributors; or (vii) any litigation arising from allegations of a breach of fiduciary duty or misrepresentation in any disclosure relating to this Agreement or the transactions contemplated hereby.

(d) For purposes of this Agreement, the term “ Person ” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity.

8.3 Counterparts . This Agreement may be executed in two (2) or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

8.4 Entire Agreement; Third-Party Beneficiaries . This Agreement and the documents and instruments and other agreements among the parties hereto as contemplated by or referred to herein, including the Company Disclosure Letter, the Escrow Agreement, the Employment Agreement, the Non-Competition Agreements, Annex A, Annex B, Annex C and any other certificates delivered pursuant to this Agreement (a) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, it being understood that the Confidentiality Agreement shall continue in full force and effect until the Closing and shall survive any termination of this Agreement and (b) are not intended to confer upon any other Person any rights or remedies hereunder and no Person is or shall be deemed to be a third party beneficiary hereunder.

8.5 Governing Law; Arbitration .

(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES AND THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY DISPUTES ARISING UNDER THIS AGREEMENT OR RELATING TO THE TRANSACTIONS (WHETHER SOUNDING IN CONTRACT, TORT, STATUTE OR OTHERWISE) SHALL BE GOVERNED BY, ENFORCED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD FOR THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

(b) Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, and also including claims sounding in contract, tort, statute or otherwise (each, a “ Dispute ”) shall be finally resolved and decided by binding arbitration pursuant to the then-applicable Rules of Arbitration (the “ Rules ”) of the International Chamber of Commerce (the “ ICC ”) which rules are deemed to be incorporated by reference into this Agreement. Any party shall refer the Dispute to arbitration by sending a written notice of such Dispute to the other party or parties and shall simultaneously file a Request for Arbitration in accordance with the Rules. The Dispute shall be resolved by three (3) arbitrators to be selected in the following manner. Within thirty (30) days after the date of the notice initiating arbitration, one arbitrator shall be selected by the petitioning party (the “ Claimant ”) and one arbitrator shall be selected by the party defending the arbitration (the “ Respondent ”), within thirty (30) days thereafter, failing which such arbitrator shall be appointed by the ICC pursuant to the Rules. The third arbitrator shall be selected by the two (2) arbitrators selected by the Claimant and the Respondent, or, if such arbitrators cannot agree within thirty (30) days on the third arbitrator, such arbitrator shall be selected by the ICC pursuant to the Rules. The seat of the arbitration proceeding shall be in the City of San Diego, State of California. All communications during the any settlement negotiations under this clause shall be confidential and shall be treated as compromise and settlement negotiations for purposes of the applicable rules of evidence and any additional confidentiality and professional secrecy protections provided by applicable Law. The language of arbitration shall be English.

(c) The decision of the arbitral panel shall be in writing and shall set forth in detail the facts of the Dispute and the reasons for the decision. The arbitral panel shall not have the authority to award punitive damages to any injured party. The arbitral award shall be final and binding on the parties from the day it is made. In the event that the losing party fails or refuses to comply with the arbitral award within fourteen (14) days following the date of receipt of notice of the award, then the prevailing party may immediately proceed to request the judicial approval necessary for execution and enforcement of the award before a competent court or before any other court where such party or its assets and properties may be found, and the parties agree not to oppose the immediate domestication (or confirmation and entry of judgment upon the award) and/or enforcement of the award in any such court, including without limitation the courts of the United States or any other country. For the avoidance of doubt, each party waives, in respect of both itself and its property, any defense it may have as to, or based on, lack of jurisdiction, improper venue or inconvenient forum. Each of the parties hereto hereby (i) consents to service of process in any such action between the parties hereto arising in whole or in part under or in connection with this Agreement in any manner permitted by applicable Legal Requirements, (ii) agrees that service of process made by registered or

certified mail, return receipt requested, at its address specified pursuant to Section 8.1 , will constitute good and valid service of process in any such action and (c) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with this section does not constitute good and valid service of process.

(d) Notwithstanding the foregoing, nothing in this Section shall be construed as preventing any party from seeking interim injunctive or conservatory relief in any court of competent jurisdiction. For purposes of any such application for interim injunctive or conservatory relief, each of the parties hereby irrevocably submits to the non-exclusive jurisdiction of the courts of San Diego, California, save that this submission shall not affect the right of any party to make such application in any other court of competent jurisdiction.

(e) All of the costs, fees and expenses that arise from the arbitral proceeding, including the costs and fees of the Claimant and Respondent’s respective counsel, as well as the fees of the arbitrators shall be paid by the losing party, if any, as determined by the arbitrators. Said losing party shall reimburse the prevailing party any amounts deposited by the prevailing party at the commencement of the arbitration or thereafter as required by the arbitrators.

8.6 Severability . In the event that any provision of this Agreement or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the greatest extent possible, the economic, business and other purposes of such void or unenforceable provision.

8.7 Other Remedies . Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other parties will be entitled to seek an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof, this being in addition to any other remedy to which it may be entitled, at law or in equity. Each party

further agrees that, in the event of any action for specific performance in respect of such breach or violation, it will not assert the defense that a remedy at law would be adequate.

8.8 Waiver of Jury Trial . Each of the parties irrevocably waives the right to trial by jury in connection with any matter based upon or arising out of this Agreement, the Escrow Agreement or the transactions contemplated hereby and thereby

8.9 Rules of Construction . The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

8.10 Assignment . No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties. Any purported assignment in violation of this Section 8.10 shall be void. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Notwithstanding the foregoing, Buyer may sell, transfer or assign its rights under this Agreement to any third party, as part of a sale or transfer of substantially all of Buyer’s assets or of the assets of the Buyer; provided that such third party agrees in writing to be bound by the terms and conditions of this Agreement.

8.11 No Waiver . No failure or delay on the part of any party hereto in the exercise of any right hereunder will impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor will any single or partial exercise of any such right preclude other or further exercise thereof or of any other right.

*****

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized respective officers as of the date first written above.

	SG PHARMACEUTICALS, INC.


	By:	/s/ Theodore R. Schroeder
	Theodore R. Schroeder
	President and Chief Executive Officer


	SELLERS’ REPRESENTATIVE:


	/s/ Julia Feliciano
	Julia Feliciano

	SELLERS:


	/s/ Evelyn J. Ellis-Grosse
	Evelyn J. Ellis-Grosse


	/s/ Steve Manogue
	Steve Manogue


	/s/ Julia Feliciano
	Julia Feliciano


	/s/ Darwin Lawson
	Darwin Larson


	/s/ Ron Jones
	Ron Jones


	/s/ Jim Kahn
	Jim Kahn


	ICPD Holdings, LLC


	/s/ Paul G. Ambrose
	Paul G. Ambrose, Member-Manager

Annex A

Company Capital Stock Owned by Sellers

Evelyn J. Ellis-Grosse		1,020,000
Steve Manogue		830,000
Ron Jones		7,500
Jim Kahn		7,500
Julia Feliciano		100,000
ICPD Holdings LLC		55,000
Darwin Larson		100,000

Annex B

Sellers to Deliver Non-Competition Agreements

Evelyn J. Ellis-Grosse

Steve Manogue

Julia Feliciano

Darwin Larson

Annex C

Closing Stock Consideration to Be Issued

Seller	Shares of Buyer Common Stock		Holder of Buyer Shares
Evelyn Ellis-Grosse	1,170,000	*
Steve Manogue	150,000
Ron Jones	2,778
Jim Kahn	2,778
Julia Feliciano	37,037		Julia Feliciano Revocable Trust dated January 10, 2011 Julia Feliciano, TRTEE
ICPD Holdings LLC	20,370
Darwin Larson	37,037		Larson Family Trust Darwin G. Larson TRTEE, Jill Larson TRTEE U/A 6/22/2001

*Subject to vesting pursuant to that certain Stock Restriction Agreement, dated of even date herewith, by and among the Company and Evelyn Ellis-Grosse.

Exhibit 10.5

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “Agreement”) is made by and between ICPD Holdings, LLC and Evelyn J. Ellis-Grosse (“Inventors”) and Zavante Therapeutics, Inc. (“Zavante”), a Delaware corporation having a place of business at 3605 Sandy Plains Road, Suite 240-218, Marietta, GA 30066.

This Agreement is effective as of March 1, 2014 (“Effective Date”).

R E C I T A L S

WHEREAS, Inventors own certain intellectual property relating to Method for Improving Drug Treatments in Mammals;

WHEREAS, Inventors own a provisional patent application for United States patent [**]; and

WHEREAS, Zavante desires to secure the exclusive right and license to use, develop, manufacture, market and exploit the intellectual property developed by Inventors and described in the aforementioned provisional patent application;

NOW, THEREFORE, in consideration of the premises and of the promises and covenants contained herein and intending to be legally bound hereby, the parties agree as follows:

1. Definitions .

“Zavante” shall include Zavante and its Affiliates.

“Affiliate” means, when used with reference to Zavante, any Entity directly or indirectly controlling, controlled by or under common control with Zavante. For purposes of this Agreement “control” means the direct or indirect ownership of over fifty percent (50%) of the outstanding voting securities of an Entity, or the right to receive over fifty percent (50%) of the profits or earnings of an Entity, or the right to control the policy decisions of an Entity.

“Bankruptcy Event” means voluntary or involuntary proceedings by or against an Entity are instituted in bankruptcy or under any insolvency law, or a receiver or custodian is appointed for such Entity, or proceedings are instituted by or against such Entity for corporate reorganization or the dissolution of such Entity, which proceedings, if involuntary, shall not have been dismissed within 60 days after the date of filing, or such Entity makes an assignment for the benefit or creditors, or substantially all of the assets of such Entity are seized or attached and not released within 60 days thereafter.

“Confidential Information” means and includes all technical information, inventions, trade secrets, developments, discoveries, software, know-how, methods, techniques, formulae, data, processes and other proprietary ideas, whether or not patentable or copyrightable, that a party

identifies as confidential or proprietary at the time it is delivered or communicated to the other party.

“Entity” means a corporation, an association, a joint venture, a partnership, a trust, a business, an individual, a government or political subdivision thereof, including an agency, or any other organization that can exercise independent legal standing.

“Inventor Licensed Product(s)” means products that in the absence of this Agreement would infringe at least one claim of Inventor Patent Rights or products that are made using a process or machine covered by a claim of Inventor Patent Rights.

“Inventor Patent Rights” means the aforementioned United States provisional patent application, and foreign counterparts including continuation, divisional and re-issue applications thereof and continuation-in-part applications thereof.

“Inventor Technical Information” means research and development information, unpatented inventions, know-how, trade secrets, and technical data in the possession of Inventors on the Effective Date of this Agreement that is needed to produce Inventor Licensed Products. Notwithstanding the immediately preceding sentence, Inventor Technical Information shall not include, and this License Agreement is not intended to convey any rights to, any inventions, processes, know-how, trade secrets and other intellectual property, including without limitation laboratory analyses, analytical methods, procedures and techniques, and computer technical expertise, software and data, that were independently developed by the members of ICPD Holdings, LLC, nor such information, inventions, know-how, trade secrets, and/or technical data that (i) at the time of receipt is already known to Zavante from a third party who is not under any obligation of confidentiality to Inventors, as evidenced in writing, or (ii) is or later becomes (through no fault of Zavante) in the public domain.

“Zavante Patent Rights” means those United States patent applications and foreign counterparts including continuation, divisional and re-issue applications thereof and continuation-in-part applications thereof based upon intellectual property discovered by Zavante as a result of its use of inventor Patent Rights and/or Inventor Technical Information, together with any and all patents issuing thereon.

2. License Grant .

A. Inventors grant to Zavante for the term of this Agreement an exclusive, worldwide right and license, with the right to grant sublicenses, to make, have made, use and sell Inventor Licensed Product(s) and to use and otherwise exploit the inventor Technical Information, and to develop and patent intellectual property discovered by Zavante as a result of Zavante’s use of Inventor Patent Rights and/or Inventor Technical Information.

B. The license grant of this Section 2 is exclusive but for the reserved right of Inventors to use the Inventor Patent Rights and the Inventor Technical Information exclusively for educational and research purposes, provided Zavante’s proprietary interests are protected. Mutual written consent of all parties is therefore required before such educational or research endeavors are undertaken.

3. Fees And Royalties .

In consideration of the exclusive license granted herein, Zavante shall pay to Inventors an amount of [**] (“License Fee”).

4. Confidentiality .

A. The parties hereto (each a “Recipient”) agree to maintain in confidence and not to disclose to any third party any CONFIDENTIAL INFORMATION of the other party (each a “Discloser”) received pursuant to this Agreement. Each party agrees to ensure that its employees and consultants have access to CONFIDENTIAL INFORMATION only on a need-to-know basis and are obligated in writing to abide by the obligations hereunder. The foregoing obligation shall not apply to:

(i) Information that is known to or independently developed by the Recipient prior to the time of disclosure, in each case, to the extent evidenced by written records promptly disclosed to the Discloser upon receipt of the CONFIDENTIAL INFORMATION;

(ii) Information disclosed to the Recipient by a third party that has a right to make such disclosure;

(iii) Information that becomes patented, published or otherwise part of the public domain as a result of acts by the Discloser or a third person obtaining such information as a matter of right; or

(iv) Information that is required to be disclosed by order of United States governmental authority or a court of competent jurisdiction; provided that the Discloser shall use its best efforts to obtain confidential treatment of such information by the agency or court.

5. Term And Termination .

A. This Agreement, unless sooner terminated as provided herein, shall terminate upon the expiration of the Inventor Patent Rights, subject to the provisions of Section 5(D) hereof.

B. If Zavante becomes subject to a Bankruptcy Event or becomes subject to dissolution, all rights of Zavante under this Agreement shall immediately terminate without the necessity of any action being taken either by Inventors or by Zavante.

C. Upon termination of this Agreement, the parties shall, upon request, return to the other party all CONFIDENTIAL INFORMATION of such requesting party fixed in any tangible medium of expression as well as any data generated during the term of this Agreement which will facilitate the development of the technology licensed hereunder.

D. The provisions of Sections 4, 6, 8, 9, l0(C) and 10(E) shall survive termination of this Agreement.

6. Patent Maintenance And Reimbursement .

A. Zavante shall control and pay costs of and diligently prosecute and maintain Inventor or Zavante Patent Rights licensed hereunder. Zavante may by written notice elect to stop paying for the preparation and maintenance of Inventor or Zavante Patent Rights pertaining to any product in any country, in which event, Inventors may assume the obligation of maintaining for their own benefit any such patent or patent application. Zavante shall provide Inventors with such notice at least [**] in advance of any required prosecution or maintenance activity and/or filing related to the Inventor or Zavante Patent Rights, together with such documentation as may reasonably be necessary to diligently and promptly complete such prosecution or maintenance activity and/or filing.

7. Infringement And Litigation .

A. Inventors and Zavante are responsible for notifying each other promptly of any infringement of Inventor Patent Rights that may come to their attention, including notice to the other of any certification filed under the United States “Drug Price Competition and Patent Term Restoration Act of 1984.” Inventors and Zavante shall consult one another in a timely manner concerning any appropriate response thereto.

B. Zavante shall have the right, but not the obligation, to prosecute such infringement at its own expense. Zavante shall not settle or compromise any such suit in a manner that imposes any obligations or restrictions on Inventors or grants any rights to the Inventor Technical Information or the Inventor Patent Rights, without Inventors• written permission which consent will not be unreasonably withheld . Financial recoveries from any such litigation will first be applied to reimburse Zavante for its litigation expenditures with additional recoveries being paid to Zavante.

C. If Zavante fails to prosecute such infringement, Inventors shall have the right, but not the obligation, to prosecute such infringement at their own expense. In such event, financial recoveries will be entirely retained by Inventors.

D. In any action to enforce any of the inventor Patent Rights, either party, at the request and expense of the other party shall cooperate to the fullest extent reasonably possible. This provision shall not be construed to require either party to undertake any activities, including legal discovery, at the request of any third party except as may be required by lawful process of a court of competent jurisdiction.

8. Representations: Disclaimer Of Warranty; Indemnification .

A. Inventors represent and warrant to Zavante that they have the right to enter into this Agreement and grant the licenses described herein. Inventors represent to the best of their knowledge that Zavante will not infringe on any rights of any other party with respect to its use, manufacture or sale of any products incorporating the Inventor Patent Rights licensed as of the Effective Date.

B. Except as set forth above, the Inventor Patent Rights, Inventor Technical Information, Inventor Licensed Products and all technology licensed under this Agreement are

provided on an “as is” basis and Inventors make no representations or warranties, express or implied, with respect thereto.

C. Zavante will defend, indemnify and hold harmless Inventors (the “Indemnified Parties”), from and against any and all liability, loss, damage, action, claim or expense suffered or incurred by the Indemnified Parties (including attorney’s fees) (individually, a “Liability”, and collectively, the “Liabilities”) which results from or arises out of: (a) the development, use manufacture, promotion, sale or other disposition, of any Inventor Patent Rights, Inventor Technical Information, Inventor Licensed Products, Zavante Patent Rights, and all technology licensed under this Agreement by Zavante, its assignees, sublicensees, vendors or other third parties; and (b) the enforcement by an Indemnified Party of its rights under this section. Without limiting the foregoing, Zavante will defend, indemnify and hold harmless the Indemnified Parties from and against any Liabilities resulting from:

(i) any product liability or other claim of any kind related to the use by a third party of a Inventor Licensed Product that was manufactured, sold or otherwise disposed by Zavante, its assignees, sublicensees, vendors or other third parties;

(ii) a claim by a third party that the Inventor Patent Rights, Inventor Technical Information, Zavante Patent Rights, or any technology licensed under this Agreement or the design, composition, manufacture, use, sale or other disposition of any Inventor Licensed Product or product made using the Zavante Patent Rights, infringes or violates any patent, copyright, trademark or other intellectual property rights of such third party [excluding matters represented by Inventors in Section 8(A) above]; and

(iii) clinical trials or studies conducted by or on behalf of Zavante relating to the Inventor Patent Rights, Inventor Technical Information, Inventor Licensed Products, Zavante Patent Rights, products made using the Zavante Patent Rights, or any technology licensed under this Agreement, including, without limitation, any claim by or on behalf of a human subject of any such clinical trial or study, any claim arising from the procedures specified in any protocol used in any such clinical trial or study, any claim or deviation, authorized or unauthorized, from the protocols of any such clinical trial or study, and any claim resulting from or arising out of the manufacture or quality control by a third party of any substance administered in any clinical trial or study.

D. Each party shall promptly notify the other of any claim or action giving rise to Liabilities subject to the provisions of the foregoing section. Zavante shall have the right to defend any such claim or action, at its cost and expense. If Zavante fails or declines to assume the defense of any such claim or action within [**] after notice thereof, Inventors may assume the defense of such claim or action for the account and at the risk of Zavante, and any Liabilities related thereto shall be conclusively deemed a liability of Zavante. Zavante shall pay promptly to the Indemnified Party any Liabilities to which the foregoing indemnity relates, as incurred. The indemnification rights of Inventors or other Indemnified Party contained herein are in addition to all other rights which such Indemnified Party may have at law or in equity or otherwise. Notwithstanding anything to the contrary in this Agreement, Zavante may use one law firm to defend the interests of Zavante and Indemnified Parties unless it is determined by the law firm defending Zavante, that a conflict of interest actually exists between Zavante and any or all of the Indemnified Parties. If

such conflict exists, Zavante shall pay for one law firm for all Indemnified Parties as a group, and nothing herein shall require Zavante to pay for the services of more than one law firm to represent any or all of the Indemnified Parties. Indemnified Parties may retain counsel of their own selection at their own expense.

9. Independent Contractor .

A. Nothing herein shall be deemed to establish a relationship of principal and agent between Inventors and Zavante, nor any of their agents or employees for any purpose whatsoever. This Agreement shall not be construed as constituting Inventors and Zavante as partners, or as creating any other form of legal association or arrangement that would impose liability upon one party for the act or failure to act of the other party.

10. Additional Provisions .

A. Notices, payments, statements, reports and other communications under this Agreement shall be in writing and shall be deemed to have been received as of the date dispatched if sent by public overnight courier (e.g. Federal Express) and addressed as follows:

If for Inventors:

ICPD Holdings, LLC, Paul G. Ambrose, Member-Manager
43 British American Boulevard
Latham, NY 12110

Evelyn J. Ellis-Grosse
2785 Carillon Crossing
Marietta, GA 30066

If for Zavante:

Zavante Therapeutics, Inc.
3605 Sandy Plains Road
Suite 240-218
Marietta, GA 30066
Attention: CEO

Either party may change its official address upon written notice to the other party.

B. This Agreement shall be construed and governed in accordance with the laws of the State of New York, without giving effect to conflict of law provisions.

C. This Agreement sets forth the entire agreement of the parties. Any modification of this Agreement shall be in writing and signed by an authorized representative of each party. This Agreement does not supersede the provisions of the Advisory Board Agreement between the parties.

D. In the event that a party to this Agreement perceives the existence of a dispute with the other party concerning any right or duty provided for herein, the parties shall, as soon as practicable, confer in an attempt to resolve the dispute.

E. A waiver by either party of a breach or violation of any provision of this Agreement will not constitute or be construed as a waiver of any subsequent breach or violation of that provision or as a waiver of any breach or violation of any other provision of this Agreement.

F. Any of the provisions of this Agreement which are determined to be invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability in such jurisdiction, without rendering invalid or unenforceable the remaining provisions hereof or affecting the validity or unenforceability of any of the terms of this Agreement in any other jurisdiction.

G. Nothing in this Agreement express or implied, is intended to confer on any person other than the parties hereto or their permitted assigns, any benefits, rights or remedies.

IN WITNESS WHEREOF the parties, intending to be legally bound, have caused this Agreement to be executed by their duly authorized representatives.

INVENTORS

ICPD HOLDINGS, LLC.

/s/ Paul G. Ambrose		Date:	July 11, 2014
Paul G. Ambrose, Member-Manager

/s/ Evelyn J. Ellis-Grosse		Date:	11 July 14
Evelyn J. Ellis-Grosse


ZAVANTE THERAPEUTICS, INC.

By:	/s/ Evelyn J. Ellis-Grosse	Date:	11 July 14
Evelyn J. Ellis-Grosse
Chief Executive Officer

Exhibit 10.6

SORRENTO R&D

OFFICE LEASE

This Office Lease, which includes the preceding Summary attached hereto and incorporated herein by this reference (the Office Lease and Summary to be known sometimes collectively hereafter as the “ Lease ”), dated as of the date set forth in Section 1 of the Summary, is made by and between AGP SORRENTO R&D, LP , a Delaware limited partnership (“ Landlord ”) and ZAVANTE THERAPEUTICS, INC. , a Delaware corporation (“ Tenant ”).

ARTICLE 1

BUILDING COMPLEX, BUILDING AND PREMISES;

RIGHT OF FIRST OFFER; EXISTING LEASE CONTINGENCY

1.1 Building Complex, Building and Premises . Upon and subject to the terms set forth in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the premises set forth in Section 6.1 of the Summary (the “ Premises ”), which Premises are located in the Building defined in Section 6.2 of the Summary. The outline of the Premises is set forth in Exhibit A attached hereto. The Building, which is part of a multiple-building office building complex commonly known as Sorrento R&D, is located at 11750 Sorrento Valley Road, San Diego, California. The complex also includes other buildings which are existing or may be constructed in the complex, if and when such buildings are constructed in such complex (collectively, the “ Other Buildings ”). The Building, the Other Buildings, the parking facilities (which currently consist of a surface parking area and may subsequently consist of either and/or both surface parking area(s) and/or parking structure(s), as determined by Landlord) located within such complex (the “ Building Complex Parking Area ”), any outside plaza areas, land and other improvements surrounding the Building and such other future buildings (if any), and the land upon which all of the foregoing are situated, are herein sometimes collectively referred to herein as the “ Building Complex ” or “ Real Property .” Tenant acknowledges that Landlord has made no representation or warranty that other office buildings will be constructed in the Complex, and Landlord may at its sole discretion, elect to construct or not construct any such additional office buildings or phases within the Complex. Tenant further acknowledges that Landlord has made no representation or warranty regarding the condition of the Real Property except as specifically set forth in this Lease or the Tenant Work Letter. Tenant is hereby granted the right to the nonexclusive use of the common corridors and hallways, stairwells, elevators, restrooms and other public or common areas located on the Real Property; provided, however, that the manner in which such public and common areas are maintained and operated shall be at the sole discretion of Landlord and the use thereof shall be subject to the rules, regulations and restrictions attached hereto as Exhibit B (the “ Rules and Regulations ”), as the same may be modified by Landlord from time to time. Landlord reserves the right to make alterations or additions to or to change the location of elements of the Building Complex and the common areas thereof.

1.2 Condition of Premises . Except as expressly set forth in this Lease and in the Tenant Work Letter attached hereto as Exhibit D , Landlord shall not be obligated to provide or pay for any improvements, work or services related to the improvement, remodeling or refurbishment of the Premises, and Tenant shall accept the Premises in its “AS IS” condition on the Lease Commencement Date. Tenant also acknowledges that Landlord has made no representation or warranty regarding the condition of the Premises or the Building Complex, except as specifically set forth in this Lease and the Tenant Work Letter. For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Premises have not undergone inspection by a Certified Access Specialist (CASp).

1.3 Rentable Square Feet . The rentable square feet of the Premises are approximately as set forth in Section 6.1 of the Summary. For purposes hereof, the “ rentable square feet ” of the Premises and the Building and other buildings in the Building Complex shall be calculated by Landlord pursuant to the Standard Method for Measuring Floor Area in Office Buildings, ANSI Z65.1-2010 (“ BOMA ”), as modified for the Building Complex pursuant to Landlord’s standard rentable area measurements for the Building Complex, to include, among other calculations, a portion of the common areas and service areas of the Building and other buildings in the Building Complex. The rentable square feet of the Premises and the rentable square feet of the Building and other buildings constructed in the Building Complex are subject to verification from time to time by Landlord’s planner/designer and such verification shall be made in accordance with the provisions of this Section 1.3. Tenant’s architect may consult with Landlord’s planner/ designer regarding such verification, except to the extent it relates to the rentable square feet of the Building and other buildings in the Building Complex; provided, however, the determination of Landlord’s planner/designer shall be conclusive and binding upon the parties. In the event that Landlord’s planner/designer determines that the rentable square footage shall be different from those set forth in this Lease, all amounts, percentages and figures appearing or referred to in this Lease based upon such incorrect rentable square feet (including, without limitation, the amount of the Base Rent and Tenant’s Share) shall be modified in accordance with such determination. If such determination is made, it will be confirmed in writing by Landlord to Tenant.

1.4 Right of First Offer . During the initial Lease Term (but not the Option Term (as defined in Section 2.2 below), if applicable), Tenant shall have a one-time right of first offer with respect to space located within the Building (as described in Section 6.2 of the Summary) (the “ First Offer Space ”). Notwithstanding the foregoing (i) the lease term for Tenant’s lease of the First Offer Space pursuant to Tenant’s exercise of such first offer right of Tenant shall commence only following the expiration or earlier termination of (A) any existing lease pertaining to the First Offer Space (the “ Existing Leases ”), and (B) if the First Offer Space is vacant as of the date of this Lease, the first lease pertaining to the First Offer Space entered into by Landlord after the date of this Lease (collectively, the “ Superior Leases ”), including any renewal or extension of any such existing or future lease, whether or not such renewal or extension is pursuant to an express written provision in such lease, and regardless of whether any such renewal or extension is consummated pursuant to a lease amendment or a new lease, and (ii) such first offer right shall be subordinate and secondary to all rights of expansion, first refusal, first offer or similar rights granted to (x) the tenants of the Superior Leases and (y) any other tenant of the Project as of the date hereof (the rights described in items (i) and (ii), above to be known collectively as “ Superior Rights ”). Tenant’s right of first offer shall be on the terms and conditions set forth in this Section 1.4.

1.4.1 Procedure for Offer . Landlord shall notify Tenant (the “ First Offer Notice ”) from time to time when Landlord determines, in Landlord’s sole and absolute discretion, that Landlord shall commence the marketing of the First Offer Space (or any portion thereof) because such space shall become or is expected to become available for lease to third parties, where no holder of a Superior Right desires to lease such space. The First Offer Notice shall set forth the Base Rent and all of Landlord’s proposed economic terms and conditions applicable to Tenant’s lease of such space (collectively, the “ First Offer Economic Terms ”), which First Offer Economic Terms shall be based on Landlord’s reasonable determination of the fair market rental value of the First Offer Space. Notwithstanding the foregoing, Landlord’s obligation to deliver the First Offer Notice shall not apply during the last nine (9) months of the initial Lease Term unless Tenant has delivered an Option Notice (as set forth in Section 2.2 below) pertaining to the extension of the initial Lease Term.

1.4.2 Procedure for Acceptance . If Tenant wishes to exercise Tenant’s right of first offer with respect to the space described in the First Offer Notice, then within five (5) business days after delivery of the First Offer Notice to Tenant, Tenant shall deliver notice to Landlord of Tenant’s exercise of its right of first offer with respect to the entire space described in the First Offer Notice and on the First Offer Economic Terms contained therein. If Tenant does not exercise its right of first offer within the five (5) business day period (on all of the First Offer Economic Terms), then Landlord shall be free to lease the space described in the First Offer Notice to anyone to whom Landlord desires on any terms Landlord desires and Tenant’s right of first offer shall thereupon automatically terminate and this Section 1.4 shall be null and void and of no further force or effect. Notwithstanding anything to the contrary contained herein, Tenant

must elect to exercise its right of first offer, if at all, with respect to all of the space comprising the First Offer Space offered by Landlord to Tenant at any particular time, and Tenant may not elect to lease only a portion thereof or object to any of the First Offer Economic Terms.

1.4.3 Construction of First Offer Space . Tenant shall take the First Offer Space in its “As-Is” condition (unless otherwise provided in the First Offer Notice as part of the First Offer Economic Terms), and Tenant shall be entitled to construct improvements in the First Offer Space at Tenant’s expense, in accordance with and subject to the provisions of Article 8 of this Lease.

1.4.4 Lease of First Offer Space . If Tenant timely exercises Tenant’s right to lease the First Offer Space as set forth herein, Landlord and Tenant shall execute an amendment adding such First Offer Space to this Lease upon the First Offer Economic Terms set forth in Landlord’s First Offer Notice and upon the same non-economic terms and conditions as applicable to the original Premises. Tenant shall commence payment of rent for the First Offer Space and the Lease Term of the First Offer Space shall commence upon the date of delivery of such space to Tenant. The Lease Term for the First Offer Space shall be as provided in the First Offer Notice as part of the First Offer Economic Terms.

1.4.5 No Defaults . The rights contained in this Section 1.4 shall be personal to the Tenant originally named in the Lease (“ Original Tenant ”) and any Affiliate Assignee (as defined in Section 14.7 below) and may only be exercised by the Original Tenant or such Affiliate Assignee (and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original Tenant or such Affiliate Assignee leases and occupies the entire Premises then being leased by Original Tenant or such Affiliate Assignee as of the date of Tenant’s exercise of its right of first offer. In addition, at Landlord’s option and in addition to Landlord’s other remedies set forth in this Lease, at law and/or in equity, Tenant shall not have the right to lease the First Offer Space as provided in this Section 1.4 if, as of the date of the First Offer Notice, or, at Landlord’s option, as of the scheduled date of delivery of such First Offer Space to Tenant, Tenant is in default under this Lease beyond the expiration of all applicable notice and cure periods.

1.5 Existing Lease Contingency . Notwithstanding the full execution and delivery of this Lease by Landlord and Tenant, this Lease is subject to and conditioned upon Landlord entering into an agreement with the existing tenant of the Premises whereby such existing tenant (i) agrees to terminate its existing lease prior to the scheduled date of expiration thereof upon terms acceptable to Landlord in its sole discretion, and (ii) vacates and surrenders possession of the Premises to Landlord when and as required by Landlord (the “ Contingency ”). If the Contingency is not satisfied within sixty (60) days after full execution and delivery of this Lease, Landlord or Tenant may terminate this Lease by written notice to the other party (“ Contingency Termination Notice ”); provided, however, that if Tenant properly and timely delivers a Contingency Termination Notice, Landlord shall have the right to rescind such termination by written notice to Tenant within five (5) business days after Landlord’s receipt of the Contingency Termination Notice, in which case Landlord’s notice to Tenant shall indicate that the Contingency has been satisfied or waived and Tenant’s Contingency Termination Notice shall be null and void and this Lease shall remain in full force and effect. If Tenant delivers a Contingency Termination Notice and Landlord fails to so respond within said five (5) business day period, this Lease shall be null and void and Landlord shall promptly return to Tenant the Security Deposit and any prepaid monthly Base Rent and neither party shall have any further obligations to the other. Landlord shall have no liability whatsoever to Tenant relating to or arising from Landlord’s inability or failure to cause the Contingency to be satisfied.

ARTICLE 2

LEASE TERM

2.1 Lease Term . The terms and provisions of this Lease shall be effective as of the date of this Lease except for the provisions of this Lease relating to the payment of Rent (as defined in Section 4.1 below). The term of this Lease (the “ Lease Term ”) shall be as set forth in Section 7.1 of the Summary and shall commence on the date (the “ Lease Commencement Date ”) set forth in Section 7.3 of the Summary (subject, however, to the terms of the Tenant Work Letter), and shall terminate on the date (the “ Lease

Expiration Date ”) set forth in Section 7.4 of the Summary, unless this Lease is sooner terminated as hereinafter provided. For purposes of this Lease, the term “ Lease Year ” shall mean each consecutive twelve (12) month period during the Lease Term; provided, however, that the first Lease Year shall commence on the Lease Commencement Date and the last Lease Year shall end on the Lease Expiration Date. If Landlord does not deliver possession of the Premises to Tenant on or before the anticipated Lease Commencement Date (as set forth in Section 7.3 of the Summary), Landlord shall not be subject to any liability nor shall the validity of this Lease nor the obligations of Tenant hereunder be affected. At any time during the Lease Term, Landlord may deliver to Tenant an amendment to this Lease confirming the Lease Commencement Date and Lease Expiration Date, in the form as set forth in Exhibit C , attached hereto, which Tenant shall execute and return to Landlord within five (5) days of receipt thereof. In the event that Landlord does not deliver such amendment to Tenant, the Lease Commencement Date shall be deemed to be the anticipated Lease Commencement Date set forth in Section 7.3 of the Summary.

2.2 Option Term . Landlord hereby grants to the Original Tenant the number of options to extend the Lease Term for the period of years set forth in the Summary of Basic Lease Information (the “ Option Term ”), which option shall be exercisable only by written notice (“ Option Notice ”) delivered by Tenant to Landlord as provided in Section 2.2.2 below, provided that, as of the date of delivery of such notice and, at Landlord’s option, as of the last day of the initial Lease Term, Tenant is not in default under this Lease after expiration of applicable cure periods. The right contained in this Section 2.2 shall be personal to the Original Tenant and may only be exercised by the Original Tenant and any Affiliate Assignee (and not any other assignee, sublessee or other transferee of the Original Tenant’s interest in this Lease) if the Original Tenant or its Affiliate Assignee occupies the entire Premises as of the date of the Option Notice.

2.2.1 Option Rent . The Rent payable by Tenant during the Option Term (the “ Option Rent ”) shall be equal to the then prevailing fair market rent for the Premises as of the commencement date of the Option Term. The then prevailing fair market rent shall be the rental rate, including all escalations, at which new, non-renewal tenants, as of the commencement of the Option Term, are leasing non-sublease, non-encumbered space comparable in size, location and quality to the Premises for a comparable term, which comparable space is located in comparable buildings in the Sorrento Valley and Sorrento Mesa areas of San Diego, California, taking into consideration only the following concessions: tenant improvements or allowances provided or to be provided for such comparable space, taking into account, and deducting the cost of the existing improvements in the Premises, and based upon the fact that the precise tenant improvements existing in the Premises are specifically suitable to Tenant.

2.2.2 Exercise of Option . The option contained in this Section 2.2 shall be exercised by Tenant, if at all, only in the following manner: (i) Tenant shall deliver written notice (“ Interest Notice ”) to Landlord on or before the date which is eight (8) months prior to the expiration of the initial Lease Term, stating that Tenant is interested in exercising its option; (ii) Landlord, after receipt of Tenant’s notice, shall deliver notice (the “ Option Rent Notice ”) to Tenant not less than six (6) months prior to the expiration of the initial Lease Term, setting forth the Option Rent; and (iii) if Tenant wishes to exercise such option, Tenant shall, on or before the earlier of (A) the date occurring five (5) months prior to the expiration of the initial Lease Term, and (B) the date occurring thirty (30) days after Tenant’s receipt of the Option Rent Notice, exercise the option by delivering the Option Notice to Landlord and upon, and concurrent with, such exercise, Tenant may, at its option, object to the Option Rent determined by Landlord. Failure of Tenant to deliver the Interest Notice to Landlord on or before the date specified in (i) above or to deliver the Option Notice to Landlord on or before the date specified in (iii) above shall be deemed to constitute Tenant’s failure to exercise its option to extend. If Tenant timely and properly exercises its option to extend, the Lease Term shall be extended for the Option Term upon all of the terms and conditions set forth in this Lease, except that the Rent shall be as indicated in the Option Rent Notice unless Tenant, concurrently with its exercise, objects to the Option Rent contained in the Option Rent Notice, in which case the parties shall follow the procedure as set forth in Section 2.2.3 below.

2.2.3 Determination of Option Rent . In the event Tenant exercises its option to extend but objects to Landlord’s determination of the Option Rent concurrently with its exercise of the option to extend, Landlord and Tenant shall attempt to agree in good faith upon the Option Rent. If Landlord and

Tenant fail to reach agreement within thirty (30) days following Tenant’s delivery of the Option Notice (the “ Outside Agreement Date ”), then Tenant may withdraw its Option Notice and this Lease shall automatically expire and terminate in accordance with its terms.

ARTICLE 3

BASE RENT

Tenant shall pay, without notice or demand, to Landlord at the management office of the Building Complex, or, at Landlord’s option, such other place as Landlord may from time to time designate in writing, in currency or a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent ( “ Base Rent ”) as set forth in Section 8 of the Summary, payable in equal monthly installments as set forth in Section 8 of the Summary in advance on or before the first day of each and every calendar month during the Lease Term, without any setoff or deduction whatsoever. The Base Rent for the first full calendar month of the Lease Term which occurs after the expiration of any free rent period shall be paid at the time of Tenant’s execution of this Lease. If any rental payment date (including the Lease Commencement Date) falls on a day of a calendar month other than the first day of such calendar month or if any Rent payment is for a period which is shorter than one calendar month (such as during the last month of the Lease Term), the Rent for any fractional calendar month shall be the proportionate amount of a full calendar month’s rental based on the proportion that the number of days in such fractional month bears to the number of days in the calendar month during which such fractional month occurs. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.

Provided Tenant is not in default under the terms of this Lease beyond any applicable cure periods, Landlord conditionally agrees that Tenant’s obligation to pay Base Rent shall be abated during the second (2 nd ) and the third (3 rd ) full calendar months of the initial Lease Term (collectively, the “ Abatement Months ”). The total amount of Base Rent abated pursuant to the immediately preceding sentence is hereafter referred to collectively as the “ Abated Rent ”. During the Abatement Months, Tenant will still be responsible for the payment of all other monetary obligations under this Lease. The Abated Rent shall only be granted provided Tenant is not in default under this Lease beyond any applicable notice and cure period. Tenant acknowledges that any default by Tenant under this Lease will cause Landlord to incur costs not contemplated hereunder, the exact amount of such costs being extremely difficult and impracticable to ascertain. Therefore, should Tenant at any time during the Lease Term be in default after having been given notice and opportunity to cure, and as a result of such uncured default Landlord elects to terminate this Lease, then the total amount of such Abated Rent so conditionally excused shall become immediately due and payable by Tenant to Landlord and any remaining Abated Rent shall no longer be available to Tenant as a rent credit from the date of such default. Tenant acknowledges and agrees that nothing in this subsection is intended to limit any other remedies available to Landlord at law or in equity under applicable law in the event Tenant defaults under this Lease beyond any applicable notice and cure period.

ARTICLE 4

ADDITIONAL RENT

4.1 General Terms . As set forth in this Article 4, in addition to paying the Base Rent specified in Article 3 of this Lease, Tenant shall pay “Tenant’s Share” of the annual “Building Complex Expenses,” as those terms are defined in Sections 4.2.6 and 4.2.4 of this Lease, respectively, allocated to the tenants of the Building pursuant to the terms of Section 4.3 below, to the extent such Building Complex Expenses allocated to the tenants of the Building are in excess of Building Complex Expenses incurred or accrued during the “Base Year”, as that term is defined in Section 9.1 of the Summary. Landlord and Tenant hereby agree that it is their intent that all Base Rent, Additional Rent and other rent and charges payable to the Landlord under this Lease (hereinafter individually and collectively referred to as “ Rent ”) shall qualify as “rents from real property” within the meaning of Section 856(d) of the Internal Revenue Code of 1986, as amended, (the “ Code ”) and the Department of the U.S. Treasury Regulations promulgated thereunder (the “ Regulations ”). Should the Code or the Regulations, or interpretations thereof by the Internal Revenue

Service contained in revenue rulings or other similar public pronouncements, be changed so that any Rent no longer so qualifies as “rent from real property” for purposes of Section 856(d) of the Code and the Regulations promulgated thereunder, such Rent shall be adjusted in such manner as the Landlord may require so that it will so qualify; provided, however, that any adjustments required pursuant to this Section 4.1 shall be made so as to produce the equivalent (in economic terms) Rent as payable prior to such adjustment. The parties agree to execute such further instrument as may reasonably be required by the Landlord in order to give effect to the foregoing provisions of this Section 4.1. All amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner, time and place as the Base Rent. Without limitation on other obligations of Tenant which shall survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

4.2 Definitions . As used in this Article 4, the following terms shall have the meanings hereinafter set forth:

4.2.1 “ Base Expenses ” shall mean the Building Complex Expenses for the Base Year set forth in Section 9.1 of the Summary.

4.2.2 “ Expense Year ” shall mean each calendar year in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.

4.2.3 “ Operating Expenses ” shall mean all expenses, costs and amounts which Landlord shall pay during any Expense Year directly in connection with the ownership, management, maintenance, repair, replacement, restoration or operation of the Building Complex, including, without limitation, any amounts paid or incurred for (i) the cost of supplying all utilities, the cost of operating, maintaining, repairing, renovating, complying with conservation measures in connection with, and managing the utility systems, mechanical systems, sanitary and storm drainage systems, any elevator systems and all other Systems and Equipment (as defined in Section 4.2.7 below), and the cost of supplies and equipment, maintenance, and service contracts in connection therewith; (ii) the cost of licenses, certificates, permits and inspections and the cost of contesting the validity or applicability of any governmental enactments which may affect Operating Expenses, and the costs incurred in connection with the implementation and operation of a transportation system management program or a municipal or public shuttle service or parking program; (iii) the cost of all insurance carried in connection with the Building Complex, or any portion thereof, in such amounts as Landlord may determine or as may be required by any mortgagees or the lessor of any underlying ground lease affecting the Real Property; (iv) the cost of landscaping, relamping, and all supplies, tools, equipment and materials, and all fees, charges and other costs (including consulting fees and accounting fees) incurred in connection with the operation, repair and maintenance of the Building Complex, or any portion thereof; (v) the cost of parking area repair, restoration, and maintenance, including, but not limited to, resurfacing, repainting, restriping, and cleaning; (vi) fees, charges and other costs, including consulting fees, legal fees and accounting fees, of all contractors and consultants; (vii) payments under any equipment rental agreements or management agreements (including the cost of any management fee and the fair rental value of any office space provided thereunder); (viii) wages, salaries and other compensation and benefits of all persons engaged in the operation, maintenance, management, or security of the Building Complex, or any portion thereof, including employer’s Social Security taxes, unemployment taxes or insurance, and any other taxes which may be levied on such wages, salaries, compensation and benefits; (ix) payments under any easement, license, operating agreement, declaration, covenant, conditions and restrictions, or any other instrument pertaining to the sharing of costs by the Building Complex, or any portion thereof; (x) the cost of operation, repair, maintenance and replacement of all systems and equipment which serve the Building Complex in whole or part; (xi) the cost of janitorial services for common areas of the Building Complex, alarm and security service, window cleaning, trash removal, replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies, corridors, restrooms and other common or public areas or facilities, maintenance and replacement of curbs and walkways, repair to roofs and re-roofing; (xii) the cost of any capital improvements made to the Building Complex which are intended as a labor-saving device or to effect other economies in the operation or maintenance of the Building Complex, or any portion thereof, or made to all or any portion of the Building Complex, or any portion thereof, after the Lease Commencement Date that are required

under any governmental law or regulation that was not applicable to the Building Complex at the time that permits for the construction of the Building were obtained; provided, however, that each such permitted capital expenditure shall be amortized (including interest on the unamortized cost) over its useful life as Landlord shall reasonably determine; and (xiii) amortization (including interest on the unamortized cost) of the cost of acquiring or the rental expense or personal property used in the maintenance, operation and repair of the Real Property. If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Building is not 95% occupied during all or a portion of any Expense Year, including that portion of any Expense Year occurring during the Base Year, Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year or applicable portion thereof, employing sound accounting and management principles, to determine the amount of Operating Expenses that would have been paid had the Building been 95% occupied. Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses among different tenants of the Building and/or different buildings of the Building Complex (the “ Cost Pools ”). Notwithstanding anything to the contrary set forth in this Article 4, when calculating Operating Expenses for the Base Year, Operating Expenses shall exclude market-wide labor rate increases due to extraordinary circumstances including, but not limited to, boycotts and strikes, amortization of the cost of any capital improvements and utility rate increases due to extraordinary circumstances including, but not limited to, conservation surcharges, boycotts, embargoes or other shortages. Further notwithstanding anything to the contrary set forth in this Article 4, Operating Expenses shall also not include:

(i) costs, including marketing costs, legal fees, space planners’ fees, advertising and promotional expenses, and brokerage fees incurred in connection with the leasing of the Building Complex, and costs, including permit, license and inspection costs, incurred with respect to the installation of improvements made for tenants occupying space in the Building Complex or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Building Complex (excluding, however, such costs relating to any Common Areas of the Building Complex);

(ii) except as set forth above, capital costs and costs of depreciation, interest and principal payments on mortgages and other debt costs;

(iii) costs for which the Landlord is reimbursed by any tenant or occupant of the Building Complex or by insurance by its carrier or any tenant’s carrier or by anyone else;

(iv) any bad debt loss, rent loss, or reserves for bad debts or rent loss;

(v) costs associated with the operation of the business of the partnership or entity which constitutes the Landlord, as the same are distinguished from the costs of operation of the Building Complex (which Building Complex operational costs shall specifically include, but not be limited to, accounting costs associated with the operation of the Building Complex), costs associated with the operation of the business of the partnership or entity which constitutes the Landlord (including costs of partnership accounting and legal matters), costs of selling, syndicating, financing or mortgaging Landlord’s interest in the Building Complex, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Building Complex management, or between Landlord and other tenants or occupants, and Landlord’s general corporate overhead and general and administrative expenses; and

(vi) any costs expressly excluded from Operating Expenses elsewhere in this Lease;

(vii) any ground lease rental;

(viii) overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods or services in or to the Building to the extent the same exceeds the amount generally excepted to be the cost of such goods or services rendered by comparably qualified, unaffiliated third parties;

(ix) depreciation of the Building;

(x) payments of interest or principal under any mortgage or deed of trust encumbering the Building;

(xi) costs arising from the presence of Hazardous Materials in or about the Premises, the Building or the Building Complex;

(xii) reserves for bad debts or for future improvements, repairs or additions;

(xiii) increased costs of performance arising from the gross negligence or willful misconduct of Landlord or Landlord’s employees, agents or contractors;

(xiv) costs arising from Landlord’s charitable or political contributions;

(xv) costs of acquiring or leasing any sculpture, paintings, fountains and other objects of art; and

(xvi) any bad debt loss or rent loss.

4.2.4 “ Building Complex Expenses ” shall mean the sum of “Operating Expenses” and “Tax Expenses”.

4.2.5 “ Tax Expenses ” shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including, without limitation, real estate taxes, general and special assessments, transit taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with all or any portion of the Building Complex), which shall be paid during any Expense Year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Building Complex, or any portion thereof. For purposes of this Lease, Tax Expenses shall be calculated as if the Tenant Improvements in the Building were fully constructed and the Building and all Tenant Improvements in the Building were fully assessed for real estate tax purposes.

4.2.5.1 Tax Expenses shall include, without limitation:

(i) Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election (“ Proposition 13 ”) and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants, and, in further recognition of the decrease in the level and quality of governmental services and amenities as a result of Proposition 13, Tax Expenses shall also include any governmental or private assessments or the Building Complex’s contribution towards a governmental or private cost-sharing agreement for the purpose of augmenting or improving the quality of services and amenities normally provided by governmental agencies. It is the intention of Tenant and Landlord that all such new and increased assessments, taxes, fees, levies, and

charges and all similar assessments, taxes, fees, levies and charges be included within the definition of Tax Expenses for the purposes of this Lease;

(ii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the Rent payable hereunder, including, without limitation, any gross income tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof;

(iii) Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises; and

(iv) Any possessory taxes charged or levied in lieu of real estate taxes.

4.2.5.2 In no event shall Tax Expenses for any Expense Year be less than Tax Expenses for the Base Year. In addition, notwithstanding anything to the contrary set forth in this Article 4, when calculating Tax Expenses for the Base Year, such Tax Expenses shall not include any increase in Tax Expenses attributable to special assessments, charges, costs, or fees, or due to modifications or changes in governmental laws or regulations, including, but not limited to, the institution of a split tax roll.

4.2.6 “ Tenant’s Share ” shall mean the percentage set forth in Section 9.2 of the Summary, as the same may be reasonably adjusted from time to time by Landlord in consultation with Landlord’s architect to reflect changes to the Premises, the Building or the Building Complex, as applicable. Tenant’s Share was calculated by multiplying the number of square feet of the Premises by 100, and dividing the product by the total rentable square feet in the Building. It is understood and agreed that the square footage figures set forth in the Basic Lease Provisions may not be strictly calculated pursuant to BOMA standards and are approximations which Landlord and Tenant agree are reasonable.

4.2.7 “ Systems and Equipment ” shall mean any plant, machinery, transformers, duct work, cable, wires, and other equipment, facilities, and systems designed to supply heat, ventilation, air conditioning and humidity or any other services or utilities, or comprising or serving as any component or portion of the electrical, gas, steam, plumbing, sprinkler, communications, alarm, security, or fire/life safety systems or equipment, or any other mechanical, electrical, electronic, computer or other systems or equipment which serve the Building and/or any other building in the Building Complex in whole or in part.

4.3 Allocation of Building Complex Expenses to Tenants of the Building . Building Complex Expenses ( i.e. , Operating Expenses and Tax Expenses) are determined annually for the Building Complex as a whole. Since the Building is only one of the buildings which constitute the Building Complex, Building Complex Expenses shall be allocated by Landlord, in its reasonable discretion, to both the tenants of the Building and the tenants of the other buildings in the Building Complex. The portion of Building Complex Expenses allocated to the tenants of the Building shall consist of (i) all Building Complex Expenses attributable solely to the Building and (ii) an equitable portion of Building Complex Expenses attributable to the Building Complex as a whole and not attributable solely to the Building or solely to any other building of the Building Complex.

4.4 Calculation and Payment of Additional Rent .

4.4.1 Calculation of Excess . If for any Expense Year ending or commencing within the Lease Term, Tenant’s Share of Building Complex Expenses allocated to the tenants of the Building pursuant to Section 4.3 above for such Expense Year exceeds Tenant’s Share of the Base Expenses allocated to the tenants of the Building, then Tenant shall pay to Landlord, in the manner set forth in Section 4.4.2, below, and as Additional Rent, an amount equal to Tenant’s Share of the excess (the “ Excess ”).

4.4.2 Statement of Actual Building Complex Expenses and Payment by Tenant . Landlord shall endeavor to give to Tenant on or before the first day of April following the end of each Expense Year, a statement (the “ Statement ”) which shall state the Building Complex Expenses incurred or accrued for such preceding Expense Year and the amount thereof allocated to the tenants of the Building, and which shall indicate the amount, if any, of any Excess. Upon receipt of the Statement for each Expense Year ending during the Lease Term, if an Excess is present, Tenant shall pay, with its next installment of Base Rent due, the full amount of the Excess for such Expense Year, less the amounts, if any, paid during such Expense Year as “Estimated Excess,” as that term is defined in Section 4.4.3, below. The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord or Tenant from enforcing its rights under this Article 4. Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant’s Share of Building Complex Expenses allocated to the tenants of the Building for the Expense Year in which this Lease terminates, if an Excess is present, Tenant shall immediately pay to Landlord an amount as calculated pursuant to the provisions of Section 4.4.1 of this Lease. The provisions of this Section 4.4.2 shall survive the expiration or earlier termination of the Lease Term.

4.4.3 Statement of Estimated Building Complex Expenses . In addition, Landlord shall endeavor to give Tenant a yearly expense estimate statement (the “ Estimate Statement ”) which shall set forth Landlord’s reasonable estimate (the “ Estimate ”) of what the total amount of Building Complex Expenses for the then-current Expense Year shall be, the amount thereof to be allocated to the tenants of the Building, and the estimated Excess (the “ Estimated Excess ”) as calculated by comparing Tenant’s Share of Building Complex Expenses allocated to the tenants of the Building, which shall be based upon the Estimate, to Tenant’s Share of the Building Complex Expenses for the Base Year. The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Estimated Excess under this Article 4. If pursuant to the Estimate Statement an Estimated Excess is calculated for the then-current Expense Year, Tenant shall pay, with its next installment of Base Rent due, a fraction of the Estimated Excess for the then-current Expense Year (reduced by any amounts paid pursuant to the last sentence of this Section 4.4.3). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year, including the month of such payment, and twelve (12) as its denominator. Until a new Estimate Statement is furnished (which Landlord shall have the right to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant.

4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible . Tenant shall reimburse Landlord upon demand for any and all taxes required to be paid by Landlord, excluding state, local and federal personal or corporate income taxes measured by the net income of Landlord from all sources and estate and inheritance taxes, whether or not now customary or within the contemplation of the parties hereto, when:

4.5.1 Said taxes are measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant, to the extent the cost or value of such leasehold improvements exceeds the cost or value of a building standard build-out as determined by Landlord regardless of whether title to such improvements shall be vested in Tenant or Landlord;

4.5.2 Said taxes are assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Building Complex (including the Building Complex parking areas); or

4.5.3 Said taxes are assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

4.6 Utilities and Services . Notwithstanding anything herein to the contrary, and in addition to Tenant’s obligations to pay items of Additional Rent as described in this Lease, throughout Tenant’s

occupancy of the Premises, whether prior to, during or after the Lease Term, Tenant shall pay directly to the appropriate utility company (or to Landlord in the event Landlord provides submeters instead of the utility company’s meters) the costs for all utilities and services supplied to the Premises, including but not limited to electricity, telephone and/or gas, together with any taxes thereon. If any such utilities or services are not separately metered to the Premises or separately billed to the Premises, Tenant shall pay to Landlord, as Additional Rent, a reasonable proportion to be determined by Landlord of all such charges jointly metered or billed with other premises in the Building, in the manner and within the time periods set forth in Section 4.4. The responsibility for providing and the cost of any water, electricity, gas or sewage service, or any other meterable utility delivered to or consumed on the Premises shall be controlled by the terms and conditions of this Article 4. Tenant agrees to provide all, and Landlord shall not provide any, of such utilities to the Premises.

4.6.1 Tenant, at its sole expense, shall maintain meters for Tenant’s use of water, electricity, gas and all other meterable utilities. Tenant shall contract directly with the appropriate utility companies and/or public entities for the provision of such utilities, and shall pay directly such companies’ charges and any governmental fees, taxes or other charges payable in connection with such utility service.

4.6.2 Tenant agrees that the heating, ventilation and air conditioning systems within the Premises are adequate for Tenant’s use. Tenant shall use its best efforts to conserve energy in the operation of its heating, ventilation and air conditioning systems, and shall cooperate with Landlord in any energy conservation programs.

4.6.3 Tenant agrees that the lighting systems within the Premises are adequate for Tenant’s use. Tenant shall use its best efforts to conserve energy in the operation of its lighting systems, and shall cooperate with Landlord in any energy conservation programs.

4.6.4 Tenant agrees to maintain certain minimum standards determined by Landlord for utilities and other services for the Premises.

4.6.5 If Tenant fails to provide any of the utility or other services as required by this Section 4.6 or is, in Landlord’s reasonable judgment, about to so fail, Landlord may, but shall not be required to, provide such services on Tenant’s account. Any costs incurred by Landlord in providing such services shall be deemed Additional Rent hereunder, and shall be billed on a monthly basis. If Tenant fails to make any such payment of Additional Rent that includes the cost of utility or other services, then without prejudice to any other remedy that Landlord may have by reason of such failure to pay, Landlord may discontinue any such utility service to the Premises, without thereby incurring any liability to Tenant. Any such discontinuance of utility or other service shall not be deemed an eviction (constructive or otherwise), a disturbance of possession, nor an election by Landlord to terminate the Lease.

4.7 Late Charges . If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designee by the due date therefor, then Tenant shall pay to Landlord a late charge equal to five percent (5%) of the amount due plus any attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or other charges when due hereunder. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder, at law and/or in equity and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid by the date they are due shall thereafter bear interest until paid at a rate (the “ Interest Rate ”) equal to the lesser of (i) twelve percent (12%), or (ii) the highest rate permitted by applicable law.

4.8 Landlord’s Books and Records . In the event Tenant disputes the amount of the Building Complex Expenses set forth in the Statement for the particular calendar year delivered by Landlord to Tenant pursuant to Section 4.4.2 above, Tenant shall have the right, at Tenant’s cost, after reasonable notice to Landlord, to have Tenant’s authorized employees or agents inspect, at Landlord’s office during normal business hours, Landlord’s books, records and supporting documents concerning the Building Complex Expenses set forth in such Statement; provided, however, Tenant shall have no right to conduct

such inspection, have an audit performed by the Accountant (as defined below), or object to or otherwise dispute the amount of the Building Complex Expenses set forth in any such Statement, unless Tenant notifies Landlord of such objection and dispute, completes such inspection, and has the Accountant commence and complete such audit within ninety (90) days immediately following Landlord’s delivery of the particular Statement in question (the “ Review Period ”); provided, further, that notwithstanding any such timely objection, dispute, inspection, and/or audit, and as a condition precedent to Tenant’s exercise of its right of objection, dispute, inspection and/or audit as set forth in this Section 4.8, Tenant shall not be permitted to withhold payment of, and Tenant shall timely pay to Landlord, the full amounts as required by the provisions of this Article 4 in accordance with such Statement. However, such payment may be made under protest pending the outcome of any audit which may be performed by the Accountant as described below. In connection with any such inspection by Tenant, Landlord and Tenant shall reasonably cooperate with each other so that such inspection can be performed pursuant to a mutually acceptable schedule, in an expeditious manner and without undue interference with Landlord’s operation and management of the Building Complex. If after such inspection and/or request for documentation, Tenant still disputes the amount of the Building Complex Expenses set forth in the Statement, Tenant shall have the right, within the Review Period, to cause an independent certified public accountant which is not paid on a contingency basis and which is mutually approved by Landlord and Tenant (the “ Accountant ”) to complete an audit of Landlord’s books and records to determine the proper amount of the Building Complex Expenses incurred and amounts payable by Tenant for the calendar year which is the subject of such Statement. Such audit by the Accountant shall be final and binding upon Landlord and Tenant. If Landlord and Tenant cannot mutually agree as to the identity of the Accountant within thirty (30) days after Tenant notifies Landlord that Tenant desires an audit to be performed, then the Accountant shall be one of the “Big 4” accounting firms, which is not paid on a contingency basis and which is selected by Tenant and reasonably approved by Landlord. If such audit reveals that Landlord has over-charged Tenant, then within thirty (30) days after the results of such audit are made available to Landlord, Landlord shall reimburse to Tenant the amount of such over-charge. If the audit reveals that the Tenant was under-charged, then within thirty (30) days after the results of such audit are made available to Tenant, Tenant shall reimburse to Landlord the amount of such under-charge. Tenant agrees to pay the cost of such audit unless it is subsequently determined that Landlord’s original Statement which was the subject of such audit was in error to Tenant’s disadvantage by five percent (5%) or more of the total Building Complex Expenses which were the subject of such audit. The payment by Tenant of any amounts pursuant to this Article 4 shall not preclude Tenant from questioning the correctness of any Statement provided by Landlord at any time during the Review Period, but the failure of Tenant to object thereto, conduct and complete its inspection and have the Accountant conduct and complete the audit as described above prior to the expiration of the Review Period shall be conclusively deemed Tenant’s approval of the Statement in question and the amount of Building Complex Expenses shown thereon. In connection with any inspection and/or audit conducted by Tenant pursuant to this Section 4.8, Tenant agrees to keep, and to cause all of Tenant’s employees and consultants and the Accountant to keep, all of Landlord’s books and records and the audit, and all information pertaining thereto and the results thereof, strictly confidential, and in connection therewith, Tenant shall cause such employees, consultants and the Accountant to execute such reasonable confidentiality agreements as Landlord may require prior to conducting any such inspections and/or audits.

ARTICLE 5

USE OF PREMISES

5.1 Use . Tenant shall use the Premises solely for general office purposes consistent with the character of the project as a first-class office building project, and Tenant shall not use or permit the Premises to be used for any other purpose or purposes whatsoever. Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the Rules and Regulations, or in violation of the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the project (including laws pertaining to Hazardous Materials, as defined below). Tenant shall comply with the Rules and Regulations. For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Premises have not undergone inspection by a Certified Access Specialist

(CASp). Landlord shall not be responsible to Tenant for the nonperformance of any of such Rules and Regulations by or otherwise with respect to the acts or omissions of any other tenants or occupants of the project. Tenant shall comply with all recorded covenants, conditions, and restrictions now or hereafter affecting the Real Property.

5.2 Hazardous Materials .

5.2.1 Prohibition on Use . Tenant shall not use or allow another person or entity to use any part of the Premises for the storage, use, treatment, manufacture or sale of Hazardous Materials. Landlord acknowledges, however, that Tenant will maintain products in the Premises which are incidental to the operation of its offices, such as photocopy supplies, secretarial supplies and limited janitorial supplies, which products contain chemicals which are categorized as Hazardous Materials. Landlord agrees that the use of such products in the Premises in compliance with all applicable laws and in the manner in which such products are designed to be used shall not be a violation by Tenant of this Section 5.2.1.

5.2.2 Indemnity . Tenant agrees to indemnify, defend (with legal counsel reasonably acceptable to Landlord), protect and hold Landlord and the Landlord Parties (as defined in Section 10.1 below) harmless from and against any and all claims, actions, administrative proceedings (including informal proceedings), judgments, damages, punitive damages, penalties, fines, costs, liabilities, interest or losses, including reasonable attorneys’ fees and expenses, consultant fees, and expert fees, together with all other costs and expenses of any kind or nature, that arise during or after the Lease Term directly or indirectly from or in connection with the presence, suspected presence, release or suspected release of any Hazardous Materials in or into the air, soil, surface water or groundwater at, on, about, under or within the Premises or Real Property or any portion thereof, caused by Tenant, its assignees or subtenants and/or their respective agents, employees, contractors, licensees or invitees (collectively, “ Tenant Affiliates ”).

5.2.3 Remedial Work . In the event any investigation or monitoring of site conditions or any clean-up, containment, restoration, removal or other remedial work (collectively, the “ Remedial Work ”) is required under any applicable federal, state or local laws or by any judicial order, or by any governmental entity as the result of operations or activities upon, or any use or occupancy of any portion of the Premises by Tenant or Tenant Affiliates, Tenant shall perform or cause to be performed the Remedial Work in compliance with such laws or order. All Remedial Work shall be performed by one or more contractors, selected by Tenant and approved in advance in writing by Landlord. All costs and expenses of such Remedial Work shall be paid by Tenant, including, without limitation, the charges of such contractor(s), the consulting engineers, and Landlord’s reasonable attorneys’ fees and costs incurred in connection with monitoring or review of such Remedial Work.

5.2.4 Definition of Hazardous Materials . As used herein, the term “ Hazardous Materials ” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government, including, without limitation, any material or substance which is (i) defined or listed as a “hazardous waste,” “extremely hazardous waste,” “restricted hazardous waste,” “hazardous substance” or “hazardous material” under any applicable federal, state or local law or administrative code promulgated thereunder, (ii) petroleum, or (iii) asbestos.

ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services . Landlord shall provide the following services on all days during the Lease Term, unless otherwise stated below.

6.1.1 Subject to all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating, ventilation and air conditioning (“ HVAC ”) when necessary for normal comfort for normal office use in the Premises, from Monday through Friday, during the period from 7:00 a.m. to 6:00 p.m., and on Saturdays during the period from 8:00 a.m. to 1:00 p.m. (collectively, the “ Building

Hours ”), except for nationally and locally recognized holidays as designated by Landlord (collectively, the “ Holidays ”).

6.1.2 Landlord shall provide adequate electrical wiring and facilities and power for normal general office use as reasonably determined by Landlord. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

6.1.3 Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes.

6.1.4 Landlord shall provide nonexclusive automatic elevator service at all times.

6.2 Overstandard Tenant Use . Tenant shall not, without Landlord’s prior written consent, use heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than building standard lights in the Premises, which may adversely affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If Tenant uses water or HVAC in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, or if Tenant’s consumption of electricity shall exceed an average of three (3) watts per useable square foot of the Premises, connected load, calculated on a monthly basis during the Building Hours set forth in Section 6.1.1 above, then Tenant shall pay to Landlord, within ten (10) days after billing, the cost of such excess consumption, the cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, administrative and overhead costs incurred in connection with such excess consumption, and the cost of the increased wear and tear on existing equipment caused by such excess consumption; and Landlord may install devices to separately meter any increased use and in such event Tenant shall pay the increased cost directly to Landlord, within ten (10) days after demand, including the cost of such additional metering devices. If Tenant desires to use HVAC during hours other than the Building Hours, (i) Tenant shall give Landlord such prior notice, as Landlord shall from time to time establish as appropriate, of Tenant’s desired use, (ii) Landlord shall supply such after-hours HVAC to Tenant at such hourly cost (which shall include, without limitation, the cost of the use of such HVAC and Landlord’s costs incurred for maintenance and increased wear and tear on equipment used to provide such after-hours HVAC, but shall exclude any of Landlord’s administrative fees, profit, or costs of overhead or depreciation) to Tenant as Landlord shall from time to time establish, and (iii) Tenant shall pay such cost within ten (10) days after billing.

6.3 Interruption of Use . Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building after reasonable effort to do so, by any accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord’s reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant’s use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease. Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant’s business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6.

6.4 Additional Services . Landlord shall also have the exclusive right, but not the obligation, to provide any additional services which may be required by Tenant, including, without limitation, locksmithing, janitorial service, and additional repairs and maintenance, provided that Tenant shall pay to Landlord, within ten (10) days after billing, the sum of all costs to Landlord of such additional services plus an administration fee. Charges for any utilities or service for which Tenant is required to pay from time to time hereunder, shall be deemed Additional Rent hereunder and shall be billed on a monthly basis.

ARTICLE 7

REPAIRS

7.1 Tenant’s Repairs . Subject to Landlord’s repair obligations in Sections 7.2 and 11.1 below, Tenant shall, at Tenant’s own expense, keep the Premises, including all improvements, fixtures and furnishings therein, in good order, repair and condition at all times during the Lease Term, which repair obligations shall include, without limitation, the obligation to promptly and adequately repair all damage to the Premises and replace or repair all damaged or broken fixtures and appurtenances; provided however, that, at Landlord’s option, or if Tenant fails to make such repairs, Landlord may, but need not, make such repairs and replacements, and Tenant shall pay Landlord the cost thereof, including a percentage of the cost thereof (to be uniformly established for the Building) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord’s involvement with such repairs and replacements forthwith upon being billed for same.

7.2 Landlord’s Repairs . Anything contained in Section 7.1 above to the contrary notwithstanding, and subject to Articles 11 and 12 of this Lease, Landlord shall repair and maintain the structural portions of the Building and the basic plumbing, heating, ventilating, air conditioning and electrical systems serving the Building and not located in the Premises; provided, however, if such maintenance and repairs are caused in part or in whole by the act, neglect, fault of or omission of any duty by Tenant, its agents, contractors, employees, licenses or invitees, Tenant shall pay to Landlord, as Additional Rent, the reasonable cost of such maintenance and repairs. Landlord shall not be liable to Tenant for any failure to make any such repairs, or to perform any maintenance hereunder, and there shall be no abatement of Rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of a failure to make any repairs, alterations or improvements in or to any portion of the Premises or Building Complex or in or to fixtures, appurtenances and equipment therein. Landlord may, but shall not be required to, enter the Premises at all reasonable times to make any repairs, alterations, improvements or additions to the Premises or to the Building Complex or to any equipment located in the Building Complex as Landlord shall desire or deem necessary or as Landlord may be required to do by governmental or quasi-governmental authority or court order or decree. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under any law, statute, or ordinance now or hereafter in effect.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations . Tenant may not make any improvements, alterations, additions or changes to the Premises (collectively, the “ Alterations ”) without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than thirty (30) days prior to the commencement thereof, and which consent shall not be unreasonably withheld by Landlord; provided, however, Landlord may withhold its consent in its sole and absolute discretion with respect to any Alterations which (i) may affect the structural components of the Building, or the Building’s mechanical, electrical, heating, ventilating, air-conditioning, or life safety systems or the Systems and Equipment, or (ii) are visible from outside the Premises. Notwithstanding the foregoing, Tenant may make strictly cosmetic changes to the finish work in the Premises, not requiring any structural or other substantial modifications to the Premises, upon thirty (30) days prior written notice to Landlord. Tenant shall pay for all overhead, general conditions, fees and other costs and expenses of the Alterations. The construction of the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter, attached hereto as Exhibit D , and not the terms of this Article 8. Notwithstanding the foregoing to the contrary, Landlord’s prior consent shall not be required with respect to any interior Alterations to the Premises which (a) are not Alterations described in subsections (i) and (ii) above, (b) cost less than Fifteen Thousand Dollars ($15,000) for any one (1) job, and (c) do not require a permit of any kind, as long as (1) Tenant delivers to Landlord notice and a copy of any final plans, specifications and working drawings for any such Alterations at least (10) days prior to commencement of the work thereof, and (2) the other conditions of this Article 8 are satisfied including, without limitation, conforming to Landlord’s rules, regulations and insurance requirements which govern contractors.

8.2 Manner of Construction . Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its sole discretion may deem desirable, including, but not limited to, the requirement that upon Landlord’s request, Tenant shall, at Tenant’s expense, remove such Alterations upon the expiration or any early termination of the Lease Term (upon Tenant’s request, Landlord shall specify, at the time of its consent, which Alteration, if any, must be removed upon expiration or early termination of the Lease Term), and/or the requirement that Tenant utilize for such purposes only contractors, materials, mechanics and materialmen approved by Landlord; provided, however, Landlord may impose such requirements as Landlord may determine, in its sole and absolute discretion, with respect to any work affecting the structural components of the Building or Systems and Equipment (including designating specific contractors to perform such work). Landlord may also require, as a condition to its consent to any Alterations, that any architect retained by Tenant in connection with such Alterations be certified as a Certified Access Specialist (CASp), and that following the completion of such Alterations, such architect shall certify the Premises as meeting all applicable construction-related accessibility standards pursuant to California Civil Code Section 55.53. Tenant shall construct such Alterations and perform such repairs in conformance with any and all applicable rules and regulations of any federal, state, county or municipal code or ordinance, including, without limitation, Title III of the ADA (as defined in Article 22 of this Lease), and pursuant to a valid building permit, issued by the City of San Diego in conformance with Landlord’s construction rules and regulations. All work with respect to any Alterations must be done in a good and workmanlike manner and diligently prosecuted to completion to the end that the Premises shall at all times be a complete unit except during the period of work. In performing the work of any such Alterations, Tenant shall have the work performed in such manner as not to obstruct access to the Building or Building Complex or the common areas by any other tenant of the Building Complex, and as not to obstruct the business of Landlord or other tenants in the Building Complex, or interfere with the labor force working in the Building Complex. If Tenant makes any Alterations, Tenant agrees to carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof. In addition, Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of such Alterations and naming Landlord as a co-obligee. Upon completion of any Alterations, Tenant shall (i) cause a timely Notice of Completion to be recorded in the office of the Recorder of San Diego County in accordance with the terms of Section 3093 of the Civil Code of the State of California or any successor statute, (ii) deliver to the Building Complex management office a reproducible copy of the “as built” drawings of the Alterations, and (iii) deliver to Landlord evidence of payment, contractors’ affidavits and full and final waivers of all liens for labor, services or materials.

8.3 Payment for Alterations . If Tenant orders any Alterations or repair work directly from Landlord, Tenant shall pay to Landlord, within ten (10) days after demand, all charges for such work, including a percentage of the cost of such work (such percentage to be established on a uniform basis for the Building) sufficient to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord’s involvement with such work. If Tenant does not order any work directly from Landlord, Tenant shall reimburse Landlord, within ten (10) days after demand, for Landlord’s out-of-pocket costs and expenses incurred in connection with Landlord’s review of such work, plus a Landlord administrative fee equal to fifteen percent (15%) of the total cost of such work.

8.4 Landlord’s Property . All Alterations, improvements and fixtures which may be installed or placed in or about the Premises, and all signs installed in, on or about the Premises, from time to time, shall be at the sole cost of Tenant and shall be and become the property of Landlord. Notwithstanding the following, Landlord may, by written notice to Tenant prior to the end of the Lease Term, require Tenant at Tenant’s expense to remove any Alterations from the Premises and repair any damage to the Premises and Building caused by such removal. If Tenant fails to complete such removal prior and/or to repair any damage caused by the removal of any Alterations by the end of the Lease Term, Landlord may do so and may charge the cost thereof to Tenant.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Real Property or any portion thereof, and any and all liens and encumbrances created by Tenant shall attach to Tenant’s interest only. Landlord shall have the right at all times to post and keep posted on the Premises any notice which it deems necessary for protection from such liens. Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialmen or others to be placed against the Real Property or any portion thereof, with respect to work or services claimed to have been performed for or materials claimed to have been furnished to Tenant or the Premises, and, in case of any such lien attaching or notice of any lien, Tenant covenants and agrees to cause it to be immediately released and removed of record. Notwithstanding anything to the contrary set forth in this Lease, in the event that such lien is not released and removed on or before the date occurring five (5) days after notice of such lien is delivered by Landlord to Tenant, Landlord, at its sole option, may immediately take all action necessary to release and remove such lien, without any duty to investigate the validity thereof, and all sums, costs and expenses, including reasonable attorneys’ fees and costs, incurred by Landlord in connection with such lien shall be deemed Additional Rent under this Lease and shall immediately be due and payable by Tenant.

ARTICLE 10

INSURANCE

10.1 Indemnification and Waiver . Tenant hereby assumes all risk of damage to property and injury to persons in, on or about the Premises from any cause whatsoever, and agrees that, to the extent not prohibited by law, Landlord, its partners and subpartners, and their respective officers, directors, shareholders, agents, property managers, employees and independent contractors (collectively, the “ Landlord Parties ”) shall not be liable for, and are hereby released from any responsibility for, any damage either to person or property or resulting from the loss of use thereof, which damage is sustained by Tenant or by other persons claiming through Tenant. Tenant shall indemnify, defend, protect and hold harmless the Landlord Parties from and against any and all loss, cost, damage, expense, cause of action, claims and liability, including without limitation court costs and reasonable attorneys’ fees (collectively “ Claims ”) incurred in connection with or arising from any cause in, on or about the Premises, and/or any acts, omissions or negligence of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, employees, licensees or invitees of Tenant or any such person in, on or about the Real Property, provided that the terms of the foregoing indemnity shall not apply to any Claims to the extent resulting from the gross negligence or willful misconduct of Landlord or the Landlord Parties and not insured (or required to be insured) by Tenant under this Lease. Tenant’s agreement to indemnify Landlord pursuant to this Section 10.1 is not intended and shall not relieve any insurance carrier of its obligations under policies required to be carried by Tenant pursuant to the provision of this Lease. The provisions of this Section 10.1 shall survive the expiration or sooner termination of this Lease with respect to any Claims occurring prior to such expiration or termination.

10.2 Insurance Requirements. Tenant will purchase and maintain at all times during the term of this Lease, at Tenant’s sole expense, the following insurance, in amounts not less than those specified below or such other amounts as Landlord may from time to time reasonably request, with insurance companies and on forms satisfactory to Landlord.

(a) Commercial General Liability Insurance written on an Insurance Service Office (“ ISO ”) “occurrence” form or its equivalent covering the Tenant and Landlord against claims for bodily injury and property damage arising out of the Tenant’s operations and Tenant’s use, occupancy and operations in, upon or about the Premises and the Development. Such coverage shall at a minimum include endorsements covering (i) Premises - Operations; (ii) Independent Contractors; (iii) Products; (iv) Contractual Liability; (v) Fire Legal Liability; (vi) Employees included as Insureds; (vii) Liquor Liability if Tenant serves or sells alcohol; and (viii) Severability.

Limits for such coverage shall be at least:

Bodily Injury and Property Damage	$	1,000,000	Per Occurrence
Combined Single Limit	$	2,000,000	General Aggregate
	$	2,000,000	Products Aggregate

Fire Legal Liability	$	500,000	Any One Occurrence

The policy shall further contain a provision that the General Aggregate limit applies exclusively to the Premises.

The policy shall contain a provision or an endorsement which specifically names AGP SORRENTO R&D, LP, a Delaware limited partnership, Parallel Capital Partners, Inc., and their officers, directors, members and employees, any lenders of Landlord, and their successors and/or assigns as additional insureds (“ Additional Insureds ”), as respects claims arising out of the Tenant’s operations, use, occupancy or maintenance of the Premises. Further, if requested by Landlord, Tenant shall name Landlord’s Property Manager and any mortgagee of Landlord as an additional insured.

The policy shall also contain a clause which provides that the insurance afforded to the Additional Insureds under this policy is primary insurance to any insurance Additional Insureds may have in force which would also cover a loss.

Additionally, the policy shall contain provision or endorsement which provides a waiver of subrogation in favor of all Additional Insureds because of payments made under this policy relevant to the Tenant’s obligations under this Lease.

(b) Auto Liability Insurance to include coverage for any owned, non-owned or hired automobiles entering and exiting from the Building Complex and for which the Tenant may be responsible with minimum limits of $1,000,000 per Person/$1,000,000 per Accident Bodily Injury; $250,000 per Accident Property Damage; and Basic No Fault coverage as required by law or regulation if any, in the State in which the Premises is located. A combined single limit of $1,000,000 per person and per accident for Bodily Injury and Property Damage is also acceptable.

(c) Umbrella or Excess Liability Insurance to be excess over the Commercial General Liability. The Umbrella or Excess Liability policy shall be written on an “occurrence” form with a limit of liability of $3,000,000 and a Self-Insured Retention no greater than $10,000.

Further, such policy shall contain clauses, provisions or endorsements which 1) cause it to be “following form” the underlying Commercial General Liability policy; 2) name all entities and persons required to be named as additional insureds on the underlying Commercial General Liability policy as additional insureds; 3) cause the policy to provide liability insurance for the Additional Insureds to be paid out prior to any contribution by Landlord’s insurance; and 4) provide that the insurer waives any right of recovery they may have against such Additional Insureds because of payments made under this policy relevant to the Tenant’s obligations under this Agreement.

The requirements contained in this paragraph may be met by increasing the limits otherwise required on the Tenant’s Commercial General Liability policy to equal the sum of the limits required for both the Commercial General Liability policy and the Umbrella or Excess policy.

(d) Workers’ Compensation coverage for statutory limits shall be carried as required by law in the State in which the Premises is located or in which the employees are hired and Employers’ Liability with limits of $500,000 Each Accident; $500,000 Disease Policy Limit; and $500,000 Disease Each Employee.

(e) Commercial Property Insurance covering all tenant improvements, whether made or acquired at the Tenant’s expense or Landlord’s expense and any other property in the Premises that Tenant is responsible for repairing or replacing under this lease, in an amount equal to their full replacement cost without deduction for depreciation. At a minimum, such policy shall insure against destruction or damage by fire and other perils covered on an ISO Causes of Loss - Special Form including wind, hurricane, and sprinkler leakage. Such policy shall further provide Replacement Cost Coverage. Such policy shall not contain a per occurrence deductible greater than $5,000 except for wind or hurricane which may contain a deductible not to exceed two percent (2%) of the total values of all property which Tenant is responsible to insure.

Tenant, with all reasonable speed, will use all proceeds of such insurance, so long as this Lease remains in effect, for rebuilding, repairing, replacing or otherwise reinstating the improvements and all other property Tenant is responsible for repairing in a good and substantial manner pursuant to applicable building laws and codes and as shall have been approved in writing by Landlord. Tenant will make up from its own funds any deficiency in such insurance proceeds.

Further, the policy shall contain a provision specifically naming Landlord as a loss payee as its interest may appear.

(f) Business Income and/or Extra Expense Insurance in an amount sufficient to insure payment of rent and all other expenses to be borne by Tenant under this Lease, for the period of time it takes to repair the Premises, but in no event less than 12 months, due to any interruption of Tenant’s business by reason of the Premises or personal property being damaged by fire or other perils covered on an ISO Causes of Loss - Special Form or its equivalent. Tenant acknowledges that it assumes all risks of loss due to interruption of Tenant’s business by any cause.

Further, the policy shall contain an ISO Lender’s Loss Payable endorsement specifically naming Landlord as a loss payee as its interest may appear.

10.3 General Requirements for All Insurance

(a) Certificates of Insurance and Evidence of Property Insurance evidencing all such insurance and acceptable to the Landlord shall be filed with Landlord prior to occupancy of the Premises and at least ten (10) days prior to the expiration of the term of each policy thereafter. Such Certificates of Insurance must specifically show all the special policy conditions required in this Section including “additional insured”, “waiver of subrogation”, “notice of cancellation”, and “primary insurance” wording applicable to each policy. Alternatively, a certified, true and complete copy of each properly endorsed policy may be submitted.

(b) All coverage shall be written by an insurer admitted to write insurance in the State in which the Premises is located with a current A. M. Best Rating of A:7 or better; otherwise, such insurance may be written by a qualified non-admitted insurer with a current A. M. Best rating of A:10 or better.

(c) All insurance policies shall provide that coverages afforded under the policies will not be cancelled for any reason until at least 30 days’ prior written notice has been given to Landlord by the insurer. The Certificate of Insurance evidencing each policy must state in the Remarks Section of the Certificate that the policy(s) have been endorsed to provide thirty (30) days’ written notice of cancellation to Landlord.

The mailing address for the notice of cancellation shall be as noted in Section 3 of the Summary.

(d) If the limits of available liability coverage required herein become substantially reduced as a result of claim payments, Tenant shall immediately, at its own expense, purchase insurance to reinstate the limits of liability coverage required by this Lease.

(e) Tenant shall not settle any claim or accept any proceeds in satisfaction of any claim involving damage to the Premises or liability of Landlord without Landlord’s prior written consent.

(f) Tenant may maintain the insurance required under this Section under blanket or umbrella policies, as applicable, issued to Tenant covering other properties owned or leased by Tenant provided that the policies otherwise comply with this Section and afford to the Premises the coverage specified by this Section. If the insurance required by this Section shall be provided by any such blanket or umbrella policies, and the Certificate of Insurance or Evidence of Property Insurance evidencing such coverage is not sufficient to determine whether Tenant’s insurance meets the requirements contained herein, Tenant shall, if requested by Landlord, furnish to Landlord certified copies of policies including schedules of all properties covered thereunder and the coverage afforded by such policies to the Premises. Landlord retains the right to disallow the use of a blanket or umbrella policy if Landlord believes the coverage provided by the blanket or umbrella policy is inadequate either as to limits or scope of coverage.

10.4 Landlord, its agents and employees, make no representation that the limits of liability required to be carried by Tenant pursuant to this Section are adequate to protect Tenant. If Tenant believes that any of such insurance coverage is inadequate, Tenant shall obtain such additional insurance coverage as Tenant deems adequate, at Tenant’s sole expense.

10.5 Landlord hereby reserves the right to make changes at any time to the Insurance Requirements herein should new exposures be brought to light or new insurance products become available during the Term of this Lease. Tenant shall add as additional insureds to the insurance policies required by this Section such other persons as Landlord may from time to time reasonably require.

ARTICLE 11

DAMAGE AND DESTRUCTION

11.1 Repair of Damage to Premises by Landlord . Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty or any condition existing in the Premises as a result of a fire or other casualty that would give rise to the terms of this Article 11. If the Premises or any common areas of the Building Complex serving or providing access to the Premises shall be damaged by fire or other casualty or be subject to a condition existing as a result of a fire or other casualty, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control, and subject to all other terms of this Article 11, restore the base, shell, and core of the Premises and such common areas to substantially the same condition as existed prior to the casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage on the Building Complex (or any portion thereof) or any other modifications to the common areas deemed desirable by Landlord, provided that access to the Premises and any common restrooms serving the Premises shall not be materially impaired. Notwithstanding any other provision of this Lease, upon the occurrence of any damage to the Premises, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance required under Article 10 of this Lease, and Landlord shall repair any injury or damage to the Tenant Improvements and Alterations installed in the Premises and shall return such Tenant Improvements and Alterations to their original condition; provided that if the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to Landlord’s repair of the damage. In connection with such repairs and replacements, Tenant shall, prior to the commencement of construction, submit to Landlord, for Landlord’s review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the contractors to perform such improvement work. Landlord shall not be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s business resulting in any way from such damage or the repair thereof; provided however, that if such fire or other casualty shall have damaged the Premises or common areas necessary to Tenant’s occupancy, and if such damage is not the result of the negligence or willful misconduct of Tenant or Tenant’s agents, employees, contractors, licensees or invitees, Landlord shall allow Tenant a proportionate abatement of Base Rent

during the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof.

11.2 Landlord’s Option to Repair . Notwithstanding the terms of Section 11.1 of this Lease, Landlord may elect not to rebuild and/or restore the Premises and/or Building and/or any other portion of the Building Complex and instead terminate this Lease by notifying Tenant in writing of such termination within sixty (60) days after the date of damage, such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect only if the Building Complex shall be damaged by fire or other casualty or cause or be subject to a condition existing as a result of such a fire or other casualty or cause, whether or not the Premises are affected, and one or more of the following conditions is present: (i) repairs cannot reasonably be completed within one hundred eighty (180) days of the date of damage (when such repairs are made without the payment of overtime or other premiums); (ii) the holder of any mortgage on the Real Property or ground lessor with respect to the Real Property shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt, or shall terminate the ground lease, as the case may be; or (iii) the damage or condition arising as a result of such damage is not fully covered, except for deductible amounts, by Landlord’s insurance policies. In addition, if the Premises, the Building or any portion of the Building Complex is destroyed or damaged to any substantial extent during the last eighteen (18) months of the Lease Term, then notwithstanding anything contained in this Article 11, Landlord shall have the option to terminate this Lease by giving written notice to Tenant of the exercise of such option within thirty (30) days after such damage or destruction, in which event this Lease shall cease and terminate as of the date of such notice. Upon such termination of this Lease pursuant to this Section 11.2, Tenant shall pay the Base Rent and Additional Rent, properly apportioned up to such date of damage (subject to any abatement as provided in Section 11.1 above), and both parties hereto shall thereafter be freed and discharged of all further obligations hereunder, except as provided for in provisions of this Lease which by their terms survive the expiration or earlier termination of this Lease Term.

11.3 Waiver of Statutory Provisions . The provisions of this Lease, including this Article 11, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Real Property, and any statute or regulation of the State of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Real Property.

ARTICLE 12

CONDEMNATION

12.1 Permanent Taking . If ten percent (10%) or more of the Premises or Building Complex shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease upon ninety (90) days’ notice to Tenant, provided such notice is given no later than one hundred eighty (180) days after the date of such taking, condemnation, reconfiguration, vacation, deed or other instrument. If more than twenty-five percent (25%) of the rentable square feet of the Premises is taken, or if access to the Premises is substantially impaired as a result of any taking of all or any portion of the Building Complex, Tenant shall have the option to terminate this Lease upon ninety (90) days’ notice to Landlord, provided such notice is given no later than one hundred eighty (180) days after the date of such taking. Landlord shall be entitled to receive the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claim does not diminish the award available to Landlord, its ground lessor with respect to the Real Property or its mortgagee, and such claim is payable separately to Tenant. All Rent shall be apportioned as of the date of such termination, or the date of such taking, whichever shall first occur. If any part of the Premises shall be taken, and this Lease shall not be

so terminated, the Base Rent shall be proportionately abated. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California Code of Civil Procedure.

12.2 Temporary Taking . Notwithstanding anything to the contrary contained in this Article 12, in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and Tenant’s Share of Building Complex Expenses shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking.

ARTICLE 13

COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying the Rent, charges for services and other payments herein reserved and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed, shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other covenant express or implied.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfers . Tenant shall not, without the prior written consent of Landlord (which will not be unreasonably withheld, conditioned or delayed), assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment or other such foregoing transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or permit the use of the Premises by any persons other than Tenant and its employees (all of the foregoing are hereinafter sometimes referred to collectively as “ Transfers ” and any person to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a “ Transferee ”). If Tenant shall desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the “ Transfer Notice ”) shall include (i) the proposed effective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the “ Subject Space ”), (iii) all of the terms of the proposed Transfer and the consideration therefor, including a calculation of the “Transfer Premium,” as that term is defined in Section 14.3, below, in connection with such Transfer, the name and address of the proposed Transferee, and a copy of all existing and/or proposed documentation pertaining to the proposed Transfer, including all existing operative documents to be executed to evidence such Transfer or the agreements incidental or related to such Transfer, (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, and (v) such other information as Landlord may reasonably require. Any Transfer made without Landlord’s prior written consent shall, at Landlord’s option, be null, void and of no effect, and shall, at Landlord’s option, constitute a default by Tenant under Section 19.1.2 of this Lease. Whether or not Landlord consents to any proposed Transfer, Tenant shall pay Landlord’s review and processing fees, as well as any reasonable legal fees incurred by Landlord, which shall not exceed $2,000 in the aggregate, within thirty (30) days after written request by Landlord.

14.2 Landlord’s Consent . Subject to Landlord’s rights in Section 14.4 below, Landlord shall not unreasonably withhold or delay its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. The parties hereby agree that it shall be deemed to be reasonable under this Lease and under any applicable law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply, without limitation as to other reasonable grounds for withholding consent:

14.2.1 The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building Complex, or would be a significantly less prestigious occupant of the Building than Tenant;

14.2.2 The Transferee’s intended use of the Subject Space is not permitted under this Lease;

14.2.3 The Transfer will result in more than a reasonable and safe number of occupants per floor within the Subject Space;

14.2.4 The Transferee is a governmental entity or agency;

14.2.5 The Transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities involved under the Lease on the date consent is requested;

14.2.6 The proposed Transfer would cause Landlord to be in violation of another lease or agreement to which Landlord is a party, or would give an occupant of the Building Complex a right to cancel its lease;

14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant to any such right); or

14.2.8 Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Building Complex at the time of the request for consent, (ii) is negotiating with Landlord to lease space in the Building Complex at such time, or (iii) has negotiated with Landlord during the twelve (12)-month period immediately preceding the Transfer Notice.

If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within six (6) months after Landlord’s consent, but not later than the expiration of said six (6)-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2, or (ii) which would cause the proposed Transfer to be more favorable to the Transferee than the terms set forth in Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord’s right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding any contrary provisions of this Lease, if Tenant or any proposed Transferee claims that Landlord has unreasonably withheld or delayed its consent to a proposed Transfer or otherwise has breached its obligations under this Article, Tenant’s and such Transferee’s only remedy shall be to seek a declaratory judgment and/or injunctive relief, and Tenant, on behalf of itself and, to the extent permitted by law, such proposed Transferee, waives all other remedies against Landlord, including without limitation, the right to seek monetary damages or terminate this Lease.

14.3 Transfer Premium .

14.3.1 Definition of Transfer Premium . If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of the “Transfer Premium,” as that term is defined in this Section 14.3, received by Tenant from such Transferee. “ Transfer Premium ” shall mean all rent, additional rent or other consideration payable by such Transferee in connection with the Transfer which is in excess of the Rent payable by Tenant under this Lease during the term of the Transfer, on a per rentable square foot basis if less than all of the Premises is transferred, after deducting the reasonable expenses incurred by Tenant for (i) any changes, alterations

and improvements to the Premises, value of furniture, fixtures and equipment transferred in connection with the Transfer, (ii) any brokerage commissions in connection with the Transfer, (iii) any marketing costs, and (iv) any rent abatement provided to Transferee(collectively, the “ Subleasing Costs ”). “Transfer Premium” shall also include, but not be limited to, key money and bonus money paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer.

14.3.2 Payment of Transfer Premiums . The determination of the amount of the Transfer Premium shall be made on an annual basis in accordance with the terms of this Section 14.3.2, but an estimate of the amount of the Transfer Premium shall be made each month and one-twelfth of such estimated amount shall be paid to Landlord promptly, but in no event later than the next date for payment of Base Rent hereunder, subject to an annual reconciliation on each anniversary date of the Transfer. If the payments to Landlord under this Section 14.3.2 during the twelve (12) months preceding each annual reconciliation exceed the amount of Transfer Premium determined on an annual basis, then Landlord shall credit the overpayment against Tenant’s future obligations under this Section 14.3.2 or if the overpayment occurs during the last year of the Transfer in question, refund the excess to Tenant. If Tenant has underpaid the Transfer Premium, as determined by such annual reconciliation, Tenant shall pay the amount of such deficiency to Landlord promptly, but in no event later than the next date for payment of Base Rent hereunder. For purposes of calculating the Transfer Premium on an annual basis, Tenant’s Subleasing Costs shall be deemed to be offset against the first rent, additional rent or other consideration payable by the Transferee, until such Subleasing Costs are exhausted.

14.3.3 Calculations of Rent . In the calculation of the Rent, as it relates to the Transfer Premium calculated under Section 14.3.1 above, the Rent paid during each annual period for the Subject Space by Tenant, shall be computed after adjusting such rent to the actual effective rent to be paid, taking into consideration any and all leasehold concessions granted in connection therewith, including, but not limited to, any rent credit and tenant improvement allowance. For purposes of calculating any such effective rent, all such concessions shall be amortized on a straight-line basis over the relevant term.

14.4 Landlord’s Option as to Subject Space . Notwithstanding anything to the contrary contained in this Article 14, Landlord shall have the option, by giving written notice to Tenant within thirty (30) days after receipt of any Transfer Notice, to recapture the Subject Space. Such recapture notice shall cancel and terminate this Lease with respect to the Subject Space as of the date stated in the Transfer Notice as the effective date of the proposed Transfer until the last day of the term of the Transfer as set forth in the Transfer Notice. If this Lease shall be canceled with respect to less than the entire Premises, the Rent reserved herein shall be prorated on the basis of the number of rentable square feet retained by Tenant in proportion to the number of rentable square feet contained in the Premises, and this Lease as so amended shall continue thereafter in full force and effect, and upon request of either party, the parties shall execute written confirmation of the same. If Landlord declines, or fails to elect in a timely manner to recapture the Subject Space under this Section 14.4, then, provided Landlord has consented to the proposed Transfer, Tenant shall be entitled to proceed to transfer the Subject Space to the proposed Transferee, subject to provisions of the last paragraph of Section 14.2 of this Lease.

14.5 Effect of Transfer . If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation pertaining to the Transfer in form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord’s request a complete statement, certified by an independent certified public accountant, or Tenant’s chief financial officer, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such Transfer, and (v) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord’s consent, shall relieve Tenant or any guarantor of the Lease from liability under this Lease. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to any Transfer, and shall have the right to make copies thereof. If the Transfer Premium with respect to any Transfer shall be found understated, Tenant shall,

within thirty (30) days after demand, pay the deficiency and Landlord’s costs of such audit and if understated by more than ten percent (10%), Landlord shall have the right to cancel this Lease upon thirty (30) days’ notice to Tenant.

14.6 Additional Transfers . For purposes of this Lease, the term “Transfer” shall also include (i) if Tenant is a partnership, the withdrawal or change, voluntary, involuntary or by operation of law, of twenty-five percent (25%) or more of the partners, or transfer of twenty-five percent or more of partnership interests, within a twelve (12)-month period, or the dissolution of the partnership without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation ( i.e. , whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant, or (B) the sale or other transfer of more than an aggregate of fifty-one percent (51%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of more than an aggregate of fifty-one percent (51%) of the value of the unencumbered assets of Tenant within a twelve (12) month period.

14.7 Permitted Affiliate Transfers . Notwithstanding anything to the contrary contained in this Article 14, Tenant shall have the right to Transfer, upon ten (10) days prior written notice to Landlord but without obtaining Landlord’s prior written consent, (a) to a corporation or other entity which is a successor in interest to Tenant by way of merger, consolidation or corporate reorganization, or (b) by the purchase of all or substantially all of the assets or the controlling ownership interest of Tenant provided that such merger or consolidation or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring this Lease, (c) to any person that as of the date of determination is controlled by or is under common control with Tenant (“ Tenant’s Affiliate ”) or (d) to any persons in connection with any secondary offering of the Tenant’s stock or in connection with any bona fide financing or capitalization for the benefit of Tenant, and otherwise comply with the requirements of this Lease regarding such Transfer (the foregoing described Transfers, or any one of them, may be referred to as an “ Exempt Transfer ”); provided, however, that (i) the overall net worth of the resulting tenant is not materially less than the overall net worth of Tenant prior to such Exempt Transfer; (ii) the liquid assets forming a portion of such net worth of the resulting Tenant are not materially less than the liquid assets forming a portion of the net worth of Tenant prior to such Exempt Transfer; (iii) Landlord receives satisfactory evidence of the satisfaction of such net worth requirements set forth in the preceding subsections (i) and (ii) not less than five (5) business days prior to the date of such Exempt Transfer; and (iv) except as expressly provided herein, such Exempt Transfer otherwise complies with the requirements of this Lease regarding such Transfer. A Tenant’s Affiliate that is an assignee of Original Tenant’s entire interest in this Lease may be referred to herein as an “ Affiliate Assignee ”. For purposes of Exempt Transfers, “control” requires both (A) owning (directly or indirectly) more than fifty percent (50%) of the stock or other equity interests of another person (unless such Transfers relate to any corporation whose shares are publicly traded) and (B) possessing, directly or indirectly, the power to direct or cause the direction of the management and policies of such person. In no event shall Tenant perform a Transfer to or with an entity that is a tenant at the Building Complex or that is in discussions or negotiations with Landlord or an affiliate of Landlord to lease premises at the Building Complex or a property owned by Landlord or an affiliate of Landlord.

ARTICLE 15

SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES

15.1 Surrender of Premises . No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in a writing signed by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof,

shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises.

15.2 Removal of Tenant Property by Tenant . All articles of personal property and all business and trade fixtures, machinery and equipment, furniture and movable partitions owned by Tenant or installed by Tenant at its expense in the Premises, which items are not a part of the tenant improvements installed in the Premises, shall remain the property of Tenant, and may be removed by Tenant at any time during the Lease Term as long as Tenant is not in default under this Lease with any applicable cure period having expired. Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15, quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, reasonable wear and tear and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, free-standing cabinet work, and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, and such similar articles of any other persons claiming under Tenant, as Landlord may, in its sole discretion, require to be removed, and Tenant shall repair at its own expense all damage to the Premises and Building resulting from such removal. Upon such expiration or termination Tenant shall, without expense to Landlord remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, any telecommunications lines and cabling installed by or at the request of Tenant, free standing cabinet work, and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises and such similar articles of any other persons claiming under Tenant, as Landlord may in its sole discretion require to be removed, and Tenant shall repair at its own expense all damage to the Premises and Building resulting from such removal.

15.3 Removal of Tenant’s Property by Landlord . Whenever Landlord shall re-enter the Premises as provided in this Lease, any personal property of Tenant not removed by Tenant upon the expiration of the Lease Term, or within forty-eight (48) hours after a termination by reason of Tenant’s default as provided in this Lease, shall be deemed abandoned by Tenant and may be disposed of by Landlord in accordance with Sections 1980 through 1991 of the California Civil Code and Section 1174 of the California Code of Civil Procedure, or in accordance with any laws or judicial decisions which may supplement or supplant those provisions from time to time.

15.4 Landlord’s Actions on Premises . Tenant hereby waives, and releases Landlord from, all claims for damages or other liability in connection with Landlord’s or its agents’ or representatives’ reentering and taking possession of the Premises or removing, retaining, storing or selling the property of Tenant as herein provided, and Tenant hereby indemnifies and holds Landlord harmless from any such damages or other liability, and no such re-entry shall be considered or construed to be a forcible entry.

ARTICLE 16

HOLDING OVER

If Tenant holds over after the expiration of the Lease Term, with or without the express or implied consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate equal to: (i) during the initial three (3) months of such holdover, one hundred fifty percent (150%) of the monthly Base Rent applicable during the last rental period of the Lease Term under this Lease; and (ii) for any period of holdover thereafter, two hundred percent (200%) of the greater of (a) the Base Rent applicable during the last rental period of the Lease Term under this Lease or (b) the fair market rental rate for the Premises as of the commencement of such holdover period. Such month-to-month tenancy shall be subject to every other applicable term, covenant and agreement contained herein. Nothing contained in this Article 16 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be

deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. Tenant acknowledges that if Tenant holds over without Landlord’s consent, such holding over may compromise or otherwise affect Landlord’s ability to enter into new leases with prospective tenants regarding the Premises. Therefore, if Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from and against all Claims resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any losses suffered by Landlord, including lost profits, resulting from such failure to surrender.

ARTICLE 17

ESTOPPEL CERTIFICATES

Within ten (10) days following a request in writing by Landlord, Tenant shall execute and deliver to Landlord an estoppel certificate which, as submitted by Landlord, shall be substantially in the form of Exhibit E , attached hereto (or such other form as may be required by any prospective mortgagee or purchaser of the Building Complex or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other information reasonably requested by Landlord or Landlord’s mortgagee or prospective mortgagee or purchasers. Tenant shall execute and deliver whatever other instruments may be reasonably required for such purposes. At any time during the Lease Term, Landlord may require Tenant to provide Landlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. Failure of Tenant to timely execute and deliver such estoppel certificate or other instruments shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception. Failure by Tenant to so deliver such estoppel certificate shall be a material default of the provisions of this Lease. In addition, Tenant shall be liable to Landlord, and shall indemnify Landlord from and against any loss, cost, damage or expense, incidental, consequential, or otherwise, including attorneys’ fees, arising or accruing directly or indirectly, from any failure of Tenant to execute or deliver to Landlord any such estoppel certificate.

ARTICLE 18

SUBORDINATION

This Lease shall be subject and subordinate to all easement agreements and covenants, conditions and restrictions recorded against the land underlying the Building Complex, and to all present and future ground or underlying leases of the Real Property and to the lien of any mortgages or trust deeds, now or hereafter in force against the Real Property, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages or trust deeds, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto. Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed in lieu thereof, to attorn, without any deductions or set-offs whatsoever, to the purchaser or any successors thereto upon any such foreclosure sale or deed in lieu thereof if so requested to do so by such purchaser, and to recognize such purchaser as the lessor under this Lease. Tenant shall, within five (5) days of request by Landlord, execute such further instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. Tenant hereby irrevocably authorizes Landlord to execute and deliver in the name of Tenant any such instrument or instruments if Tenant fails to do so, provided that such authorization shall in no way relieve Tenant from the obligation of executing such instruments of subordination or superiority. Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely

affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale.

ARTICLE 19

DEFAULTS; REMEDIES

19.1 Defaults . All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any reduction of Rent. The occurrence of any of the following shall constitute a default of this Lease by Tenant:

19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due; or

19.1.2 Any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for twenty (20) days after written notice thereof from Landlord to Tenant; provided however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 or any similar or successor law; and provided further that if the nature of such default is such that the same cannot reasonably be cured within a twenty (20) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure said default, as soon as possible; or

19.1.3 Abandonment or vacation of the Premises by Tenant; or

19.1.4 To the extent permitted by law, a general assignment by Tenant or any guarantor of the Lease for the benefit of creditors, or the filing by or against Tenant or any guarantor of any proceeding under an insolvency or bankruptcy law, unless in the case of a proceeding filed against Tenant or any guarantor the same is dismissed within sixty (60) days, or the appointment of a trustee or receiver to take possession of all or substantially all of the assets of Tenant or any guarantor, unless possession is restored to Tenant or such guarantor within thirty (30) days, or any execution or other judicially authorized seizure of all or substantially all of Tenant’s assets located upon the Premises or of Tenant’s interest in this Lease, unless such seizure is discharged within thirty (30) days; or

19.1.5 The hypothecation or assignment of this Lease or subletting of the Premises, or attempts at such actions, in violation of Article 14 hereof.

19.2 Remedies Upon Default . Upon the occurrence of such default by Tenant, Landlord shall have, in addition to any other remedies available to Landlord at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever.

19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:

(i) The worth at the time of award of any unpaid rent which has been earned at the time of such termination; plus

(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus

(iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, specifically including but not limited to, brokerage commissions and advertising expenses incurred, expenses of remodeling the Premises or any portion thereof for a new tenant, whether for the same or a different use, and any special concessions made to obtain a new tenant; and

(v) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law.

The term “ rent ” as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 19.2.1(i) and (ii), above, the “worth at the time of award” shall be computed by allowing interest at the Interest Rate, but in no case greater than the maximum amount of such interest permitted by law. As used in Section 19.2.1(iii) above, the “worth at the time of award” shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).

19.2.2 Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.

19.2.3 Landlord may, but shall not be obligated to, make any such payment or perform or otherwise cure any such obligation, provision, covenant or condition on Tenant’s part to be observed or performed (and may enter the Premises for such purposes), all at Tenant’s expense, without waiving its rights based upon any default of Tenant and without releasing Tenant from any obligations hereunder. In the event of Tenant’s failure to perform any of its obligations or covenants under this Lease, and such failure to perform poses a material risk of injury or harm to persons or damage to or loss of property, then Landlord shall have the right to cure or otherwise perform such covenant or obligation at any time after such failure to perform by Tenant, whether or not any such notice or cure period set forth in Section 19.1 above has expired. Any such actions undertaken by Landlord pursuant to the foregoing provisions of this Section 19.2.3 shall not be deemed a waiver of Landlord’s rights and remedies as a result of Tenant’s failure to perform and shall not release Tenant from any of its obligations under this Lease.

19.3 Payment by Tenant . Tenant shall pay to Landlord, within fifteen (15) days after delivery by Landlord to Tenant of statements therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with Landlord’s performance or cure of any of Tenant’s obligations pursuant to the provisions of Section 19.2.3 above; and (ii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all legal fees and other amounts so expended. Tenant’s obligations under this Section 19.3 shall survive the expiration or sooner termination of the Lease Term.

19.4 Subleases of Tenant . Whether or not Landlord elects to terminate this Lease on account of any default by Tenant, as set forth in this Article 19, following any such default by Tenant, Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in such subleases, licenses, concessions or arrangements. In the event of Landlord’s election to succeed to Tenant’s interest in any such subleases, licenses, concessions or

arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.

19.5 Form of Payment After Default . Following the occurrence of an event of default by Tenant, Landlord shall have the right to require that any or all subsequent amounts paid by Tenant to Landlord hereunder, whether in the cure of the default in question or otherwise, be paid in the form of cash, money order, cashier’s or certified check drawn on an institution acceptable to Landlord, or by other means approved by Landlord, notwithstanding any prior practice of accepting payments in any different form.

19.6 Waiver of Default . No waiver by Landlord of any violation or breach by Tenant of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach by Tenant of the same or any other of the terms, provisions, and covenants herein contained. Forbearance by Landlord in enforcement of one or more of the remedies herein provided upon a default by Tenant shall not be deemed or construed to constitute a waiver of such default. The acceptance of any Rent hereunder by Landlord following the occurrence of any default, whether or not known to Landlord, shall not be deemed a waiver of any such default, except only a default in the payment of the Rent so accepted.

19.7 Efforts to Relet . For the purposes of this Article 19, Tenant’s right to possession shall not be deemed to have been terminated by efforts of Landlord to relet the Premises, by its acts of maintenance or preservation with respect to the Premises, or by appointment of a receiver to protect Landlord’s interests hereunder. The foregoing enumeration is not exhaustive, but merely illustrative of acts which may be performed by Landlord without terminating Tenant’s right to possession.

ARTICLE 20

SECURITY DEPOSIT

Concurrent with Tenant’s execution of this Lease, Tenant shall deposit with Landlord a security deposit (the “ Security Deposit ”) in the amount set forth in Section 10 of the Summary. The Security Deposit shall be held by Landlord as security for the faithful performance by Tenant of all the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the Lease Term. If Tenant defaults with respect to any provisions of this Lease, including, but not limited to, the provisions relating to the payment of Rent, Landlord may, but shall not be required to, use, apply or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any amount that Landlord may spend or become obligated to spend by reason of Tenant’s default, or to compensate Landlord for any other loss or damage that Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within five (5) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount, and Tenant’s failure to do so shall be a default under this Lease. If Tenant shall fully and faithfully perform every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant, or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder, within sixty (60) days following the expiration of the Lease Term. Tenant shall not be entitled to any interest on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant.

ARTICLE 21

SIGNS

21.1 Suite and Building Lobby Signage . Tenant’s identifying suite and Building lobby signage shall be provided by Landlord, at Landlord’s sole cost and expense, and such signage shall be comparable to that used by Landlord for other similar floors in the Building and shall comply with Landlord’s Building standard signage program. Landlord shall remove, at Landlord’s sole cost and expense, any such signage upon the expiration or earlier termination of the Lease Term. Any additions, deletions or modifications to such Building standard signage shall be at Tenant’s sole expense and subject to the prior written approval of Landlord, in Landlord’s sole discretion.

21.2 Prohibited Signage and Other Items . Any signs, notices, logos, pictures, names or advertisements which are installed and that have not been separately approved by Landlord may be removed without notice by Landlord at the sole expense of Tenant. Tenant may not install any signs on the exterior or roof of the Building or the common areas of the Building or the Real Property. Any signs, window coverings, or blinds (even if the same are located behind the Landlord approved window coverings for the Building), or other items visible from the exterior of the Premises or Building are subject to the prior written approval of Landlord, in its sole discretion.

21.3 Building Directory . Tenant shall, at Landlord’s expense, be entitled to one (1) line on the Building directory to display Tenant’s name and suite number.

ARTICLE 22

COMPLIANCE WITH LAW

Tenant shall not do anything or suffer anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. At its sole cost and expense, Tenant shall promptly comply with any board of fire underwriters or similar body relating to the Premises, all recorded covenants, conditions and restrictions now or hereafter affecting the Premises and all laws, statutes, codes, rules and regulations (including those pertaining to Hazardous Materials) now or hereafter in force relating to or affecting the condition, use, occupancy, alteration or improvement of the Premises, including, without limitation, the provisions of the Americans with Disabilities Act (“ ADA ”) as it pertains to the condition, use, occupancy, improvement and alteration (including unforeseen and/or extraordinary alterations or improvements, and regardless of the period of time remaining in the Lease Term) of the Premises, other than the making of structural changes to the Building (collectively, the “ Excluded Changes ”), except to the extent such Excluded Changes are required due to Tenant’s alterations to or manner of use of the Premises. Should any standard or regulation now or hereafter be imposed on Landlord or Tenant by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly with such standards or regulations. In addition, Tenant shall fully comply with all present or future programs intended to manage parking, transportation or traffic in and around the Building, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive of that fact as between Landlord and Tenant.

ARTICLE 23

ENTRY BY LANDLORD

Landlord reserves the right at all reasonable times and upon prior reasonable notice to Tenant (except no such prior notice shall be required in emergencies) to enter the Premises to: (i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees or ground or underlying lessors, or, during the last twelve (12) months of the Lease Term, prospective tenants; (iii) post notices of nonresponsibility; or (iv) alter, improve or repair the Premises or the Building if necessary to comply with current building codes or other applicable laws, or for structural alterations, repairs or improvements to the Building, or as Landlord may otherwise reasonably desire or deem necessary. Notwithstanding anything to the contrary contained in this Article 23, Landlord may enter the Premises at any time, without notice to Tenant, to (A) perform services required of Landlord, (B) take possession due to any breach of this Lease in the manner provided herein; and (C) perform any covenants of Tenant which Tenant fails to perform. Any such entries shall be without the abatement of Rent and shall include the right to take such reasonable steps as required to accomplish the stated purposes; provided, however, that any such entry shall be accomplished as expeditiously as reasonably possible and in a manner so as to cause as little interference to Tenant as reasonably possible. Tenant hereby waives any claims for damages or for any injuries or inconvenience to or interference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned by Landlord’s entry into the Premises. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by Tenant. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises.

ARTICLE 24

TENANT PARKING

Tenant shall be entitled to use throughout the Lease Term the number of unreserved parking passes set forth in Section 12 of the Summary, in a location in the Building Complex Parking Area as designated by Landlord from time to time. Tenant shall not be required to pay to Landlord any parking fees for the use of such parking passes during the initial Lease Term, other than any parking taxes which may be imposed by governmental authorities in connection with the use of such parking. Thereafter, Tenant shall pay to Landlord for the use of such parking passes, on a monthly basis, the prevailing rate charged from time to time by Landlord or Landlord’s parking operator for parking passes in the Building Complex Parking Area where such parking passes are located. Tenant’s continued right to use the parking passes is conditioned upon Tenant abiding by all rules and regulations which are prescribed from time to time for the orderly operation and use of the Building Complex Parking Area and upon Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply with such rules and regulations. In addition, Landlord may assign any parking spaces and/or make all or a portion of such spaces reserved or institute an attendant-assisted tandem parking program and/or valet parking program if Landlord determines in its sole discretion that such is necessary or desirable for orderly and efficient parking. Landlord specifically reserves the right, from time to time, to change the size, configuration, design, layout, location and all other aspects of the Building Complex Parking Area, and Tenant acknowledges and agrees that Landlord, from time to time, may, without incurring any liability to Tenant and without any abatement of Rent under this Lease temporarily close-off or restrict access to the Building Complex Parking Area, or temporarily relocate Tenant’s parking spaces to other parking structures and/or surface parking areas within a reasonable distance from the Building Complex Parking Area, for purposes of permitting or facilitating any such construction, alteration or improvements or to accommodate or facilitate renovation, alteration, construction or other modification of other improvements or structures located on the Real Property. Landlord may delegate its responsibilities hereunder to a parking operator in which case such parking operator shall have all the rights of control attributed hereby to Landlord. The parking rates charged by Landlord for Tenant’s parking passes shall be exclusive of any parking tax or other charges imposed by governmental authorities

in connection with the use of such parking, which taxes and/or charges shall be paid directly by Tenant or the parking users, or, if directly imposed against Landlord, Tenant shall reimburse Landlord for all such taxes and/or charges within ten (10) days after Tenant’s receipt of the invoice from Landlord. The parking passes provided to Tenant pursuant to this Article 24 are provided solely for use by Tenant’s own personnel and such passes may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord’s prior approval.

ARTICLE 25

MISCELLANEOUS PROVISIONS

25.1 Binding Effect . Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Article 14 of this Lease.

25.2 No Air Rights . No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the light or view therefrom is obstructed by reason of any repairs, improvements, maintenance or cleaning in or about the Building, the same shall be without liability to Landlord and without any reduction or diminution of Tenant’s obligations under this Lease.

25.3 Modification of Lease . Should any current or prospective mortgagee or ground lessor for the Building Complex require a modification or modifications of this Lease, which modification or modifications will not cause an increased cost or expense to Tenant or in any other way materially and adversely change the rights and obligations of Tenant hereunder, then and in such event, Tenant agrees that this Lease may be so modified and agrees to execute whatever documents are required therefor and deliver the same to Landlord within ten (10) days following the request therefor. Should Landlord or any such prospective mortgagee or ground lessor require execution of a short form of Lease for recording, containing, among other customary provisions, the names of the parties, a description of the Premises and the Lease Term, Tenant agrees to execute such short form of Lease and to deliver the same to Landlord within ten (10) days following the request therefor.

25.4 Transfer of Landlord’s Interest . Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Real Property and in this Lease, and Tenant agrees that in the event of any such transfer and a transfer of the Security Deposit, Landlord shall automatically be released from all liability under this Lease and Tenant agrees to look solely to such transferee for the performance of Landlord’s obligations hereunder after the date of transfer. Tenant further acknowledges that Landlord may assign its interest in this Lease to the holder of any mortgage or deed of trust as additional security, but agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.

25.5 Prohibition Against Recording . Except as provided in Section 25.3 of this Lease, neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by Tenant or by anyone acting through, under or on behalf of Tenant, and the recording thereof in violation of this provision shall make this Lease null and void at Landlord’s election.

25.6 Captions . The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.

25.7 Relationship of Parties . Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant, it being expressly understood and agreed that neither the method of computation of Rent nor any act of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of landlord and tenant.

25.8 Time of Essence . Time is of the essence of this Lease and each of its provisions.

25.9 Partial Invalidity . If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.

25.10 Landlord Exculpation . It is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law to the contrary, the liability of Landlord and the Landlord Parties hereunder (including any successor landlord) and any recourse by Tenant against Landlord or the Landlord Parties (including any successor landlord) shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Building Complex, and neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant.

25.11 Child Care Facilities . Tenant acknowledges that any child care facilities located or which may be located in the Building Complex (the “ Child Care Facilities ”) which are available to Tenant and Tenant’s employees are provided by a third party (the “ Child Care Provider ”) which is leasing space in the Building Complex, and not by Landlord. If Tenant or its employees choose to use the Child Care Facilities, Tenant acknowledges that Tenant and Tenant’s employees are not relying upon any investigation which Landlord may have conducted concerning the Child Care Provider or any warranties or representation with respect thereto, it being the sole responsibility of Tenant and the individual user of the Child Care Facilities to conduct any and all investigations of the Child Care Facilities prior to making use thereof. Accordingly, Landlord shall have no responsibility with respect to the quality or care provided by the Child Care Facilities, or for any acts or omissions of the Child Care Provider. Furthermore, Tenant, for Tenant and for Tenant’s employees, hereby agrees that Landlord, its partners, subpartners and their respective officers, agents, servants, employees, and independent contractors shall not be liable for, and are hereby released from any responsibility for any loss, cost, damage, expense or liability, either to person or property, arising from the use of the Child Care Facilities by Tenant or Tenant’s employees. Tenant hereby covenants that Tenant shall inform all of Tenant’s employees of the provisions of this Section prior to such employees’ use of the Child Care Facilities. Nothing contained herein is intended to be a representation nor warranty by Landlord that any Child Care Facilities will be available during the Lease Term and Landlord shall have no obligation to provide, or to make available, any such Child Care Facilities.

25.12 Entire Agreement . It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. This Lease, the exhibits and schedules attached hereto, and any side letter or separate agreement executed by Landlord and Tenant in connection with this Lease and dated of even date herewith contain all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Premises, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto.

25.13 Right to Lease . Landlord reserves the absolute right to effect such other tenancies in the Building Complex as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Building Complex. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building Complex.

25.14 Force Majeure . Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental

actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform (collectively, the “ Force Majeure ”), except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease, notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s performance caused by a Force Majeure.

25.15 Notices . All notices, demands, statements, approvals or communications (collectively, “ Notices ”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage prepaid, return receipt requested, or delivered personally (i) to Tenant at the appropriate address set forth in Section 5 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord; or (ii) to Landlord at the addresses set forth in Section 3 of the Summary, or to such other firm or to such other place as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given on the date which is two (2) business days after it is mailed as provided in this Section 25.15 or upon the date personal delivery is made. If Tenant is notified of the identity and address of Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such mortgagee or ground or underlying lessor written notice of any default by Landlord under the terms of this Lease by registered or certified mail, and such mortgagee or ground or underlying lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s exercising any remedy available to Tenant.

25.16 Joint and Several . If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.

25.17 Authority . If Tenant is a corporation or partnership, each individual executing this Lease on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so.

25.18 Governing Law . This Lease shall be construed and enforced in accordance with the laws of the State of California.

25.19 Submission of Lease . Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant.

25.20 Brokers . Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 13 of the Summary and Landlord’s designated representative (the “ Brokers ”), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Landlord shall pay the brokerage commissions owing to the Brokers in connection with the transaction contemplated by this Lease pursuant to the terms of a separate written agreement between Landlord and the Brokers. Each party agrees to indemnify, defend, protect and hold the other party harmless from and against any and all Claims with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party’s dealings with any real estate broker or agent other than the Brokers. The terms of this Section 25.20 shall survive the expiration or earlier termination of the Lease Term.

25.21 Independent Covenants . This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord; provided, however, that the foregoing shall in no way impair the right of Tenant to commence a separate action against Landlord for any violation by Landlord of the provisions hereof so long as notice is first given to

Landlord and any holder of a mortgage or deed of trust covering the Building, Real Property or any portion thereof, of whose address Tenant has theretofore been notified, and an opportunity is granted to Landlord and such holder to correct such violations as provided above.

25.22 Building Name and Signage . Landlord shall have the right at any time to designate and/or change the name of the Building Complex, the Building and/or any other building in the Building Complex, and to install, affix and maintain any and all signs on the exterior and on the interior of the Building Complex, the Building and/or any other building in the Building Complex, as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use the name of the Building Complex, the Building or any other building in the Building Complex, or use pictures or illustrations of the Building Complex, the Building or any other building in the Building Complex, in advertising or other publicity, without the prior written consent of Landlord.

25.23 Hazardous Materials . Tenant acknowledges that Landlord has agreed to make the existing Phase I Environmental Assessment Report, if any, available to Tenant upon Tenant’s prior written request. Tenant acknowledges that Landlord may incur costs (a) for complying with laws, codes, regulations or ordinances relating to Hazardous Materials, or (b) otherwise in connection with Hazardous Materials including, without limitation, the following: (i) Hazardous Materials present in soil or ground water, (ii) Hazardous Materials that migrate, flow, percolate, diffuse or in any way move onto or under the Building Complex, (iii) Hazardous Materials present on or under the Building Complex as a result of any discharge, dumping or spilling (whether accidental or otherwise) on the Building Complex by other tenants of the Building Complex or their agents, employees, contractors or invitees, or by others, and (iv) material which becomes Hazardous Materials due to a change in laws, codes, regulations or ordinances which relate to hazardous or toxic material, substances or waste. Tenant agrees that the costs incurred by Landlord with respect to, or in connection with, the Building Complex for complying with laws, codes, regulations or ordinances relating to Hazardous Materials shall be an Operating Expense, unless the cost of such compliance, as between Landlord and Tenant, is made the responsibility of Tenant under this Lease. Notwithstanding the foregoing, Tenant shall not be responsible for any costs or expenses incurred in connection with any loss or injury caused by (A) the presence of any Hazardous Materials existing on the Building Complex prior to the Effective Date of this Lease, or (B) the release of any Hazardous Materials on the Building Complex by Landlord. To the extent any such Operating Expense relating to Hazardous Materials is subsequently recovered or reimbursed through insurance, or recovery from responsible third parties, or other action, Tenant shall be entitled to a proportionate share of such Operating Expense to which such recovery or reimbursement relates.

25.24 Transportation Management . Tenant shall fully comply with all present or future programs intended to manage parking, transportation or traffic in and around the Building Complex, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities. Such programs may include, without limitation: (i) restrictions on the number of peak-hour vehicle trips generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of an in-house ridesharing program and an employee transportation coordinator; (iv) working with employees and any Building Complex or area-wide ridesharing program manager; (v) instituting employer-sponsored incentives (financial or in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work shifts for employees.

25.25 No Discrimination . Tenant covenants by and for itself, its heirs, executors, administrators and assigns, and all persons claiming under or through Tenant, and this Lease is made and accepted upon and subject to the following conditions: that there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, sex, religion, marital status, ancestry or national origin in the leasing, subleasing, transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any person claiming under or through Tenant, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the Premises.

25.26 Successors . Except as otherwise expressly provided herein, the obligations of this Lease shall bind and benefit the successors and assigns of the parties hereto; provided, however, that no assignment, sublease or other transfer in violation of the provisions of Article 14 shall operate to vest any rights in any putative assignee, subtenant or transferee of Tenant.

25.27 Development of the Building Complex .

25.27.1 Subdivision . Tenant acknowledges that the Building Complex is comprised of separate legal lots. Landlord reserves the right to further subdivide or sell all or a portion of the buildings and Common Areas in the Building Complex. Tenant agrees to execute and deliver, upon demand by Landlord and in the form requested by Landlord, any additional documents needed to conform this Lease to the circumstances resulting from such a subdivision or sale and any all ancillary transactions in connection therewith.

25.27.2 Other Improvements . If portions of the Building Complex or property adjacent to the Building Complex (collectively, the “ Other Improvements ”) are owned by an entity other than Landlord, Landlord, at its option, may enter into an agreement with the owner or owners of any of the Other Improvements to provide (i) for reciprocal rights of access, use and/or enjoyment of the Building Complex and the Other Improvements, (ii) for the common management, operation, maintenance, improvement and/or repair of all or any portion of the Building Complex and all or any portion of the Other Improvements, (iii) for the allocation of a portion of the Building Complex Expenses to the Other Improvements and the allocation of a portion of the operating expenses and taxes for the Other Improvements to the Building Complex, (iv) for the use or improvement of the Other Improvements and/or the Building Complex in connection with the improvement, construction, and/or excavation of the Other Improvements and/or the Building Complex, and (v) for any other matter which Landlord deems necessary. Nothing contained herein shall be deemed or construed to limit or otherwise affect Landlord’s right to sell all or any portion of the Building Complex or any other of Landlord’s rights described in this Lease.

25.27.3 Landlord Renovations . It is specifically understood and agreed that Landlord has made no representation or warranty to Tenant and has no obligation to alter, remodel, improve, renovate, repair or decorate the Premises, Building, Building Complex or any part thereof, or to add any additional phases or office buildings to the Building Complex, and that no representations respecting the condition of the Premises or the Building Complex have been made by Landlord to Tenant except as specifically set forth herein or in the Tenant Work Letter. However, Tenant acknowledges that Landlord may during the Lease Term renovate, improve, alter, or modify (collectively, the “ Renovations ”) the Building, Premises, and/or Real Property, including without limitation the Building Complex Parking Area, common areas, systems and equipment, roof, and structural portions of the same, which Renovations may include, without limitation, (i) modifying the driveways and other common areas and tenant spaces to comply with applicable laws and regulations, including regulations relating to the physically disabled, seismic conditions, and building safety and security, (ii) installing new floor covering, lighting, and wall coverings in the common areas, and in connection with any Renovations, Landlord may, among other things, erect scaffolding or other necessary structures in the Building or Building Complex, limit or eliminate access to portions of the Real Property, including portions of the common areas, or perform work in the Building or Building Complex, which work may create noise, dust or leave debris in the Building Complex, (iii) renovation and/or expansion of the main entry to the Building Complex and the main Building lobby area, (iv) renovation of the elevator, lobbies, elevator doors and frames and restrooms, and (v) installations, repairs or maintenance of telephone risers. Tenant hereby agrees that such Renovations and Landlord’s actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no responsibility or for any reason be liable to Tenant for any direct or indirect injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant’s personal property or improvements resulting from the Renovations or Landlord’s actions in connection with such Renovations, or for any inconvenience or annoyance occasioned by such Renovations or Landlord’s actions in connection with such Renovations.

25.28 Confidentiality . Tenant acknowledges that the content of this Lease and any related documents are confidential information. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant’s financial, legal, accounting, real estate and space planning consultants, respectively, or as otherwise required by law.

25.29 Landlord’s Title . Landlord’s title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord.

25.30 No Waiver . No waiver of any provision of this Lease shall be implied by any failure of a party to enforce any remedy on account of the violation of such provision, even if such violation shall continue or be repeated subsequently, any waiver by a party of any provision of this Lease may only be in writing, and no express waiver shall affect any provision other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant’s right of possession hereunder or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

25.31 Jury Trial; Attorneys’ Fees . IF EITHER PARTY COMMENCES LITIGATION AGAINST THE OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE BREACH HEREOF OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES HERETO AGREE TO AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY. In the event of any such commencement of litigation, the prevailing party shall be entitled to recover from the other party such costs and reasonable attorneys’ fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and executing such judgment.

25.32 Substitution of Other Premises . Landlord shall have the right to move Tenant to other space in the Building Complex comparable in size to the Premises, and all terms hereof shall apply to the new space with equal force. In such event, Landlord shall give Tenant at least thirty (30) days’ prior notice of Landlord’s election to so relocate Tenant, and shall move Tenant’s effects to the new space at Landlord’s sole cost and expense at such time and in such manner as to inconvenience Tenant as little as reasonably practicable. The new space shall be delivered to Tenant with improvements substantially similar to those improvements existing in the Premises at the time of Landlord’s notification to Tenant of the relocation, which improvements shall be paid for by Landlord at Landlord’s cost. Simultaneously with such relocation of the Premises, the parties shall immediately execute an amendment to this Lease stating the relocation of the Premises.

25.33 OFAC Compliance .

25.33.1 Tenant represents and warrants that (a) Tenant and each person or entity owning an interest in Tenant is (i) not currently identified on the Specially Designated Nationals and Blocked Persons List maintained by the Office of Foreign Assets Control, Department of the Treasury (“ OFAC ”) and/or on any other similar list maintained by OFAC pursuant to any authorizing statute, executive order or regulation (collectively, the “ List ”), and (ii) not a person or entity with whom a citizen of the United States is prohibited to engage in transactions by any trade embargo, economic sanction, or other prohibition of United States law, regulation, or Executive Order of the President of the United States, (b) none of the funds or other assets of Tenant constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as hereinafter defined), (c) no Embargoed Person has any interest of any nature whatsoever in Tenant (whether directly or indirectly), (d) none of the funds of Tenant have been derived from any unlawful activity with the result that the investment in Tenant is prohibited by law or that the Lease is in violation of law, and (e) Tenant has implemented procedures, and will consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times.

The term “ Embargoed Person ” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq ., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq ., and any Executive Orders or regulations promulgated thereunder with the result that the investment in Tenant is prohibited by law or Tenant is in violation of law.

25.33.2 Tenant covenants and agrees (a) to comply with all requirements of law relating to money laundering, anti-terrorism, trade embargos and economic sanctions, now or hereafter in effect, (b) to immediately notify Landlord in writing if any of the representations, warranties or covenants set forth in this paragraph or the preceding paragraph are no longer true or have been breached or if Tenant has a reasonable basis to believe that they may no longer be true or have been breached, (c) not to use funds from any “Prohibited Person” (as such term is defined in the September 24, 2001 Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) to make any payment due to Landlord under the Lease and (d) at the request of Landlord, to provide such information as may be requested by Landlord to determine Tenant’s compliance with the terms hereof.

25.33.3 Tenant hereby acknowledges and agrees that Tenant’s inclusion on the List at any time during the Lease Term shall be a material default of the Lease. Notwithstanding anything herein to the contrary, Tenant shall not permit the Premises or any portion thereof to be used or occupied by any person or entity on the List or by any Embargoed Person (on a permanent, temporary or transient basis), and any such use or occupancy of the Premises by any such person or entity shall be a material default of the Lease.

25.34 Financial Statements . Tenant shall, within ten (10) days after request from Landlord, deliver to Landlord financial statements (including balance sheets and income/expense statements) for Tenant’s then most recent full and partial fiscal year preceding such request for which such financial statements have already been prepared, certified by an independent certified public accountant or Tenant’s chief financial officer, in form reasonably satisfactory to Landlord.

25.35 Energy Disclosure Requirements . Tenant acknowledges that Landlord may be required to disclose certain information concerning the energy performance of the Building and/or Building Complex pursuant to California Public Resources Code Section 25402.10 and the regulations promulgated pursuant thereto (collectively, “ Energy Disclosure Requirements ”). Tenant further acknowledges that pursuant to the Energy Disclosure Requirements, Landlord may be required in the future to disclose information concerning Tenant’s energy usage to certain third parties, including, without limitation, prospective purchasers, lenders and tenants of the Building and/or Building Complex (the “ Tenant Energy Use Disclosure ”). Tenant hereby (A) consents to all such Tenant Energy Use Disclosures, (B) agrees to cooperate with Landlord in obtaining such information, and (C) acknowledges that Landlord shall not be required to notify Tenant of any Tenant Energy Use Disclosure. Further, Tenant hereby releases Landlord from any and all losses, costs, damages, expenses and liabilities relating to, arising out of and/or resulting from any Tenant Energy Use Disclosure. The terms of this Section 25.35 shall survive the expiration or earlier termination of this Lease.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, Landlord and Tenant have caused their duly authorized representatives to execute this Lease as of the day and date first above written.

“ Landlord ”	AGP SORRENTO R&D, LP,
	a Delaware limited partnership

	By:	Parallel Capital Partners, Inc.,
		a California corporation,
		its authorized agent

		By:	/s/ Jim Ingebritsen
		Name:	Jim Ingebritsen
		Its:	President

“ Tenant ”	ZAVANTE THERAPEUTICS INC.,
	a Delaware corporation

	By:	/s/ Theodore R. Schroeder
	Name:
	Title:

	By:
	Name:
	Title:

EXHIBIT A

SORRENTO R&D

FLOOR PLAN OF PREMISES

This Exhibit “A” is provided for informational purposes only and is intended to be only an approximation of the layout of the Premises and shall not be deemed to constitute any representation by Landlord as to the exact layout or configuration of the Premises.

EXHIBIT B

SORRENTO R&D

RULES AND REGULATIONS

Tenant shall faithfully observe and comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of said Rules and Regulations by or otherwise with respect to the acts or omissions of any other tenants or occupants of the Building Complex.

1. Tenant shall not alter any lock or install any new or additional locks or bolts on any doors or windows of the Premises without obtaining Landlord’s prior written consent. Tenant shall bear the cost of any lock changes or repairs required by Tenant. Two keys will be furnished by Landlord for the Premises, and any additional keys required by Tenant must be obtained from Landlord at a reasonable cost to be established by Landlord.

2. All doors opening to public corridors shall be kept closed at all times except for normal ingress and egress to the Premises, unless electrical hold backs have been installed.

3. Landlord reserves the right to close and keep locked all entrance and exit doors of the Building and to exclude from the Building between the hours of 6:00 p.m. and 7:00 a.m. and at all hours on Saturday, Sunday and Holidays (as defined in the Lease) all persons who do not present a pass or card key to the Building approved by Landlord. Tenant, its employees and agents must be sure that the doors to the Building are securely closed and locked when leaving the Premises if it is after the normal hours of business for the Building. Any tenant, its employees, agents or any other persons entering or leaving the Building at any time when it is so locked, or any time when it is considered to be after normal business hours for the Building or Building Complex may be required to sign the Building register when so doing. Access to the Building may be refused unless the person seeking access has proper identification or has a previously arranged pass for access. Landlord and his agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building or Building Complex of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building and/or Building Complex during the continuance of same by any means it deems appropriate for the safety and protection of life and property.

4. Landlord shall have the right to prescribe the weight, size and position of all safes and other heavy property brought into the Building. Safes and other heavy objects shall, if considered necessary by Landlord, stand on supports of such thickness as is necessary to properly distribute the weight. Landlord will not be responsible for loss of or damage to any such safe or property in any case. All damage done to any part of the Building and/or Building Complex, its contents, occupants or visitors by moving or maintaining any such safe or other property shall be the sole responsibility of Tenant and any expense of said damage or injury shall be borne by Tenant.

5. No furniture, freight, packages, supplies, equipment or merchandise will be brought into or removed from the Building or carried up or down in the elevators, except upon prior notice to Landlord, and in such manner, in such specific elevator, and between such hours as shall be designated by Landlord. Tenant shall provide Landlord with not less than 24 hours prior notice of the need to utilize an elevator for any such purpose, so as to provide Landlord with a reasonable period to schedule such use and to install such padding or take such other actions or prescribe such procedures as are appropriate to protect against damage to the elevators or other parts of the Building.

6. Landlord shall have the right to control and operate the public portions of the Building and Building Complex, the public facilities, the heating and air conditioning, and any other facilities furnished for the common use of tenants, in such manner as is customary for comparable building complexes in the vicinity of the Building Complex.

7. The requirements of Tenant will be attended to only upon application at the management office of the Building Complex or at such office location designated by Landlord. Employees of Landlord shall not perform any work or do anything outside their regular duties unless under special instructions from Landlord.

8. Tenant shall not disturb, solicit, or canvass any occupant of the Building Complex and shall cooperate with Landlord or Landlord’s agents to prevent same.

9. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose employees or agents, shall have caused it.

10. Tenant shall not overload the floor of the Premises, nor mark, drive nails or screws, or drill into the partitions, woodwork or plaster or in any way deface the Premises or any part thereof, unless hanging artwork, AV equipment, or other suitable items, without Landlord’s consent first had and obtained.

11. Except for vending machines intended for the sole use of Tenant’s employees and invitees, no vending machine or machines of any description other than fractional horsepower office machines shall be installed, maintained or operated upon the Premises without the written consent of Landlord.

12. Tenant shall not use any method of heating or air conditioning other than that which may be supplied by Landlord, without the prior written consent of Landlord.

13. Tenant shall not use or keep in or on the Premises or the Building Complex any kerosene, gasoline or other inflammable or combustible fluid or material. Tenant shall not use, keep or permit to be used or kept, any foul or noxious gas or substance in or on the Premises, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building Complex by reason of noise, odors, or vibrations, or interfere in any way with other Tenants or those having business therein.

14. Tenant shall not bring into or keep within the Building Complex or the Premises any animals, birds, bicycles or other vehicles.

15. No cooking shall be done or permitted by any tenant on the Premises, nor shall the Premises be used for the storage of merchandise, for lodging or for any improper, objectionable or immoral purposes. Notwithstanding the foregoing, Underwriters’ laboratory-approved equipment and microwave ovens may be used in the Premises for heating food and brewing coffee, tea, hot chocolate and similar beverages, provided that such use is in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations, and does not cause odors which are objectionable to Landlord and other Tenants.

16. Landlord will approve where and how telephone and telegraph wires are to be introduced to the Premises. No boring or cutting for wires shall be allowed without the consent of Landlord. The location of telephone, call boxes and other office equipment affixed to the Premises shall be subject to the approval of Landlord.

17. Landlord reserves the right to exclude or expel from the Building and/or Building Complex any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations.

18. Tenant, its employees and agents shall not loiter in the entrances or corridors, nor in any way obstruct the sidewalks, lobby, halls, stairways or elevators, and shall use the same only as a means of ingress and egress for the Premises.

19. Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to ensure the most effective operation of the Building’s heating and air conditioning system, and shall refrain from attempting to adjust any controls.

20. Tenant shall store all its trash and garbage within the interior of the Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the city in which the Building is located without violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entry-ways and elevators provided for such purposes at such times as Landlord shall designate.

21. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.

22. Tenant shall assume any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed, when the Premises are not occupied.

23. No awnings or other Building Complexion shall be attached to the outside walls of the Building without the prior written consent of Landlord. No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord. The sashes, sash doors, skylights, windows, and doors that reflect or admit light and air into the halls, passageways or other public places in the Building shall not be covered or obstructed by Tenant, nor shall any bottles, parcels or other articles be placed on the windowsills. All electrical ceiling fixtures hung in offices or spaces along the perimeter of the Building must be fluorescent and/or of a quality, type, design and bulb color approved by Landlord.

24. The washing and/or detailing of or, the installation of windshields, radios, telephones in or general work on, automobiles shall not be allowed on the Real Property.

25. The term “ personal goods or services vendors ” as used herein means persons who periodically enter the Building of which the Premises are a part for the purpose of selling goods or services to a tenant, other than goods or services which are used by the Tenant only for the purpose of conducting its business in the Premises. “Personal goods or services” include, but are not limited to, drinking water and other beverages, food, barbering services and shoe shining services. Landlord reserves the right to prohibit personal goods and services vendors from access to the Building except upon Landlord’s prior written consent and upon such reasonable terms and conditions, including, but not limited to, the payment of a reasonable fee and provision for insurance coverage, as are related to the safety, care and cleanliness of the Building, the preservation of good order thereon, and the relief of any financial or other burden on Landlord or other tenants occasioned by the presence of such vendors or the sale by them of personal goods or services to Tenant or its employees. Under no circumstance shall the personal goods or services vendors display their products in a public or common area, including corridors and elevator lobbies. If necessary for the accomplishment of these purposes, Landlord may exclude a particular vendor entirely or limit the number of vendors who may be present at any one time in the Building.

26. Tenant must comply with requests by the Landlord concerning the informing of their employees of items of importance to the Landlord.

27. Tenant shall comply with any non-smoking ordinance adopted by any applicable governmental authority.

28. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Building Complex. Landlord reserves the right

at any time to change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable Rules and Regulations as in Landlord’s judgment may from time to time be necessary for the management, safety, care and cleanliness of the Premises and Building Complex, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord shall not be responsible to Tenant or to any other person for the nonobservance of the Rules and Regulations by another tenant or other person. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition of its occupancy of the Premises.

EXHIBIT C

SORRENTO R&D

AMENDMENT TO LEASE

This AMENDMENT TO LEASE (“ Amendment ”) is made and entered into effective as of , 20 , by and between AGP SORRENTO R&D, LP, a Delaware limited partnership (“ Landlord ”), and , (“ Tenant ”)

R E C I T A L S :

A. Landlord and Tenant entered into that certain Office Lease dated as of (the “ Lease ”) pursuant to which Landlord leased to Tenant and Tenant leased from Landlord certain “Premises”, as described in the Lease, known as Suite of the Building located at .

B. Except as otherwise set forth herein, all capitalized terms used in this Amendment shall have the same meaning gives such terms in the Lease.

C. Landlord and Tenant desire to amend the Lease to confirm the commencement and expiration dates of the Lease Term, as hereinafter provided.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Confirmation of Dates . The parties hereby confirm that (a) the Premises are Ready for Occupancy and Landlord has performed all work required to be performed by Landlord pursuant to the Tenant Work Letter attached to the Lease, (b) the Lease Term for the Lease commenced as of (the “ Lease Commencement Date ”) for a term of ( ) years ending on (the “ Lease Expiration Date ”) (unless sooner terminated or extended as provided in the Lease) and (c) in accordance with the Lease, Rent commenced to accrue on .

2. No Further Modification . Except as set forth in this Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first above written.

“Landlord”
	By:
	Name:
	Its:


“Tenant”		,
	a

	By:
	Name:
	Its:

	By:
	Name:
	Its:

EXHIBIT D

SORRENTO R&D

TENANT WORK LETTER

Landlord shall, at Landlord’s sole cost and expense (except as set forth below with respect to painting), utilizing Building standard materials and finishes in Landlord’s Building standard manner, complete the following improvements within the Premises following full execution and delivery of this Lease: (i) clean the existing carpet; and (ii) paint all of the painted walls within the Premises with a Building-standard color chosen by Tenant, subject to Tenant’s reimbursement to Landlord, upon demand, of fifty percent (50%) of the total costs for such painting (collectively, “ Landlord’s Work ”). For purposes of this Lease, including for purposes of determining the Lease Commencement Date, the Premises shall be “ Ready for Occupancy ” upon the substantial completion of such Landlord’s Work in the Premises pursuant to this Exhibit D . Except for such Landlord’s Work, Tenant shall accept the Premises from Landlord in their presently existing, “as-is” condition and Landlord shall have no obligation to modify or improve any component of the Premises, the Building or the Building Complex. In addition, Landlord will make good faith efforts to facilitate the transfer of the existing tenant’s furniture to Tenant prior to the Lease Commencement Date.

EXHIBIT E

SORRENTO R&D

FORM OF TENANT’S ESTOPPEL CERTIFICATE

The undersigned, as Tenant under that certain Office Lease (the “ Lease ”) made and entered into as of , 20 and between , as Landlord, and the undersigned as Tenant, for Premises on the ( ) floor(s) of the Building located at hereby certifies as follows:

1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all amendments and modifications thereto. The documents contained in Exhibit A represent the entire agreement between the parties as to the Premises.

2. The undersigned has commenced occupancy of the Premises described in the Lease, currently occupies the Premises, and the Lease Term commenced on .

3. The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Exhibit A .

4. Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows:

5. Tenant shall not modify the documents contained in Exhibit A or prepay any amounts owing under the Lease to Landlord in excess of thirty (30) days without the prior written consent of Landlord’s mortgagee.

6. Base Rent became payable on .

7. Tenant has a security deposit held by Landlord in the amount of .

8. The Lease Term expires on .

9. All conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder.

10. No rental has been paid in advance and no security has been deposited with Landlord except as provided in the Lease.

11. As of the date hereof, there are no existing defenses or offsets that the undersigned has, which preclude enforcement of the Lease by Landlord.

12. All monthly installments of Base Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through . The current monthly installment of Base Rent is $ .

13. The undersigned acknowledges that this Estoppel certificate may be delivered to Landlord’s prospective mortgagee, or a prospective purchaser, and acknowledges that it recognizes that if same is done, said mortgagee, prospective mortgagee, or prospective purchaser will be relying upon the statements contained herein in making the loan or acquiring the property of which the Premises are a part, and in accepting an assignment of the Lease as collateral security, and that receipt by it of this certificate is a condition of making of the loan or acquisition of such property.

14. If Tenant is a corporation or partnership, each individual executing this Estoppel Certificate on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.

Executed at on the day of , 20 .

“Tenant”		,
	a

	By:
	Name:
	Its:

	By:
	Name:
	Its:

SORRENTO R&D

OFFICE LEASE

AGP SORRENTO R&D, LP,

a Delaware limited partnership

as Landlord,

and

ZAVANTE THERAPEUTICS, INC.,

a Delaware corporation

as Tenant.

SORRENTO R&D

SUMMARY OF BASIC LEASE INFORMATION

This Summary of Basic Lease Information (the “ Summary ”) is hereby incorporated by reference into and made a part of the attached Office Lease. Each reference in the Office Lease to any term of this Summary shall have the meaning as set forth in this Summary for such term. In the event of a conflict between the terms of this Summary and the Office Lease, the terms of the Office Lease shall prevail. Any initially capitalized terms used herein and not otherwise defined herein shall have the meaning as set forth in the Office Lease.


TERMS OF LEASE
(References are to the Office Lease)			DESCRIPTION

1.	Dated as of:		June 16, 2016 (the “ Effective Date ”)

2.	Landlord:		AGP SORRENTO R&D, LP,
			a Delaware limited partnership

3.	Address of Landlord (Section 25.15):		AGP SORRENTO R&D, LP
			c/o Parallel Capital Partners, Inc.
			4105 Sorrento Valley Boulevard
			San Diego, CA 92121
			Attn: Mr. Matthew Root

4.	Tenant:		ZAVANTE THERAPEUTICS, INC.,
			a Delaware corporation

5.	Address of Tenant (Section 25.15):		Zavante Therapeutics, Inc.
			12670 High Bluff Drive
			San Diego, CA 92130
			(Prior to Lease Commencement Date)

			and

			Zavante Therapeutics, Inc.
			11750 Sorrento Valley Road, Suite 250
			San Diego, California 92121
			(After Lease Commencement Date)

6.	Premises (Article 1):

	6.1	Premises:	Approximately 4,420 rentable square feet of space located on the second (2 nd ) floor of the Building (as defined below), as set forth in Exhibit A attached hereto, known as Suite 250.

	6.2	Building:	The Premises are located in the “ Building ” whose address is 11750 Sorrento Valley Road, San Diego, California 92121.

7.	Term (Article 2):

	7.1	Lease Term:	Thirty-six (36) months.

	7.2	Option Term(s):			One (1) option for thirty-six (36) months.

	7.3	Lease Commencement Date:			The earlier of (i) the date Tenant occupies all or a portion of the Premises, and (ii) the date that the Premises are Ready For Occupancy (as defined in Exhibit D attached hereto), which Lease Commencement Date is anticipated to be July 15, 2016.

	7.4	Lease Expiration Date:			The last day of the month in which the third (3 rd ) anniversary of the Lease Commencement Date occurs.

	7.5	Lease Amendment:			Landlord and Tenant shall confirm the Lease Commencement Date and the Lease Expiration Date in an Amendment to the Lease ( Exhibit C ) to be executed pursuant to Article 2 of the Office Lease.

8.	Base Rent (Article 3):

						Monthly Base
			Monthly Installment			Rental Rate per
	Lease Months		of Base Rent			Rentable Square Foot

	1 – 36*		$	10,033.40		$	2.27


	* Subject to abatement as set forth in Article 3, below.

	8.1	Payment of Rent:			Rent checks shall be made payable to and sent to the following lockbox address:

					AGP SORRENTO R&D, L.P.
					PO Box 30308-05
					Department 1175
					Los Angeles, CA 90030-0308

9.	Additional Rent (Article 4):

	9.1	Base Year:			Calendar year 2016.

	9.2	Tenant’s Share:			22.54% (4,420 rentable square feet within the Premises / 19,612 rentable square feet within the Building) (See Section 4.2.7 of Office Lease).

	9.3	Electrical Usage in Premises:			Notwithstanding anything to the contrary contained in this Lease, at Landlord’s election, from time to time, Tenant shall pay directly to the charging utility all charges, surcharges and other fees (however denominated) for electrical services used in the Premises during the Term of this Lease.

10.	Security Deposit (Article 20):				$10,033.40

11.	Intentionally Omitted.

The foregoing terms of this Summary are hereby agreed to by Landlord and Tenant.

“Landlord”	AGP SORRENTO R&D, LP,
	a Delaware limited partnership

	By:	Parallel Capital Partners, Inc.,
		a California corporation,
		its authorized agent

		By:	/s/ Jim Ingebritsen
		Name:	Jim Ingebritsen
		Its:	President

“ Tenant ”

	ZAVANTE THERAPEUTICS, INC.,
	a Delaware corporation

	By:	/s/ Theodore R. Schroeder
	Name:
	Its:

	By:
	Name:
	Its:

TABLE OF CONTENTS

		Page

ARTICLE 1	BUILDING COMPLEX, BUILDING AND PREMISES; RIGHT OF FIRST OFFER; EXISTING LEASE CONTINGENCY	1
ARTICLE 2	LEASE TERM	3
ARTICLE 3	BASE RENT	5
ARTICLE 4	ADDITIONAL RENT	5
ARTICLE 5	USE OF PREMISES	12
ARTICLE 6	SERVICES AND UTILITIES	13
ARTICLE 7	REPAIRS	15
ARTICLE 8	ADDITIONS AND ALTERATIONS	15
ARTICLE 9	COVENANT AGAINST LIENS	17
ARTICLE 10	INSURANCE	17
ARTICLE 11	DAMAGE AND DESTRUCTION	20
ARTICLE 12	CONDEMNATION	21
ARTICLE 13	COVENANT OF QUIET ENJOYMENT	22
ARTICLE 14	ASSIGNMENT AND SUBLETTING	22
ARTICLE 15	SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES	25
ARTICLE 16	HOLDING OVER	26
ARTICLE 17	ESTOPPEL CERTIFICATES	27
ARTICLE 18	SUBORDINATION	27
ARTICLE 19	DEFAULTS; REMEDIES	28
ARTICLE 20	SECURITY DEPOSIT	30
ARTICLE 21	SIGNS	31
ARTICLE 22	COMPLIANCE WITH LAW	31
ARTICLE 23	ENTRY BY LANDLORD	32
ARTICLE 24	TENANT PARKING	32
ARTICLE 25	MISCELLANEOUS PROVISIONS	33

EXHIBITS:

A	FLOOR PLAN OF PREMISES

B	RULES AND REGULATIONS

C	AMENDMENT TO LEASE

D	TENANT WORK LETTER

E	ESTOPPEL CERTIFICATE

INDEX

	Page(s)

ADA	31
Alterations	15
Amendment	Exhibit C
Base Expenses	6
Base Rent	5
BOMA	2
Brokers	35
Building	Summary
Building Complex	1
Building Complex Parking Area	1
Building Hours	14
Child Care Facilities	34
Child Care Provider	34
Claims	17
Cost Pools	7
Effective Date	Summary
Embargoed Person	39
Estimate	10
Estimate Statement	10
Estimated Excess	10
Excess	9
Excluded Changes	31
Expense Year	6
Force Majeure	35
Hazardous Materials	13
Holidays	14
HVAC	13
Interest Notice	4
Interest Rate	11
Landlord	1
Landlord Parties	17
Lease	1
Lease Commencement Date	3
Lease Expiration Date	4
Lease Term	3
Lease Year	4
List	38
Notices	35
OFAC	38
Operating Expenses	6
Option Notice	4
Option Rent	4
Option Rent Notice	4
Option Term	4
Original Tenant	3
Other Buildings	1
Other Improvements	37
Outside Agreement Date	5
personal goods or services vendors	Exhibit B
Premises	1
Project Expenses	8
Proposition 13	8
Real Property	1

	Page(s)

Remedial Work	13
Renovations	37
rent	29
rentable square feet	2
Rules and Regulations	1
Security Deposit	30
Statement	10
Subject Space	22
Subleasing Costs	24
Summary	Summary
Systems and Equipment	9
Tax Expenses	8
Tenant	1
Tenant Affiliates	13
Tenant’s Share	9
Transfer Notice	22
Transfer Premium	23
Transferee	22
Transfers	22

iii

Exhibit 10.7

Confidential

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

Manufacturing & Supply Agreement

This Manufacturing and Supply Agreement (the “ Agreement ”) is made as of this 28 day of July, 2016 (the “ Effective Date ”) by and between Zavante Therapeutics, Inc. , a corporation organized under the laws of the State of Delaware, USA, with a place of business located at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, USA (“ Zavante ”), and Ercros, S.A., a Spanish company with a principal place of business at Paseo del Deleite s/n, 28300 Aranjuez, Spain (“ Ercros ”). Zavante and Ercros may each be referred to herein as a “ Party ” and, collectively, as the “ Parties .”

WHEREAS, Zavante is looking to obtain regulatory approval to market a finished dosage form of the Product (as defined herein) in the Territory (as defined herein); and

WHEREAS, Zavante desires to establish a development and commercial relationship with Ercros for the exclusive supply of the API Mixture to Zavante for the manufacture of the Product for the Territory, and Ercros desires to supply the API Mixture exclusively to Zavante for manufacture of the Product for the Territory;

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the Parties agree as follows.

Article 1: Definitions

· “ Affiliate ” means any corporation or non-corporate entity that directly or indirectly controls, is controlled by, or is under common control with a Party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation; or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

· “ Agreement ” means this Manufacturing and Supply Agreement.

· “ API ” or “Active Pharmaceutical Ingredient” means the active pharmaceutical ingredient, sterile fosfomycin sodium. The API shall meet European Pharmacopoeia 01/2008: 1329 monograph specifications; in the event that FDA requires any other specification, Ercros will use its best efforts to comply with FDA requirements, for approval in the Territory.

· “ API Mixture ” means a blend of fosfomycin sodium and succinic acid to obtain intravenous quality, according to the API Mixture Specifications.

· “ API Mixture Specifications ” means the specifications for the API Mixture set forth in ANNEX 1 attached hereto, as amended from time to time in accordance with this Agreement.

· “ Applicable Laws ” means all laws, regulations applicable to the performance by each Party of its obligations under this Agreement including, but not limited to, the provisions of the FDC Act; cGMPs; FDA’s regulations for drug establishment registration; the other rules and regulations promulgated under the FDC Act relating to the manufacture of pharmaceutical products; and equivalent laws, regulations and standards promulgated by Regulatory Authorities.

· “ cGMPs ” means the regulations set forth in United States Code of Federal Regulations Section 21, Parts 210—

211, 820 and Section 21 Subchapter C (Drugs), as amended from time to time.

· “ Commercially Reasonable Efforts ” means what a reasonable person would do in the individual circumstance, taking all factors into account, as judged by the standards of the applicable business, in this case pharmaceuticals, including reasonable consideration of its own business interests and the level of assumed risk and investment, relevant and in proportion to that party’s business expectations. Commercially Reasonable Efforts should be consistent with good faith business judgments.

· “ Damag e” shall have the meaning set forth in Section 7.2.

· “ Disclosure ” shall have the meaning set forth in Section 12.4.

· “ Drug Master File ” or “ DMF ” means mean Ercros’ drug master file relating to Fosfomycin Disodium for IV Injection, including confidential portions, required for manufacturing, marketing and selling the Product in the Territory.

· “ Effective Date ” means the date set forth in the first paragraph of this Agreement.

· “ Ercros ” has the meaning set forth in the first paragraph of this Agreement.

· “ ERN ” means Laboratorios ERN, S.A., a Spanish company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain.

· “ Ercros Indemnitees ” shall have the meaning set forth in Section 12.1.

· “ Ercros Intellectual Property Rights ” means all Intellectual Property Rights owned by or licensed to Ercros, including any of Ercros’ General Developments used in the development, production and manufacture of the API Mixture.

· “ Facility ” means any facility in which any aspect of this Agreement is performed by Ercros.

· “ FCPA ” shall have the meaning set forth in Section 15.3.

· “ FDA ” means the United States Food and Drug Administration, and any successor agency of the United States government.

· “ FDC Act ” means the United States Federal Food, Drug and Cosmetic Act, as amended from time to time.

· “ First Commercial Sale ” means the first sale or other commercial disposition by Zavante or any of Zavante’s Affiliates or licensees of the Product to any Third Party for value in an arm’s length transaction.

· “ Foreground Intellectual Property Rights ” means any and all of the Intellectual Property Rights developed with respect to, or for incorporation into, the API Mixture or the Product, that are either developed by Zavante alone, by Zavante and Ercros jointly, or by Ercros alone as requested by Zavante in connection with this Agreement.

· “ GDUFA ” means the Generic Drug User Fee Amendments of 2012 to the FDC Act, as amended from time to time.

· “ General Developments ” means any and all inventions, discoveries, know-how, information, data, writings, and other Intellectual and Industrial Property, in any form whatsoever, both tangible and intangible, developed by Ercros or Zavante in the course of performance under this Agreement which do not specifically relate to the Product, the API, or the API Mixture.

· “ ICH ” means the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use.

· “ Initial Term ” shall have the meaning set forth in Section 13.1.

· “ Intellectual Property Rights ” means all industrial and other intellectual property rights comprising or relating to: (a) patents (including all reissues, divisionals, provisionals, continuations and continuations-in-part, re-examinations, renewals, substitutions and extensions thereof), patent applications, and other patent rights and any other indicia of invention ownership (including inventor’s certificates, petty patents and patent utility models) issued by a governmental authority; (b) all rights in and to trademarks, service marks, trade dress, trade names, brand names, logos, symbols, trade dress, corporate names and domain names and other similar designations of source, sponsorship, association or origin, together with the goodwill symbolized by any of the foregoing, in each case whether registered or unregistered and including all registrations and applications for, and renewals or extensions of, such rights and all similar or equivalent rights or forms of protection in any part of the world; (c) internet domain names, whether or not Trademarks, registered by any authorized private registrar or any governmental authority, web addresses, web pages, website and URLs; (d) works of authorship, expressions,

designs and design registrations, whether or not copyrightable, including copyrights and copyrightable works, software and firmware, data, data files, and databases and other specifications and documentation; (e) inventions, discoveries, trade secrets, business and technical information and know-how, databases, data collections, patent disclosures and other confidential and proprietary information and all rights therein; (f) all industrial and other intellectual property rights, and all rights, interests and protections that are associated with, equivalent or similar to, or required for the exercise of, any of the foregoing, however arising, in each case whether registered or unregistered and including all registrations and applications for, and renewals or extensions of, such rights or forms of protection pursuant to the Applicable Laws of any jurisdiction throughout in any part of the world.

· “ NDA ” means a New Drug Application and/or an Abbreviated New Drug Application, filed with the FDA, together with all amendments and supplements thereto.

· “ Non-Obvious Damage ” shall have the meaning set forth in Section 7.2.

· “ Obvious Damage ” shall have the meaning set forth in Section 7.1.

· “ Party(ies) ” shall have the meaning set forth in the first paragraph of this Agreement.

· “ Price ” shall have the meaning set forth in ANNEX 2 .

· “ Proceeding ” shall have the meaning set forth in Section 12.4.

· “ Product ” means fosfomycin disodium + succinic acid injection for intravenous use filled, finished and packaged into containers for use by end users.

· “ Purchase Commitment ” shall have the meaning set forth in Section 6.1.

· “ Purchase Order ” shall have the meaning set forth in Section 2.3.

· “ Quality Agreement ” shall have the meaning set forth in Section 11.1.

· “ Recalls” shall have the meaning set forth in Section 11.2.

· “ Regulatory Authority ” means the FDA and the European Medicines Agency (“EMEA”) and any successor agency of the European Union.

· “ Supply Commitment ” shall have the meaning set forth in Section 4.3.

· “ Technical Documentation ” shall mean such technical documentation and data as established by the ICH guidelines and the FDA for submission of the NDA or ANDA, respectively, defined in ANNEX 3.

· “ Term ” shall have the meaning set forth in Section 13.1.

· “ Territory ” means the United States of America, and all of its territories and possessions including, without limitation, its military installations wherever located.

· “ Third Party ” means any individual or legal entity other than Ercros or Zavante, or their respective Affiliates and licensees.

· “ Validation Activities ” means those activities to be performed by Ercros with respect to the API Mixture prior to the First Commercial Sale including, but not limited to, process qualification of content uniformity, analytical testing, preparation of validation technical reports and manufacturing and testing of validation lots.

· “ Zavante ” has the meaning set forth in the first paragraph of this Agreement.

· “ Zavante Indemnitees ” shall have the meaning set forth in Section 12.2.

· “ Zavante’s Intellectual Property Rights ” means all Intellectual Property Rights owned by or licensed to Zavante, including all Foreground Intellectual Property Rights and any Zavante General Developments used in the design, production and manufacturing of the API Mixture.

Article 2: Scope of Agreement

2.1 The objective of this Agreement is, with respect to the API Mixture, to allow Zavante to submit an NDA filing for the Product with the FDA and to establish the basis for the exclusive supply of API Mixture by Ercros to Zavante in anticipation of FDA approval of the Product and, following such approval, for the manufacture of quantities of Product required by Zavante for sale and distribution within the Territory. This objective will be supported by the delivery by Ercros to Zavante of technical documentation, expertise and know-how for the API and API Mixture, and related to Product manufacturing.

2.2 All API Mixture sold by Ercros to Zavante will be manufactured by Ercros in accordance with the terms of this Agreement. This Agreement does not constitute a purchase order. Purchases under this Agreement shall be made only with purchase orders issued by Zavante to Ercros (each, a “ Purchase Order ”). The Purchase Order shall set forth the quantities of API Mixture desired, the desired delivery date and the desired destination for delivery. All terms and conditions of the Purchase Orders shall apply, provided that in the event of a conflict between the terms of any Purchase Order, order acknowledgement, packaging slip or other documentation, and the terms of this Agreement, the terms of this Agreement shall control, unless such documentation specifically states that it overrides conflicting terms of this Agreement and is signed by each of the Parties.

2.3 Ercros will supply to Zavante API Mixture for use by Zavante in support of filing an IND, NDA, or ANDA, as applicable, and for commercial supply of the Product within the Territory. Conditioned upon Zavante complying with the guaranteed purchase requirements set forth in this Agreement, neither Ercros nor any of its Affiliates or licensees shall: (a) manufacture or supply API, API Mixture or the Product to any Third Party for purposes of developing, testing, seeking regulatory approval for, marketing, selling or distributing the Product in the Territory, (b) disclose to any Third Party any information provided to Ercros by or on behalf of Zavante in connection with this Agreement, (c) license, allow, enable, facilitate or assist in any way, directly or indirectly, any Third Party to use the API, API Mixture, Foreground Intellectual Property or General Developments (including, without limitation, the DMF), for purposes of developing, testing, seeking regulatory approval for, marketing, selling or distributing the Product in the Territory, or (d) on its own behalf or on behalf of any Third Party, develop, test, obtain regulatory approval for, market, sell or distribute the Product in the Territory.

2.4 The Parties agree that, irrespective of any other provision of this Agreement, Zavante may provide to ERN copies of all Purchase Orders for the API Mixture, and that Ercros may provide to ERN copies of all invoices for the API Mixture sold to Zavante under this Agreement.

Article 3: Manufacturing

3.1 Ercros shall manufacture the API Mixture at the Facility, in accordance with the API Mixture Specifications. If Ercros wishes to make major changes to the API Specifications or API Mixture Specifications (including, but not limited to, any change that could affect the purity, potency, identity and/or physical properties of the API Mixture or the Product or the site of its manufacture), or if Ercros believes that a change is required by ICH or by any regulatory agency which has jurisdiction over Zavante, Ercros and/or the API Mixture, Ercros shall notify Zavante at least [**] in advance thereof. Such notification shall describe the proposed change in sufficient detail so as to permit Zavante to understand the reasons for the proposed change and evaluate the impact of such change on its development plans, its plans to seek regulatory approval and its commercialization plans for the Product.

3.2 Notwithstanding Section 3.1, if any change to the API Mixture Specifications requires the approval of a Regulatory Authority, such change shall not be implemented by Ercros unless and until such Regulatory Authority has approved such change in writing. For the avoidance of doubt, Ercros shall not supply to Zavante hereunder, and Zavante shall have no obligation to accept, any API Mixture from Ercros manufactured in contravention of this Section 3.2.

3.3 Ercros will use Commercially Reasonable Efforts to enable Zavante to secure approval by the Regulatory Authorities of Ercros as a source of supply of API Mixture for Product. Without limiting the generality of the foregoing, Ercros will supply to Zavante, as soon as possible, sufficient quantities of API Mixture to enable Zavante to support the filing of one or more NDAs for the Product, referencing Ercros as its supplier of API Mixture, and letters authorizing Zavante to exclusively (even with respect to Ercros) reference the DMF in the NDAs and other regulatory submissions for the Product in the Territory. Ercros will be solely responsible for maintaining the DMF and all other regulatory filings and for conducting any other compliance efforts related to manufacturing the API Mixture that are required in order to obtain approval from the FDA of Zavante’s NDAs referencing the DMF and the API Mixture, at no additional cost to Zavante.

3.4 Ercros shall test, or have tested, each lot of API Mixture shipped to Zavante using the analytical testing methodologies which are set forth in the API Mixture Specifications. With each shipment of API Mixture, Ercros shall deliver to Zavante certificates of analysis and compliance from Ercros (a) stating that the API Mixture being shipped has been tested and conforms to the API Mixture Specifications, (b) setting forth in detail the testing methodology employed by Ercros in making the foregoing determination and the results generated by such tests, and (c) confirming compliance with cGMPs, all relevant ICH requirements, and all other Applicable Laws.

3.5 Ercros will bear the cost of any annual fees assessed against it by FDA as a result of Ercros’ being classified as a “ Foreign API Facility ” under GDUFA. However, in the event that Ercros is assessed higher annual fees as a “ Foreign FDF Facility ” under GDUFA as a direct result of Ercros’ supply of the API Mixture to Zavante under this Agreement, Ercros will invoice Zavante for the difference between the then-current “ Foreign API Facility ” GDUFA fee and the “ Foreign FDF Facility ” GDUFA fee, and Zavante will pay the invoiced amount promptly. Notwithstanding the foregoing, in the event that Ercros is assessed fees as a “ Foreign FDF Facility ” under GDUFA in connection with manufacturing activities performed for any Third Parties in addition to Zavante, the amount of such fee charged to Zavante will be shared equally between Zavante and such Third Parties.

Article 4: Forecasts; Supply Commitment

4.1 In order to assist Ercros in planning the production runs for the API Mixture, Zavante shall use its Commercially Reasonable Efforts to provide to Ercros, at least [**] prior to the beginning of each [**], a [**] rolling forecast of the quantities of API Mixture required by Zavante, by [**], for the following [**] period. Zavante shall deliver the first such forecast to Ercros as soon as reasonably practicable following the execution of this Agreement, and will update the forecast every [**] thereafter. Zavante may, at its discretion, update such forecast more frequently. It is understood that all such forecasts are intended to be Zavante’s estimates of its purchase requirements and they shall not be binding upon Zavante; however, Ercros shall, at minimum, supply the amounts specified in Section 4.3.

4.2 After approval of the NDA for the Product, Ercros shall, within [**] after Zavante has provided its [**] forecast, notify Zavante in writing of any anticipated problems it might have with respect to supplying Zavante’s forecasted order quantities. Upon receipt of such notice, the Parties shall promptly discuss the inability to supply the amounts forecasted by Zavante and work in good faith to agree upon revised forecast amounts. Failing agreement, Zavante’s last submitted forecast shall be deemed to be the new [**] forecast.

4.3 Zavante shall place firm Purchase Orders for API Mixture with Ercros at least [**] prior to requested delivery date, except for the Purchase Orders for the [**] after receipt of NDA Approval for the Product, which may be submitted [**], respectively, prior to the requested delivery dates. Within [**] after the date that a Purchase Order is submitted, Ercros shall acknowledge receipt of Zavante’s Purchase Order and confirm that the amounts of API Mixture ordered in the Purchase Order, subject to Section 4.3, will be timely supplied. Subject to such lead-time requirements, Ercros shall deliver to Zavante, pursuant to Purchase Orders provided hereunder, the amount specified in the Purchase Order therefor, which amount may be up to the greater of (a) the amount specified in the most recent forecast for such month or (b) [**] percent ([**]%) of Zavante’s average monthly purchases for the previous [**] (the “ Supply Commitment ”). In addition, Ercros shall use Commercially Reasonable Efforts to deliver any and all ordered amounts in excess of the Supply Commitment.

4.4 Ercros agrees to use Commercially Reasonable Efforts to maintain at the Facility a rolling [**] safety stock of all materials and components required to be used for the manufacture of the API Mixture based on the [**] rolling forecast. Ercros will promptly notify Zavante if Ercros anticipates that its manufacturing capacity at the Facility will be insufficient to fill a Purchase Order submitted by Zavante. Such notice will include the expected duration of the shortage and its impact on the supply of API Mixture to Zavante. Such notification shall not operate to relieve Ercros of its obligations to deliver the ordered amounts of API Mixture or affect Zavante’s right to pursue any remedies that may be available to it. Ercros will use its best efforts to mitigate the impact on Zavante of shortages or other constrained capacity.

Article 5: Order; Delivery

5.1 Each Purchase Order for API Mixture shall specify the quantity of API Mixture ordered and the required delivery date and destination, consistent with the terms of this Agreement. Such delivery dates are “on dock” at the Facility. Deliveries must be made on normal business days of the Facility unless otherwise coordinated between the Parties.

5.2 Delivery of API Mixture shall be EXW (Incoterms 2010) the Facility. Ercros shall arrange for shipping of the API Mixture, with a carrier designated by Zavante, in the manner customarily arranged for its own products from the point of manufacture to the destination specified by Zavante. Ercros shall promptly notify Zavante of the expected delivery date of each order to enable receipt to be coordinated. Ercros shall arrange for export clearances and loading at the port of departure. Expenses for special packaging, export or customs agents, shall be included in Ercros’ invoice and paid by Zavante. Zavante shall arrange for insurance from the Facility to the ultimate destination and import customs clearances at the destination country. Zavante shall be responsible for all loading charges, freight, insurance, import customs clearances, export, special packaging, and other shipping expenses from the Facility to the ultimate destination. Title to the API Mixture and risk of loss, delay or damage in transit for API Mixture purchased by Zavante shall pass to Zavante when a shipment of the Product is placed at the disposal of Zavante’s carrier at the Facility.

5.3 Each shipment of API Mixture shall include certificates of analysis and compliance, which include, without limitation, a statement of compliance with cGMP, and such other documentation and information as may be necessary or desirable for complying with import, export and customs laws, regulations and requirements as applicable.

Article 6: Purchase Commitment; Price; Payment

6.1 Subject to Section 6.3, Zavante agrees to purchase from Ercros at the Price all of its requirements for API Mixture for Product intended for commercial sale in the Territory during the Term (the “ Purchase Commitment ”). Notwithstanding the foregoing, Zavante shall be relieved of such Purchase Commitment in the event that Ercros is unwilling or unable to manufacture and deliver the Supply Commitment to Zavante.

6.2 The Price is firm and not subject to increase for any reason, including changes in market conditions, increases in raw material, component, labor or overhead costs or because of labor disruptions, changes in program timing or length, or fluctuations in production volumes, for the first [**] following the Effective Date. Thereafter, Ercros may increase the Price hereunder no more than [**] period in a per-unit amount solely to the extent necessary to compensate Ercros commercially reasonable manufacturing cost increases (but not to allow for any additional margin).

6.4 Zavante shall have no obligation to comply with its Purchase Commitment in the event of breach by Ercros of any of the terms of this Agreement, which breach is not cured within the period set forth in Section 13.2. In the event the Purchase Commitment terminates pursuant to this Section 6.4, Ercros shall remain obligated to continue to perform under the terms of this Agreement.

6.5 Ercros shall issue its invoice to Zavante at the time of shipment. Each invoice shall set forth, in Euros, the applicable Price for the shipment properly determined in accordance with the provisions of this Agreement. Payment of the invoice by Zavante shall be within [**] following receipt of each such invoice. Payment shall be subject to the inspection and acceptance procedures set forth in Section 7. Zavante may withhold payment of that portion of any invoice that it disputes in good faith pending resolution of such dispute. All invoices and payments shall be in Euros.

Article 7: Inspection of Shipments

7.1 Ercros shall notify Zavante at least [**] prior to each shipment of API Mixture. Zavante or its designated representative shall have the right to visually inspect each shipment of API Mixture at Ercros’ warehouse for obvious

damage and/or shortage (collectively, “ Obvious Damage ”) prior to shipment, and shall promptly provide Ercros with written notice of any such Obvious Damage. Zavante shall be deemed to have accepted any shipment of API Mixture, but only with respect to Obvious Damage, unless Zavante provides the written notice promptly as specified in the foregoing sentence. At its discretion, Zavante may also test, or have tested, any lot of API Mixture supplied to Zavante.

7.2 Promptly after discovery, but before the expiration date of the API Mixture, Zavante may provide Ercros with written notice of any non-obvious damage, including adulteration of the API Mixture, failure to meet Specifications, or other latent damage (collectively, “ Non-Obvious Damage ”). Obvious Damage and Non-Obvious Damage shall hereinafter be collectively referred to as “ Damage . ”

7.3 Zavante may reject any portion of any shipment of API Mixture which contains any Damage by providing written notice to Ercros of its rejection. Zavante agrees to provide Ercros’ Quality Control Department with documentation of Damage to confirm the existence thereof in connection with any notice of rejection.

7.4 If Ercros and Zavante disagree as to the existence of Damage, then they will diligently and in good faith repeat the analyses of samples from the shipment in question and implement suitable controls to determine the source of the discrepancy in results and the cause of any detected Damage, applying all objective and sound principles of scientific investigation. If, after such repeated analyses, Ercros and Zavante continue to disagree, they will then submit representative samples of the shipment to a mutually acceptable independent testing lab and the results of said lab shall be binding on Ercros and Zavante. The costs associated with such submission shall be borne by the Party against which the lab decided.

7.5 Provided Zavante provides notice of the Damage claimed within [**] of receipt of the allegedly Damaged API Mixture in the case of Obvious Damage, and promptly following the date on which Zavante becomes aware of the allegedly Damaged API Mixture in the case of Non-Obvious Damage, whether or not Ercros accepts Zavante’s basis for rejection, promptly on receipt of a notice of rejection and/or shortage, Ercros shall, at Zavante’s request: (a) at no additional cost to Zavante, deliver to Zavante quantities of replacement API Mixture equal to the rejected or short quantities as soon as reasonably practicable thereafter, and in no event more than [**] after such notice is given; or (b) refund to Zavante the invoice price for the Damaged API Mixture. Ercros will use expedited means of transport, if so requested by Zavante, at Zavante’s expense unless such API Mixture being replaced is determined to have been Damaged. Any destruction or return of Damaged API Mixture to Ercros shall be at Ercros’ expense.

Article 8: Confidentiality

8.1 During the term of this Agreement and for a period of [**] following termination or expiration of this Agreement, each of Zavante and Ercros agrees not to publish, disclose or use for any purpose other than its performance hereunder, any information disclosed by the other Party which is Ercros Intellectual Property or Zavante Intellectual Property, respectively, or which is designated as proprietary or confidential, including API, API Mixture, and all Technical Documentation and know-how associated therewith, whether or not identified or labeled as confidential information (“ Confidential Information ”), including, without limitation, information stored on audio or video tapes and disks, or information or knowledge visually acquired by or generated by Zavante or Ercros personnel in the form of written notes and memoranda memorializing information or knowledge acquired visually, aurally or orally in the course of either Party’s performance hereunder.

8.2 Each Party (the “ Receiving Party ”) shall limit disclosure of Confidential Information received hereunder from the disclosing party (the “ Disclosing Party ”) to only those officers and employees, and in the case of Zavante, consultants, of the Receiving Party (or its Affiliates’) who are directly concerned with the performance of this Agreement, on a need-to-know basis. Each Party shall advise such officers or employees, and in the case of Zavante, consultants, upon disclosure of any Confidential Information to them of the confidential nature of the Confidential Information and the terms and conditions of this Article 8, and shall use all reasonable safeguards to prevent

unauthorized disclosure of the Confidential Information by such officers and employees, and in the case of Zavante, consultants.

8.3 Each Party agrees that the following shall not be considered Confidential Information subject to this Agreement: (a) information that is in the public domain by publication or otherwise, provided that such publication is not in violation of this Agreement or any other confidentiality agreement to which one of the Parties is bound; (b) information that the Receiving Party can establish in writing was in the Receiving Party’s possession prior to the time of disclosure by the Disclosing Party and was not acquired, directly or indirectly, from the Disclosing Party, other than a disclosure that originated from the Disclosing Party without restriction on further disclosure; (c) information that the Receiving Party lawfully receives from a Third Party; provided, however, that such Third Party was not obligated to hold such information in confidence; (d) information that, prior to the Disclosing Party’s disclosure thereof, was independently developed by the Receiving Party without reference to any Confidential Information as established by appropriate documentation; and (e) information that the Receiving Party is compelled to disclose by a court, administrative agency, or other tribunal; provided however, that in such case the Receiving Party shall immediately give as much advance written notice as feasible to the Disclosing Party to enable the Disclosing Party to exercise its legal rights to prevent and/or limit such disclosure. In any event, the Receiving Party shall disclose only that portion of the Confidential Information that, in the opinion of the Receiving Party’s legal counsel, is legally required to be disclosed and will exercise reasonable best efforts to ensure that any such information so disclosed will be accorded confidential treatment by said court, administrative agency or tribunal.

8.4 All Confidential Information shall remain the property of the Disclosing Party. Upon the termination of this Agreement, or at any time upon the request of the other Party, the Receiving Party shall immediately return or destroy any Confidential Information in the Receiving Party’s possession, custody or control, except that the Receiving Party may keep one (1) physical copy for archival and regulatory purposes. Confidential Information in digital form may be retained for archival and/or regulatory purposes only if stored in a way that restricts access to persons with a legitimate need to know and Commercially Reasonable Efforts are used to prevent additional copies from being made. The Disclosing Party’s failure to request the return of Confidential Information shall not relieve the Receiving Party of its confidentiality obligations under this Agreement.

8.5 Each Party acknowledges and expressly agrees that the remedy at law for any breach by it of the terms of this Article 8 shall be inadequate and that the full amount of damages which would result from such breach are not readily susceptible to being measured in monetary terms. Accordingly, in the event of a breach or threatened breach by either Party of this Article 8, the other Party shall be entitled to immediate injunctive relief prohibiting any such breach and requiring the immediate return of all Confidential Information. The remedies set forth in this Section 8.5 shall be in addition to any other remedies available for any such breach or threatened breach, including the recovery of damages from the breaching Party.

8.6 The terms and conditions of this Agreement, but not the fact of its existence, shall constitute Confidential Information of Zavante, except that any Party may disclose such terms and conditions to its Affiliates in accordance with Section 8.2 hereof.

Article 9: Intellectual Property .

9.1 All Ercros Intellectual and Industrial Property is the property of Ercros. Zavante shall have, and Ercros hereby grants to Zavante and ERN, a non-exclusive, non-transferable (except in accordance with Section 15.6), and with the right to sublicense in accordance with Section 9.2, license for the Territory to exploit, reproduce and distribute any Ercros Intellectual and Industrial Property solely to the extent necessary to assist Zavante in its performance hereunder (including for the avoidance of doubt, any copyright included in the Ercros Intellectual and Industrial Property), to the maximum extent permitted under law, which license shall include, without limitation, the right to disclose, report and include any Ercros Intellectual and Industrial Property and any General Developments in any filings or regulatory submissions to FDA or any other regulatory bodies in the United States or elsewhere in connection with the Products.

9.2 Zavante shall have the right to sublicense the rights granted to it under Section 9.1 to any of its Affiliates and to any Third Party solely to the extent necessary to manufacture the Product and to obtain approvals from Regulatory Authorities and as reasonably required to import, use, market, promote, sell, and offer for sale of the Product in the Territory.

9.3 Zavante shall acquire no other right, title or interest in the Ercros Intellectual and Industrial Property as a result of its performance hereunder except as set forth in this Article 9, including, without limitation, any right to manufacture or have manufactured the API or API Mixture using any Ercros Intellectual and Industrial Property.

Article 10: Representations and Warranties

10.1 Ercros hereby represents, warrants and covenants as follows:

10.1.1 At all times during the term of this Agreement, the Facility shall remain in compliance with, and the API Mixture shall be manufactured and delivered in compliance with, all Applicable Laws, including but not limited to, the provisions of the FDC Act and the cGMPs; FDA’s regulations for drug establishment registration; the API Specifications; the other rules and regulations promulgated under the FDC Act relating to the manufacture of pharmaceutical products.

10.1.2 No API Mixture constituting or being a part of any shipment to Zavante shall at the time of any such shipment be adulterated within the meaning of the FDC Act, or the rules and regulations promulgated thereunder, as such law, rule or regulation is constituted and in effect at the time of any such shipment.

10.1.3 All API Mixture supplied to Zavante hereunder (a) shall comply with the API Mixture Specifications; (b) shall have been manufactured, stored and shipped in accordance with the API Mixture Specifications, applicable approvals from Regulatory Authorities and all Applicable Laws, (c) may be used to manufacture Product introduced into public commerce consistent with the intended use for API Mixture pursuant to Applicable Laws, and (d) will have, at the time of shipment, a remaining shelf life of not less than [**].

10.1.4 All necessary licenses, permits or approvals required by Applicable Laws in connection with the manufacture, storage, and shipment of API Mixture, including without limitation permits related to the Facility, shall be obtained and maintained.

10.1.5 Ercros will (a) respond fully and accurately to all inquiries directed to it by the FDA or any other Regulatory Authority that may impact the quality or timely delivery of API Mixture and promptly notify Zavante of same, (b) assist Zavante in responding to inquiries directed to Zavante by the FDA or other Regulatory Authorities,

and (iii) provide the FDA or other Regulatory Authorities with such information and data as is requested by the FDA or other Regulatory Authorities with respect to the manufacture, use, route of synthesis and testing of the API Mixture.

10.1.6 The Facility is in full compliance with cGMP.

10.1.7 Ercros has disclosed to Zavante all warning letters or similar notices relating to its manufacturing facilities or import alerts (including FDA Form 483’s), if any, for products manufactured in its facilities issued during the last [**] and Ercros will during the term disclose in timely fashion all such letters, alerts and notices.

10.1.8 Ercros has, and shall maintain, sufficient facilities, personnel and resources to meet its obligations to supply API Mixture under this Agreement.

10.1.9 Ercros is not aware of any claim by a Third Party that Ercros’ process for manufacturing the API Mixture supplied hereunder would infringe, misappropriate or violate any patent, trade secret or other intellectual property right of such Third Party.

10.1.10 Ercros does not employ, engage or otherwise use any child or forced labor in any form, and will comply with all Applicable Laws regarding employee compensation, employment rights, health and safety conditions and environmental protection.

10.2 Each Party represents and warrants that all corporate action on its part and on the part of each of its officers and directors necessary for the authorization, execution and delivery of this Agreement has been taken, it has the full right and authority to enter into this Agreement and perform its obligations hereunder and that it is not aware of any obligations owed to Third Parties that would conflict with its ability to perform its obligations hereunder.

10.3 If requested in writing by Zavante, Ercros shall permit Zavante or its authorized representatives to inspect Ercros’ facilities and records and be given access to Ercros’ personnel (at reasonable times, upon reasonable advance notice and in the company of an Ercros representative, as the case may be, during normal business hours), to the extent Zavante deems reasonably necessary to enable Zavante to verify compliance by Ercros with its obligations under this Agreement and to verify compliance with any Applicable Laws.

10.4 Zavante shall provide Ercros copies of product complaints, or notices or inquiries from the FDA or other Regulatory Authorities, which raise issues with respect to the manufacture or product quality of the API Mixture provided by Ercros to Zavante. Ercros shall fully and appropriately investigate such matters and provide Zavante with a report of its investigation. In the event that Ercros receives any complaint, claims or adverse reaction reports regarding API Mixture, including notices from the FDA regarding any alleged regulatory non-compliance of API Mixture, Ercros shall promptly and not more than [**] after receipt, provide to Zavante all information contained in the complaint, report or notice and such additional information regarding API Mixture as Zavante may reasonably request. Ercros shall comply, at a minimum, with FDA requirements for complaint handling with respect to such complaints, claims or adverse reaction reports.

10.5 Zavante and Ercros each further represents and warrants that it shall comply with all Applicable Laws in the performance of its obligations hereunder.

10.6 Ercros shall promptly notify Zavante of any problems or unusual production situations that have, or are reasonably likely to have, an adverse effect on Ercros’ ability to perform its obligations hereunder or to deliver the API Mixture to Zavante in a timely manner. In addition, Ercros shall notify and, if applicable, provide copies of any notices or communications to, Zavante of any FDA or other governmental agency inspection, investigation or other inquiry or communication relating to the manufacture of the API Mixture or to any facility at which the API Mixture is manufactured, including, but not limited to, any FDA FORM 483 or warning letter, promptly and not more than [**] after Ercros becomes aware of such inspection, investigation or other inquiry or communication and shall

promptly thereafter provide to Zavante a written summary of all findings and corrective actions taken or planned by Ercros, including any written responses from Ercros to the FDA or other governmental agency. Such notices shall not operate to relieve Ercros of their obligations to deliver the ordered amounts of API Mixture or affect Zavante’s right to pursue any remedies that might be available to it.

10.7 Ercros covenants that it will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended under 21 U.S.C. §335(a) or (b). Ercros represents that it does not currently have, and covenants that it will not hire, as an officer or an employee, any person who has been convicted of a felony under the laws of the United States for conduct relating to the regulation of any drug product under the Act.

10.8 Ercros and Zavante shall each maintain commercial general liability insurance with a minimum limit per occurrence or accident of $[**] and an annual aggregate limit of $[**] and product liability insurance with a minimum limit per occurrence or accident of $[**] and an annual aggregate limit of $[**] for the term of this Agreement and for [**] thereafter. Notwithstanding the foregoing, in connection with the commencement of commercial sales of the Product in the Territory, Zavante and Ercros shall each increase its insurance coverage to a minimum limit per occurrence or accident of $[**] and an annual aggregate limit of $[**] for the term of this Agreement and for [**] thereafter. Upon request, Zavante will provide to Ercros copies of insurance certificates reflecting the above. Upon request, the parties will provide copies of insurance certificates reflecting the above.

10.9 Ercros shall immediately notify Zavante of any information of the following kind about API Mixture provided to Zavante:

10.9.1 information indicating that shipped product has not been manufactured or supplied in accordance with the API Mixture Specifications, cGMP, this Agreement or in compliance with Applicable Laws; and

10.9.2 information concerning any bacteriological contamination, or any significant chemical, physical or other changes or deterioration in the API Mixture, or the failure of one or more shipped lots of API Mixture to meet the API Mixture Specifications, including stability parameters.

Article 11: Quality and Regulatory Matters.

11.1 Quality Agreement . Within [**] following the execution of this Agreement, the Parties shall in good faith negotiate and execute a Quality Agreement concerning the API Mixture (the “ Quality Agreement ”). Upon execution and delivery of the Quality Agreement by both Zavante and Ercros, the Quality Agreement shall automatically become part of this Agreement, and any breach of the Quality Agreement shall be deemed a breach of this Agreement. The terms contained in the Quality Agreement are intended to complement the terms of this Agreement, and they shall be interpreted as complementary to the extent possible. In the event of a conflict between the terms of the Quality Agreement and the terms of this Agreement, the terms of the Quality Agreement shall control with respect to quality control and quality assurance matters related to the API Mixture (including, without limitation, manufacturing, testing, storage, release, change management and validation activities), and this Agreement shall control with respect to all other matters. The inclusion of a particular term or level of detail in the Quality Agreement where such term or level of detail is absent from this Agreement shall not be deemed to constitute a conflict between the two agreements. Only where competing terms in the two agreements conflict in terms of the principal focus of an express prescription or prohibition in the agreements shall a conflict between the two agreements be deemed to exist.

11.2 Recalls. Ercros and Zavante will each maintain records necessary to permit voluntary and involuntary recalls or other related actions of the Product delivered by Zavante to its customers (collectively, “ Recalls ”). As used herein, the term, “Recall” includes any action (i) by Zavante to recover title to or possession of quantities of the API Mixture or the Product sold or shipped to Third Parties (including, without limitation, the voluntary withdrawal of Product from the market); or (ii) by any Regulatory Authorities to detain or destroy any of the API Mixture and/or the Product. Recall will also include any action by either Party to refrain from selling or shipping quantities of the API Mixture

and/or the Product to Third Parties which would have been subject to a Recall if sold or shipped. Each Party will promptly notify the other by telephone (to be confirmed in writing) of any information which might affect the marketability, safety or effectiveness of the API Mixture and/or the Product or which might result in the Recall or seizure of the API Mixture and/or the Product. Upon receiving this notice or upon this discovery, Ercros will stop making any further shipments of any API Mixture in its possession or control until a decision has been made whether a Recall or some other corrective action is necessary. Zavante will have the responsibility for handling customer returns of the Product, and Ercros will give Zavante any assistance that Zavante may reasonably require to handle any such returns. The decision to initiate a Recall or to take some other corrective action, if any, will be made and implemented solely by Zavante.

11.3 Cooperation . lf (a) any Regulatory Authority issues a directive, order or, following the issuance of a safety warning or alert about the Product or API Mixture, a written request that any Product or API Mixture should be Recalled, (b) a court of competent jurisdiction orders a Recall of any Product or API Mixture, or (c) Zavante determines that any Product or API Mixture should be Recalled or that a “Dear Doctor” letter (or other communication regarding the Product directed to healthcare professionals) is required relating the restrictions on the use of any Product, Ercros will fully co-operate as required by Zavante, having regard to all Applicable Laws.

11.4 Ercros will permit Zavante or its representative to monitor and inspect, as reasonably needed, that portion of the Facility where the API Mixture is manufactured, packaged or stored and review such related documents as is reasonably necessary for the purpose of assessing Ercros’ compliance with Applicable Laws, API Mixture Specifications, Ercros’ applicable manufacturing and quality control and assurance procedures, and this Agreement. Any Zavante employee or representative present at the Ercros Facility will adhere to all applicable Ercros policies, safety and security procedures.

11.5 Healthcare Provider or Patient Inquiries. Zavante will have the sole responsibility for responding to questions and complaints regarding the Product from its customers. Questions or complaints received by Ercros from Zavante’s customers, healthcare providers or patients will be promptly referred to Zavante. Ercros will co-operate as required to allow Zavante to determine the cause of and resolve any questions and complaints. This assistance will include follow-up investigations, including testing. In addition, Ercros will give Zavante all mutually agreed upon information that will enable Zavante to respond properly to questions or complaints about the API Mixture as set forth in the Quality Agreement.

11.6 Reports . Ercros will supply on an annual basis and at no cost to Zavante, all data regarding the API Mixture in its control, including release test results, complaint lest results, and all investigations (in manufacturing, testing, and storage), that Zavante reasonably requires in order to complete any filing under any applicable regulatory regime, including any Annual Product Review Report that Zavante is required to file with the FDA or any other Regulatory Authority. At Ercros’ request, Zavante will provide a copy of the Annual Product Review Report to Ercros.

11.7 Regulatory Filings . Zavante will have the sole responsibility for filing all documents with all Regulatory Authorities and taking any other actions that may be required for the receipt and/or maintenance of Regulatory Authority approval for the Product in the Territory including, without limitation, NDAs. Ercros shall: (a) ensure that the DMF remains in effect and good standing with the FDA during the Term; (b) provide access to the DMF and such other Technical Documentation as may be requested by Zavante; (c) notify Zavante at least [**] in advance of any amendments or additional information to the DMF; and (d) otherwise assist Zavante to obtain NDAs for the Product as quickly as reasonably possible.

Article 12: Indemnification

12.1 Zavante hereby agrees to and shall defend, indemnify, and hold harmless Ercros, their affiliates and each of their respective employees, officers, directors and agents (the “ Ercros Indemnitees ”), from, against, and in respect

of, any and all losses, judgments, damages, liabilities, suits, actions, expenses (including reasonable attorney’s fees), and proceedings arising from any claims of any Third Party to the extent resulting from:

12.1.1 any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Zavante under this Agreement;

12.1.2 any claim, complaint, suit, proceeding or cause of action against any of the Ercros Indemnitees alleging physical injury or death, brought by or on behalf of an injured party, or loss of service or consortium or a similar such claim, complaint, suit, proceeding or cause of action brought by a spouse, relative or companion of an injured party due to such physical injury or death, and in each case arising out of the Products, except to the extent resulting from (i) any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Ercros under this Agreement, (ii) any negligence or willful misconduct of the Ercros Indemnitees in performing this Agreement, or (iii) any claim subject to Ercros’ indemnification obligations under Section 12.2;

12.1.3 any negligence or willful misconduct of Zavante, its employees, officers and directors in performing this Agreement; and

12.1.4 any claim of patent infringement relating to a Product or the process for manufacturing a Product (excluding any claim of patent infringement arising out of or relating to the Product or the process for manufacturing the Product), which claim, if true, would be in contravention of the representations, warranties and covenants of Zavante hereunder.

12.. Ercros hereby agrees to and shall defend, indemnify, and hold harmless Zavante, its affiliates and each of their respective employees, officers, directors and agents (the “ Zavante Indemnitees ”), from, against, and in respect of, any and all losses, judgments, damages, liabilities, suits, actions, expenses (including reasonable attorney’s fees), and proceedings arising from any claims of any Third Party to the extent resulting from:

12.2.1 any misrepresentation, breach of warranty, or the nonfulfillment of any obligation, covenant, or duty on the part of Ercros under this Agreement;

12.2.2 any claim, complaint, suit proceeding or cause of action against any of the Zavante Indemnitees alleging physical injury or death, brought by or on behalf of an injured party, or loss of service or consortium or a similar such claim, complaint, suit, proceeding or cause of action brought by a spouse, relative or companion of an injured party due to such physical injury or death, and in each case arising out of the API Mixture supplied by Ercros to Zavante, except to the extent resulting from (i) any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Zavante under this Agreement, (ii) any negligence or willful misconduct of the Zavante Indemnitees in performing this Agreement, or (iii) any claim subject to Zavante’s indemnification obligations under Section 12.1;

12.2.3 any negligence or willful misconduct of Ercros or their respective employees, officers or directors in performing this Agreement; and

12.2.4 any claim of patent infringement relating to the API Mixture supplied to Zavante or the process for manufacturing the API Mixture supplied to Zavante which claim, if true, would be in contravention of the representations, warranties and covenants of Ercros hereunder.

12.3 The foregoing indemnification obligations are subject to the following: (a) the indemnifying Party must be notified by or on behalf of the indemnified Party in writing promptly after a claim is made, a suit is filed or an action or investigation is initiated (each, a “ Proceeding ”) against the indemnified Party, unless such delay does not materially prejudice the indemnifying Party; (b) subject to the provisions set forth below in this Section 10.4, the indemnifying Party shall be permitted to defend, control, conduct and prosecute, in the indemnifying Party’s sole discretion and by

counsel of the indemnifying Party’s choosing, the defense of such Proceeding brought against the indemnified Party; (c) the indemnifying Party shall have the right in its sole discretion to settle, compromise or otherwise terminate the Proceeding solely upon the payment of money; provided , that, there is no finding or admission of any violation by any indemnified Party of (i) any law, rule or regulation or (ii) the rights of any person; and provided, further , that, no such settlement shall prohibit any indemnified Party from importing the Product into the United States or making, using or selling products in the United States made from such Product; (d) the indemnified Party shall refrain from settling (or endeavoring to settle, or entering into settlement negotiations with respect to) any such Proceeding without the indemnifying Party’s prior written consent; (e) except as may otherwise be required by law, the indemnified Party shall not compromise the position of the indemnifying Party by admission, statements, disclosure or conduct (collectively, “ Disclosure ”) in a way that could prejudice the defense, control, conduct or prosecution of said cause of action (it being understood that no indemnified Party shall be deemed to have violated this provision so long as such Party has acted in good faith to fulfill its obligations under this provision); and (f) the indemnified Party shall cooperate with the indemnifying Party in the defense, conduct, prosecution or termination of the Proceeding, including the furnishing of information and the assistance from employees of the indemnified Party at the indemnifying Party’s reasonable request and expense. With respect to clause (e) above, the indemnified Party will provide the indemnifying Party with prompt written notice in advance of any such Disclosure being made to permit the indemnifying Party to seek an appropriate protective order, restriction on response or withdrawal of the request for Disclosure. If, however, any such request for relief by the indemnifying Party is denied or is otherwise unavailable, the relevant indemnified Party may make the Disclosure without any liability to the indemnifying Party. The indemnified Party may, at its option and expense, participate in the indemnifying Party’s defense with counsel of its own choosing, and if the indemnified Party so participates, the Parties shall cooperate with one another in such defense in a commercially reasonable fashion. Notwithstanding any provision in this Agreement to the contrary, Zavante shall at all times have the right to assume direction and control of the defense of any claim alleging infringement, misappropriation or violation of any patent, trade secret or other intellectual property right of any Third Party; provided , that Zavante will provide Ercros with a reasonable opportunity to review and consult from time to time concerning the strategy and action plan (including possibly pursuing one or more licenses as appropriate), and in such event Ercros shall cooperate and assist as requested in the defense of such claim and if Zavante finds it necessary or desirable to join Ercros or both as parties, Ercros shall execute all papers or perform such other acts as may reasonably be required by Zavante. Further, Ercros shall settle not consent to the entry of any judgment with respect to any such claim, without Zavante’s prior written consent.

12.4 The indemnification rights provided for herein are in addition to, and not in substitution for, any and all remedies available to a Party under this Agreement or otherwise at law or in equity. Notwithstanding anything to the contrary in this Section 12, each Party may, and expressly reserves the right to, seek judicial relief from any court of competent jurisdiction in order to obtain an injunction or other equitable relief.

12.5 IN NO EVENT SHALL EITHER OF THE PARTIES HERETO BE RESPONSIBLE OR LIABLE TO THE OTHER UNDER ANY PROVISION OF THIS AGREEMENT OR UNDER ANY THEORY OF NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, OR EXEMPLARY DAMAGES OR LOST PROFITS.

12.6 Zavante shall have sole control and responsibility for the conduct of all Recalls of the Product; provided, however , that Ercros agrees to reimburse Zavante for all reasonable costs and expenses incurred by Zavante with respect to any Recalls arising out of any of the causes set forth in Sections 12.2.1 through 12.2.4. This Section 12.6 is intended to augment and not limit the indemnification provisions of Sections 12.1 through 12.5 herein.

Article 13: Term and Termination.

13.1 This Agreement shall be effective for a period commencing on the Effective Date and, unless it is earlier terminated pursuant to the terms of this Agreement, continuing until the ten (10) year anniversary of the Effective Date (the “ Initial Term ”) and shall thereafter be automatically renewed for additional two (2) year terms unless

written notice of intent to terminate is provided by either Party to the other Party at least eighteen (18) months prior to the expiration of the Initial Term or any extension term (the “ Term ”).

13.2 This Agreement may be terminated by (a) Zavante upon [**] written notice to Ercros of a failure by Ercros to perform or observe any material covenant, condition or agreement to be performed or observed by it under this Agreement, unless such breach has been cured within the [**] notice period, and (b) Ercros upon [**] written notice to Zavante of a failure by Zavante to perform or observe any material covenant, condition or agreement to be performed or observed by it under this Agreement, unless such breach has been cured within the [**] notice period; provided, however , that with respect to a failure to timely supply ordered quantities of API Mixture under this Agreement, Ercros combined shall have the right to cure such breach no more than [**]during the term of this Agreement unless otherwise agreed by Zavante in writing.

13.3 Zavante may terminate this Agreement effective immediately upon written notice to Ercros in the event that (a) Ercros dissolves, is declared insolvent or bankrupt by a court of competent jurisdiction; (b) a voluntary or involuntary petition of bankruptcy is filed in any court of competent jurisdiction by Ercros; or (c) this Agreement is assigned by Ercros for the benefit of creditors.

13.4 Ercros may terminate this Agreement effective immediately upon written notice to Zavante in the event that (a) Zavante dissolves, is declared insolvent or bankrupt by a court of competent jurisdiction; (b) a voluntary or involuntary petition of bankruptcy is filed in any court of competent jurisdiction by Zavante; or (c) this Agreement is assigned by Zavante for the benefit of creditors.

13.5 Zavante may terminate this Agreement upon thirty (30) days’ prior written notice to Ercros (or a shorter period required by the agency with jurisdiction) in the event that (a) any governmental agency takes any action, or raises any objection, that prevents Zavante from importing, exporting, purchasing or selling the Product for a period reasonably anticipated to endure for more than one hundred twenty (120) days; or (b) Zavante has not obtained FDA approval of the Product within five (5) years after submission of the NDA due to manufacturing problems or failure to supply by Ercros, in which event Zavante shall not be entitled to claim reimbursement for the expense of the IND and NDA, except in the event of gross negligence of Ercros.

13.6 Ercros may terminate this Agreement upon thirty (30) days’ prior written notice to Ercros if Zavante has not obtained FDA approval of the Product within five (5) years, from the Effective Date, provided that any such non-approval is not due to manufacturing problems or failure to supply the API Mixture by Ercros.

13.7 Zavante may terminate this Agreement effective immediately upon written notice to Ercros should any legal proceeding be instituted against Ercros, including, without limitation, a breach of the FCPA by Ercros, which is reasonably likely to materially adversely impact Ercros’ ability to properly perform under this Agreement or subject Zavante to any material risk of liability or loss.

13.8 Ercros may terminate this Agreement effective immediately upon written notice to Zavante should any legal proceeding be instituted against Zavante, including, without limitation, a breach of the FCPA by Zavante, which is reasonably likely to materially adversely impact Zavante’s ability to properly perform under this Agreement or subject Ercros to any material risk of liability or loss.

13.9 The provisions of this Article 13 as to termination shall not limit or restrict the rights of any Party to seek remedies or take measures that may be otherwise available to it at law or equity in connection with the enforcement and performance of obligations under this Agreement.

Article 14: Notices

Any and all notices required to be given under this Agreement will be in writing and effective upon receipt, sent by facsimile transmission, mailed postage prepaid by first-class certified or registered mail, or sent by express courier service, at the respective addresses, as follows:

If to Zavante, to : Zavante Therapeutics, Inc.

11750 Sorrento Valley Road

Suite 250

San Diego, CA 92121, USA

Attention: Chief Operating Officer

Facsimile Number: [ ]

If to Ercros, to :

ERCROS S.A.

Paseo del Deleite s/n

28300 Aranjuez (Madrid)

Spain

Attn: Maria del Carmen Cruzado Rodríguez

Facsimile Number: [**]

Article 15: Miscellaneous

15.1 Force Majeure . In the event that any Party hereto is prevented from complying, either in whole or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, strike or lockout, riot, war, rebellion, lack or failure of transportation facilities, court order, accident, or Acts of God, and to the extent that the foregoing are beyond a Party’s reasonable control, then, unless conclusive evidence to the contrary is provided, upon written notice by the Party whose performance is so affected to the other, the requirements of this Agreement so affected (to the extent affected) shall be suspended during the period of, and only to the extent of, such disability. Said Party shall be excused by reason of said force majeure only so long as it is exercising its best efforts to overcome said reason.

15.2 Assurances . Each Party to this Agreement shall execute, acknowledge and deliver such further instruments and documents, and do all such other acts and things as may be required by law or as may be necessary or advisable to carry out the intents and purposes of this Agreement. The Parties will cooperate with each other and offer reasonable assistance in carrying out their respective responsibilities under this Agreement.

15.3 Compliance with Laws . Each Party will comply with all Applicable Laws in the conduct of its responsibilities and activities under this Agreement. In addition, each Party shall comply with all applicable anti-corruption and anti-bribery laws and regulations, including but not limited to, the United States Foreign Corrupt Practices Act (“ FCPA ”). Each Party, and its respective officers, directors, employees, agents and representatives, represents that it has not and will not pay, offer or promise to pay, or authorize the payment of, any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a Third Party, to any official or employee of any governmental authority, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of (a) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or such public international organization or such political party, (b) inducing such person to use his influence with such governmental agency or such public international organization or such political party to affect or influence any act or decision thereof or (c) securing any improper advantage.

15.4 Governing Law . This Agreement shall, for all purposes, be governed by, construed and enforced in accordance with the laws of England and Wales, without giving effect to any conflict of law rules. Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the London Court of International Arbitration (LCIA) Rules, which Rules are deemed to be incorporated by reference into this clause. The number of arbitrators shall be one (1), the seat, or legal place, of arbitration shall be London, and the language to be used in the arbitral proceedings shall be English. Neither the UNCITRAL Convention for the International Sale of Goods, nor any other unified laws relating to the conclusion and implementation of contracts for the international sale of goods, shall apply.

15.5 Severability . If any provision of this Agreement shall be held to be invalid, illegal, or unenforceable, the validity, legality, or enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby unless the purposes of the Agreement cannot be achieved. In the event any provision shall be held invalid, illegal, or unenforceable the Parties shall use best efforts to substitute a valid, legal, and enforceable provision which insofar as practical implements the purposes hereof.

15.6 No Assignment . Neither Party shall assign its rights and/or obligations under this Agreement without the prior written consent of the other Party hereto, except that either Party may assign this Agreement in connection with the transfer or sale of all or substantially all of its assets or business to which the subject matter of this Agreement relates or in connection with any merger, consolidation or reorganization, without the other Party’s prior written consent. No assignment shall relieve the assigning Party of any of its obligations hereunder.

15.7 Waiver . No delay, waiver, omission or forbearance on the part of any Party to exercise any right, option, duty or power arising out of any breach or default by any other Party of any of the terms, provisions or covenants hereof, will constitute a waiver by such Party of its rights to enforce any such right, option, duties or power as against the other Party hereto, or its rights as to any subsequent breach or default by the other Party.

15.8 Survival . Upon termination or expiration of this Agreement, the obligations of the Parties which by their nature should survive and the obligations under Sections 7-15 of this Agreement and under any existing confidentiality agreements between the Parties shall survive.

15.9 Entire Agreement . This Agreement and the Schedules attached hereto and the confidentiality agreements referenced in Section 15.8 constitute the full understanding and entire agreement between the Parties and supersede any and all prior oral or written understandings and agreements with respect to the subject matter hereof. No terms, conditions, understandings, or agreements purporting to modify, amend, waive or terminate this Agreement, or any provision hereof, shall be binding except by the execution of a writing specified to be an explicit amendment to this Agreement duly executed by the authorized signatories of the Parties hereto. No modification, waiver, termination, rescission, discharge or cancellation of any right or claim under this Agreement shall affect the right of any Party to enforce any other claim or right hereunder.

15.10 Binding Agreement . Subject to Section 15.6, this Agreement shall be binding upon the Parties and their respective successors and permitted assigns and shall insure to the benefit of the Parties and their respective successors and permitted assigns.

15.11 Headings . The headings used in this Agreement are for convenience of reference only and are not a part of the text hereof.

15.12 Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which shall together constitute a single agreement.

15.13 Annexes . The following annexes are attached hereto and incorporated herein by reference:

ANNEX 1: API Specifications and API Mixture Specifications

ANNEX 2: Price

[Signature page follows]

IN WITNESS WHEREOF, the Parties hereby agree to the terms and conditions of this Agreement.

Zavante Therapeutics, Inc.		Ercros S.A.


By:	/s/ Theodore R. Schroeder	By:	Ercros S.A.
Name:	Theodore R. Schroeder	Name:	M. Carmen Cruzado
Title:	President & CEO	Title:	Manager Pharmaceutical Div.
Date:	28 July 2016	Date:	07/27/2016

[SIGNATURE PAGE TO MANUFACTURING& SUPPLY AGREEMENT]

ANNEX 1: API Specifications and API Mixture Specifications

1. API mixture Specifications: fosfomycin disodium for IV injection

Quality specifications of BULK product (Fosfomycin sodium + Succinic acid)

Parameters	Specifications	Reference methods
Appearance	[**]	[**]
Appearance of solution – Clarity – Colour	[**]	[**]
pH	[**]	[**]
Water content	[**]	[**]
Related substance: Glyco1 (1)	[**]	[**]
Assay
Succinic acid	[**]	[**]
Fosfomycin sodium (2)	[**]	[**]
Residual Solvents Methanol Ethanol	[**]	[**]
Particulate Contamination Particles: [] Fibres: []	[**]	[**]
Sterility	[**]	[**]
Bacterial endotoxins	[**]	[**]

(1) Impurity A: Disodium (1,2-dihydroxipropyl) phosphonate.

(2) Percentage of fosfomycin sodium in the mixture.

2. Active Pharmaceutical Ingredient: fosfomycin disodium

Quality specifications of Fosfomycin Sodium

EUROPEAN PHARMACOPOEIA MONOGRAPH NO. 1329

Parameters	Specifications	Reference Methods
Description	[**]	[**]
Solubility	[**]	[**]
IR Identification	[**]	[**]
Na Identification	[**]	[**]
Appearance of solution – Clarity – Colour	[**]	[**]
pH (Sol. 5%)	[**]	[**]
Water	[**]	[**]
Optical rotation (Hg)	[**]	[**]
Heavy metals	[**]	[**]
Related substance: Glycol(1)	[**]	[**]
Assay (epoxide, as anhydrous base)	[**]	[**]
Bacterial endotoxins	[**]	[**]

ADDITIONAL TESTS

Parameters	Specifications	Reference Methods
Phenethylamine	[**]	[**]
Tungsten	[**]	[**]
Nickel	[**]	[**]
Related Substances Olefinic acid Trans Olefinic acid Terminal Olefine Saturated acid Unknown impurities	[**]	[**]

ANNEX 2: Price

The Price shall be [**] Euros (€[**]) per Kg. of API Mixture.

Exhibit 10.8

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

AMENDED & RESTATED

THREE-WAY AGREEMENT

By and Between

LABORATORIOS ERN, S.A.

and

ERCROS, S.A.

and

ZAVANTE THERAPEUTICS, INC.

AMENDED & RESTATED

THREE-WAY AGREEMENT

THIS AMENDED AND RESTATED THREE-WAY AGREEMENT (this “Agreement”) is made effective as of 28th July 2016 (the “Effective Date”), by and between Laboratorios ERN, S.A., a Spanish company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain, represented by David Solanes López in his capacity as General Manager (“ERN”), Ercros, S.A., a Spanish company with a principal place of business at Paseo del Deleite s/n, 28300 Aranjuez, Spain, represented by Maria del Carmen Cruzado Rodríguez in her capacity as General Manager Pharmaceutical Division (“Ercros”), and Zavante Therapeutics, Inc. , a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, represented by Theodore R. Schroeder in his capacity as Chief Executive Officer (“Zavante”) (each individually a “Party” and collectively the “Parties”).

W I T N E S S:

WHEREAS, Zavante is looking to obtain regulatory approval to market the Product (as defined in Article 1), which is a certain pharmaceutical product in finished dosage form for human use;

WHEREAS, Ercros and ERN have successful common experience in the development of the Product in some countries outside the Territory (as defined in Article 1);

WHEREAS, Ercros has the necessary knowledge, professional expertise, facilities, manufacturing authorization, equipment, and trained, competent personnel to provide the API Mixture (as defined in Article 1) required to obtain approval of the Product in the Territory and to manufacture quantities of the API Mixture required by Zavante for commercial sale of the Product in the Territory;

WHEREAS, concurrently with the execution of this Agreement, Zavante and Ercros will enter into an agreement with respect to the manufacture of the API (as defined in Article 1) and the API Mixture, and the supply of the API Mixture, by Ercros to Zavante;

WHEREAS, ERN is developing the necessary knowledge and has the professional expertise and trained, competent personnel with regard to the Product to assist Zavante in obtaining regulatory approval of the Product in the Territory;

WHEREAS, Zavante desires to remove the responsibility for ERN to provide commercial Product to Zavante, and allow Zavante to take direct responsibility for the manufacture and supply of the commercial Product for the Territory, and ERN agrees with this change in obligations and responsibilities; and

WHEREAS, concurrently with the execution of this Agreement, Zavante and ERN will enter into an amendment and restatement of the Pharmaceutical Manufacturing and Exclusive Supply Agreement between ERN and Zavante, which was effective as of June 5, 2014;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

ARTICLE 1: DEFINITIONS

The following terms, whether used in the singular or plural, shall have the meanings assigned to them below for purposes of this Agreement:

1.1 Active Pharmaceutical Ingredient . “Active Pharmaceutical Ingredient” or “API” means the active pharmaceutical ingredient, sterile fosfomycin sodium. The API shall meet European Pharmacopoeia 01/2008: 1329 monograph specifications and any other specifications that may be required by the FDA for approval in the Territory.

1.2 Affiliate . “Affiliate” means any corporation or non-corporate entity that directly or indirectly controls, is controlled by, or is under common control with a Party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation; or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

1.3 Agreement . “Agreement” means this Amended and Restated Three-Way Agreement.

1.4 API Mixture . “API Mixture” means a blend of fosfomycin sodium and succinic acid to obtain intravenous quality, according to the API Mixture Specifications.

1.5 API Mixture Specifications . “API Mixture Specifications” means the specifications for the API Mixture set forth in the Ercros-Zavante Supply Agreement, as amended from time to time by Ercros and Zavante in accordance with such Agreement.

1.6 A/R ERN-Zavante Agreement . “A/R ERN-Zavante Agreement” means that certain Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement with respect to the supply of certain development knowledge by ERN to Zavante that will be executed by ERN and Zavante concurrently with the execution of this Agreement, a redacted copy of which is attached hereto as Annex A .

1.7 cGMP . “cGMP” means those practices in the manufacture of pharmaceutical products that are recognized as the current good manufacturing practices by the FDA in accordance with FDA regulations, guidelines, other administrative interpretations, and rulings in connection therewith, including but not limited to those regulations cited in 21 C.F.R. parts 210 and 211, all as they may be amended from time to time.

1.8 Clinical Drug Supply . “Clinical Drug Supply” means Product intended for use only in clinical studies required to obtain FDA approval.

1.9 CMC . “CMC” means the FDA Department of Chemistry, Manufacturing and Controls.

1.10 Effective Date . “Effective Date” mean the date appearing at the beginning of this Agreement.

1.11 Ercros-Zavante Supply Agreement . “Ercros-Zavante Supply Agreement” means that certain Manufacturing and Supply Agreement with respect to the manufacture of API and API Mixture and supply of the API Mixture by Ercros to Zavante that will be executed by Ercros and Zavante concurrently with the execution of this Agreement, a redacted copy of which is attached hereto as Annex B .

1.12 FD&C Act . “FD&C Act” means the United States Federal Food, Drug and Cosmetic Act, as amended from time to time.

1.13 FDA . “FDA” means the United States Food and Drug Administration, and any successor agency of the United States government.

1.14 ICH . “ICH” means the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use.

1.15 Intellectual and Industrial Property . “Intellectual and Industrial Property” means trademarks, service marks, trade names, domain names, trade dress, logos, patents, inventions, discoveries, technology, know-how, trade secrets, data, registered and unregistered design rights, copyrights, author rights, database and sui-generis rights and all other similar rights in any part of the world including, where such rights are obtained or enhanced by registration, any registration of such rights and applications, and rights to apply for such registrations.

1.16 NDA . “NDA” means a New Drug Application and/or an Abbreviated New Drug Application, filed with the FDA, together with all amendments and supplements thereto.

1.17 Original Three-Way Agreement . “Original Three-Way Agreement” has the meaning set forth in Section 2.2 of this Agreement.

1.18 Product . “Product” means fosfomycin disodium + succinic acid injection for intravenous use filled, finished and packaged into containers for use by end users.

1.19 Technical Documentation . “Technical Documentation” means such technical documentation and data required for submission of an NDA or ANDA for the Product.

1.20 Territory . “Territory” means the United States of America, and all of its territories and possessions including, without limitation, its military installations wherever located.

1.21 Third Party . “Third Party” or “Third Parties” means any Party other than Zavante, ERN, Ercros and their respective Affiliates.

1.22 Term . “Term” means any period described in Section 8.1.

ARTICLE 2: OBJECTIVE AND PRINCIPAL UNDERSTANDING OF THE PARTIES

2.1 The objective of this Agreement is, with respect to the Product, to allow Zavante to conduct clinical trials pursuant to support, in conjunction with the documentation supplied by ERN and Ercros, an NDA filing with the FDA. This objective will be supported by the delivery to Zavante from Ercros and ERN of technical documentation, expertise and know-how for the API and API Mixture, and regarding Product manufacturing. This Agreement also establishes the basis for related supply agreements in anticipation of FDA approval of the Product.

2.2 The Parties agree to revise the original version of this Agreement, which was effective as of 16 May 2014 (the “Original Three-Way Agreement”), to remove the responsibility for ERN to provide commercial Product to Zavante, and allow Zavante to take direct responsibility for the manufacture and supply of the commercial Product in the Territory. As a result, this Agreement amends and restates, in its entirety, the Original Three-Way Agreement.

For the avoidance of doubt, the Original Three-Way Agreement shall not have any further effect as of the Effective Date of this Agreement. By virtue of this Agreement, (a) the Original Three-Way Agreement shall be deemed fully terminated; and (b) the parties thereto shall be relieved from full performance of any obligations incurred prior thereunder; and (c) no indemnification obligations shall survive such termination. In the event of any conflict between the terms of either the Ercros-Zavante Supply Agreement and this Agreement, or the A/R ERN-Zavante Agreement and this Agreement, the terms and conditions of this Agreement shall govern.

2.3 This Agreement sets out the general principal understanding of the Parties. As set out herein:

2.3.1 ERN shall provide to Zavante certain Technical Documentation and other technical assistance and support, as set forth the A/R ERN-Zavante Agreement. ERN will use know-how and provide to Zavante its part of the Technical Documentation for the NDA to be approved by the FDA in accordance with the terms of the A/R ERN-Zavante Agreement.

2.3.2 Ercros shall provide to Zavante certain Technical Documentation, and will manufacture and supply API Mixture to Zavante for manufacture of the Product, as set forth in the Ercros-Zavante Supply Agreement.

2.3.3 Zavante shall obtain the Product for commercial sales in the Territory, under one or more separate agreements with third party manufacturers.

ARTICLE 3: COORDINATORS

3.1 Appointment of Coordinators . Within ten (10) days after the signing of this Agreement by all Parties, Zavante, ERN and Ercros shall each appoint an authorized representative and a backup representative (“Coordinators”) for the exchange of all communications, other than legal notices, related to this Agreement. Each Party shall provide notice to the other Parties as to the name and title of the individuals so appointed. Each Party may replace its

Coordinators at any time for any reason by providing written notice to the other Parties in accordance with Section 16.9 hereof.

ARTICLE 4: WARRANTIES

4.1 Warranty terms between ERN and Zavante shall be as set forth in the A/R ERN-Zavante Agreement, and warranty terms between Ercros and Zavante shall be as set forth in the Ercros-Zavante Supply Agreement.

ARTICLE 5: COMPLETED RESPONSIBILITIES OF THE PARTIES

The Parties hereby agree that:

5.1 ERN has provided Technical Documentation required by Zavante for submission of the IND to Zavante . Zavante has reviewed such Technical Documentation and has given its acceptance to ERN in writing.

5.2 Zavante has filed the IND with FDA, and FDA has approved the IND.

5.3 ERN has supplied Clinical Drug Supply to Zavante for use in clinical studies of the Product.

5.4 Zavante has verified with FDA that, for purposes of submitting the IND and for Phase 1 clinical studies, ERN’s current facilities and processes are acceptable to FDA.

5.5 During the pre-IND CMC submission with FDA, Zavante verified with the FDA, for purposes of submitting the IND and for Phase 1, the acceptability of the method development for degradation product NMR and the method development for the analysis of related substances of disodium fosfomycin, raw material and finished Product.

5.6 Zavante has confirmed with FDA that clinical assays for Phase 1, 2 and 3 can be done with product manufactured under cGMP conditions in Europe at non-approved FDA sites. Zavante has provided ERN with FDA’s comments from the pre-IND CMC meeting.

ARTICLE 6: RESPONSIBILITIES OF ERCROS

6.1 Ercros will have the responsibilities set forth in the Ercros-Zavante Supply Agreement.

ARTICLE 7: RESPONSIBILITIES OF ERN

7.1 ERN will have the responsibilities set forth in the A/R ERN-Zavante Agreement.

ARTICLE 8: RESPONSIBILITIES OF ZAVANTE

8.1 Zavante will have the responsibilities set forth in the Ercros-Zavante Supply Agreement and the A/R ERN-Zavante Agreement.

8.2 Zavante will have the responsibility to contract with one or more third party manufacturers to provide quantities of the Product required by Zavante for commercial sale in the Territory and perform validation activities with respect thereto as required by FDA, and obtain FDA approval of such third party manufacturer’s facilities and quality systems.

8.3 Zavante will use Commercially Reasonable Efforts to file an NDA within [**] of its receipt of all Technical Documentation for the NDA from ERN and Ercros.

8.4 Zavante will obtain and own all trademarks to be used for the Product in the Territory.

8.5 Zavante will bear the cost and manage all clinical trials necessary for obtaining Product Approval and will keep ERN and Ercros updated regarding the progress of such clinical trials.

ARTICLE 9: TERM; TERMINATION

9.1 Term . Unless sooner terminated pursuant to the terms hereof, the term of this Agreement shall commence on the Effective Date and shall continue in force and effect until the Ercros-Zavante Supply Agreement and the A/R ERN-Zavante Agreement have both been terminated or expire in accordance with the respective terms thereof (the “Term”). For the avoidance of doubt, this Agreement shall not terminate if either the ERCROS-Zavante Supply Agreement or the ERN-Zavante Supply Agreement expire or are terminated.

9.2 Termination by Mutual Agreement . This Agreement may be terminated at any time upon mutual written agreement of all of the Parties.

ARTICLE 10: INDEMNIFICATION OF THIRD PARTY CLAIMS

10.1 Indemnification terms between ERN and Zavante shall be as set forth in the A/R ERN-Zavante Agreement, and indemnification terms between Ercros and Zavante shall be as set forth in the Ercros-Zavante Supply Agreement.

ARTICLE 11: CONFIDENTIALITY

11.1 The rights and responsibilities of the Parties with respect to the protection of proprietary or confidential information shall be as set forth in the A/R ERN-Zavante Agreement and the Ercros-Zavante Supply Agreement, respectively.

ARTICLE 12: INTELLECTUAL AND INDUSTRIAL PROPERTY

12.1 The rights and responsibilities of the Parties with respect to Intellectual and Industrial Property shall be as set forth in the A/R ERN-Zavante Agreement and the Ercros-Zavante Supply Agreement, respectively.

ARTICLE 13: LEGAL COMPLIANCE; AUTHORIZATION

13.1 Legal Compliance . Each Party shall comply in all material respects with all laws and regulations applicable to the conduct of its business pursuant to this Agreement, including, but not limited to, the FD&C Act for all Parties and applicable EU and Spanish regulations for Ercros and ERN. In addition, each Party shall comply with all anti-corruption and anti-bribery laws and regulations, including but not limited to, the U.S. Foreign Corrupt Practices Act (FCPA). Zavante, ERN and Ercros, and their respective officers, directors, employees, agents and representatives, represent that they have not and will not pay, offer or promise to pay, or authorize the payment of, any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a third party, to any official or employee of any governmental authority, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of (i) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or such public international organization or such political party, (ii) inducing such person to use his influence with such governmental agency or such public international organization or such political party to affect or influence any act or decision thereof or (iii) securing any improper advantage.

13.2 Authorization.

13.2.1 ERN hereby represents and warrants to Zavante and Ercros that all corporate action on the part of ERN and its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of ERN hereunder has been taken.

13.2.2 Ercros hereby represents and warrants to Zavante and ERN that all corporate action on the part of Ercros and its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of Ercros hereunder has been taken.

13.2.3 Zavante hereby represents and warrants to ERN and Ercros that all requisite action on the part of Zavante and its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of Zavante hereunder has been taken.

ARTICLE 14: PRESS RELEASES; USE OF NAMES

14.1 Press Releases . Any press release, publicity or other form of public written disclosure related to this Agreement prepared by one Party shall be submitted to the other Parties prior to release for approval, which approval shall not be unreasonably withheld or delayed by such other Party. Notwithstanding the foregoing, no Party shall issue any press release, publicity or other form of public written disclosure prior to the approval of the Product by FDA.

14.2 Use of Names . Except as expressly provided or contemplated hereunder and except as otherwise required by applicable law, no right is granted pursuant to this Agreement to any Party to use in any manner the trademarks or name of the other Parties, or any other trade name, service mark, or trademark owned by or licensed to the other Parties in connection with the performance of this Agreement. Notwithstanding the above, as may be required by applicable law, Zavante, ERN, Ercros and their Affiliates shall be permitted to use the other Parties’ names and to disclose the existence and terms of this Agreement in connection with securities or other public filings.

ARTICLE 15: DISPUTE RESOLUTION

15.1 Disputes between ERN and Zavante shall be resolved in accordance with the A/R ERN-Zavante Agreement, and disputes between Ercros and Zavante shall be resolved in accordance with the Ercros-Zavante Supply Agreement.

ARTICLE 16: MISCELLANEOUS

16.1 Independent Contractors . The relationship between Zavante, ERN and Ercros is that of independent contractors and nothing herein shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between Zavante, ERN and Ercros. No Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Parties or to bind the other Parties to any contract, agreement or undertaking with any Third Party.

16.2 Assignment . This Agreement may not be assigned or otherwise transferred by any Party without the prior written consent of the other Parties, which consent shall not unreasonably be withheld. It shall not be unreasonable for ERN to withhold consent for an assignment to an ERN Competitor (as such term is defined in the A/R ERN-Zavante Agreement). Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. No assignment shall relieve any Party of responsibility for the performance of any obligation that accrued prior to the effective date of such assignment.

16.3 Continuing Obligations . Termination, assignment or expiration of this Agreement shall not relieve any Party from full performance of any obligations incurred prior thereto.

16.4 Waiver . No Party’s waiver of any breach or failure to enforce any of the terms and conditions of this Agreement, at any time, shall in any way affect, limit or waive such Party’s right thereafter to enforce and compel strict compliance with every term and condition of this Agreement.

16.5 Severability . Each Party hereby expressly agrees that it has no intention to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries; that if any word, sentence, paragraph, clause or combination thereof in this Agreement is found by a court or executive body with judicial powers having jurisdiction over this Agreement or any Party hereto, in a final unappealed order, to be in violation of any such provisions in any country or community or association of countries, such words, sentences, paragraphs, clauses or combination shall be inoperative in such country or community or association of countries and the remainder of this Agreement shall remain binding upon the Parties, so long as enforcement of the remainder does not violate the Parties’ overall intentions in this transaction.

16.6 Headings . The headings in this Agreement are for convenience of reference only and shall not affect its interpretation.

16.7 Construction . This Agreement has been jointly prepared on the basis of the mutual understanding of the Parties and shall not be construed against any Party by reason of such Party’s being the drafter hereof or thereof.

16.8 Annexes, Schedules and Attachments . Any and all annexes, schedules and attachments referred to herein form an integral part of this Agreement and are incorporated into this Agreement by such reference.

16.9 Notices . All notices and other communications required or permitted to be given under this Agreement shall be in writing in English and shall be delivered personally or sent by an internationally-recognized courier service guaranteeing maximum three-days delivery, charges prepaid, and shall be deemed to have been given upon receipt. Any such notices shall be addressed to the receiving Party at such Party’s address set forth below, or at such other address as may from time to time be furnished by similar notice by either Party:

If to ERN:

ERN

Laboratorios ERN, S.A.

228, Perú st.

08020 Barcelona (Spain)

Attn: David Solanes López

If to Ercros:

ERCROS S.A.

Paseo del Deleite s/n

28300 Aranjuez (Madrid)

Spain

Attn: Maria del Carmen Cruzado Rodríguez

If to Zavante:

Zavante Therapeutics, Inc.

11750 Sorrento Valley Road, Suite 250

San Diego, CA 92121

USA

Attn: Theodore R. Schroeder, CEO

16.10 Counterparts . This Agreement and any amendment or supplement hereto may be executed in three (3) counterparts and delivered via electronic means, and any Party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. The execution of this Agreement and any such amendment or supplement by any Party hereto will not become effective until counterparts hereof have been executed by all Parties hereto.

16.11 Governing Law; Entire Agreement . The validity, interpretation and performance of this Agreement shall be governed and construed in accordance with the laws of Spain. This Agreement constitutes the full understanding of the Parties and a complete and exclusive statement of the terms of their agreement and supersedes all prior agreements. No terms, conditions, understanding, or agreement purporting to modify or vary the terms of this Agreement shall be binding unless hereafter made in writing and signed by the Party to be bound.

[Signatures on following page]

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized representatives as of the Effective Date.

Laboratorios ERN, S.A.


By:	/s/ David Solanes L ó pez

Name: David Solanes López

Title: General Manager


Ercros S.A.

By:	/s/ Maria del Carmen Cruzado Rodríguez

Name: Maria del Carmen Cruzado Rodríguez

Title: General Manager Pharmaceutical Division


Zavante Therapeutics, Inc.


By:	/s/ Theodore R. Schroeder

Name: Theodore R. Schroeder

Title: Chief Executive Officer

ANNEX A

A/R ERN-Zavante Agreement

(financial terms redacted)

Incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2018

ANNEX B

Ercros-Zavante Supply Agreement

(financial terms redacted)

Incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2018

Exhibit 10.9

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

AMENDED AND RESTATED
PHARMACEUTICAL MANUFACTURING AND
EXCLUSIVE SUPPLY AGREEMENT

By and Between

LABORATORIOS ERN, S.A.

and

ZAVANTE THERAPEUTICS, INC.

TABLE OF CONTENTS

ARTICLE 1:	DEFINITIONS	1

ARTICLE 2:	DEVELOPMENT ACTIVITIES	4

ARTICLE 3:	COORDINATORS; DIVESTMENT	7

ARTICLE 4:	WARRANTIES; SPECIFICATIONS; QUALITY	8

ARTICLE 5:	MILESTONE PAYMENT; QUARTERLY SALES REPORTING; ERN KNOWLEDGE PRICE	8

ARTICLE 6:	REGULATORY	9

ARTICLE 7:	TERM; TERMINATION	10

ARTICLE 8:	INDEMNIFICATION OF THIRD PARTY CLAIMS	12

ARTICLE 9:	CONFIDENTIALITY	13

ARTICLE 10:	INTELLECTUAL AND INDUSTRIAL PROPERTY	15

ARTICLE 11:	FORCE MAJEURE	17

ARTICLE 12:	LEGAL COMPLIANCE; AUTHORIZATION	17

ARTICLE 13:	PRESS RELEASES; USE OF NAMES	18

ARTICLE 14:	DISPUTE RESOLUTION	18

ARTICLE 15:	MISCELLANEOUS	19

AMENDED AND RESTATED
PHARMACEUTICAL MANUFACTURING
AND EXCLUSIVE SUPPLY AGREEMENT

THIS AMENDED AND RESTATED PHARMACEUTICAL MANUFACTURING AND EXCLUSIVE SUPPLY AGREEMENT (this “Agreement”) is made on the Effective Date by and between Laboratorios ERN, S.A., a Spanish Company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain, represented by David Solanes López in his capacity as General Manager (“ERN”) and Zavante Therapeutics, Inc. , a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, represented by Theodore R. Schroeder in his capacity as Chief Executive Officer (“Zavante”) (each individually a “Party” and collectively the “Parties”).

W I T N E S S:

WHEREAS, with regard to the definitions stated in Article 1 of this Agreement, Zavante is looking to obtain regulatory approval to market the Product in the Territory; and

WHEREAS, ERN will provide certain necessary knowledge, professional expertise, intellectual property rights and trained, competent personnel to assist Zavante in obtaining regulatory approval to market the Product in the Territory;

WHEREAS, Zavante desires to revise the original version of this Agreement to remove the responsibility for ERN to provide commercial Product to Zavante, and allow Zavante to take direct responsibility for the manufacture and supply of the commercial Product for the Territory, and ERN agrees with this change in obligations and responsibilities;

WHEREAS, the above change of responsibility in relation to the manufacture and supply of the Commercial Product for the Territory requires also an amendment of the Three-Way Agreement signed by Laboratorios ERN, S.A., Ercros, S.A. and Zavante Therapeutics, Inc., effective as of 16 May 2014, which will result in an Amended and Restated Three-Way Agreement, without which the execution of this Agreement will not be valid and effective;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

ARTICLE 1: DEFINITIONS

The following terms, whether used in the singular or plural, shall have the meanings assigned to them below for purposes of this Agreement:

1.1 Active Pharmaceutical Ingredient/API . “Active Pharmaceutical Ingredient” or “API” means the active pharmaceutical ingredient, sterile fosfomycin sodium. The API shall meet European Pharmacopoeia 01/2008: 1329 monograph specifications and any other specifications that may be required by the FDA for approval in the Territory.

1.2 Adjacent Territory . “Adjacent Territory” means Mexico and Canada.

1.3 API Mixture . “API Mixture” means the blend of fosfomycin sodium and succinic acid intended for use in preparing an intravenous formulation purchased by Zavante from Ercros.

1.4 Affiliate . “Affiliate” shall mean any corporation or non-corporate entity that directly or indirectly controls, is controlled by, or is under common control with a Party. A corporation or non-corporate entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty percent (50%) of the voting stock of the other corporation; or (a) in the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) in the case of a non-corporate entity, the power to direct or cause the direction of the management and policies of such corporation or non-corporate entity, as applicable.

1.5 Agreement . “Agreement” shall mean this Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement.

1.6 Business Day . “Business Day” means a day other than a Saturday, Sunday or public holiday in the United States of America or Spain.

1.8 Clinical Trial : Clinical studies of the Product required to obtain FDA approval.

1.9 Commercial Product . “Commercial Product” shall mean Product sold or intended for commercial sale and/or human use.

1.10 Commercially Reasonable Efforts . “Commercially Reasonable Efforts” is what a reasonable person would do in the individual circumstance, taking all factors into account, as judged by the standards of the applicable business, in this case pharmaceuticals, including reasonable consideration of its own business interests and the level of assumed risk and investment, relevant and in proportion to that party’s business expectations. Commercially Reasonable Efforts should be consistent with good faith business judgments.

1.11 Drug Rights .”Drug Rights” shall mean the legal right to market, sell and distribute the final Product in the Territory.

1.12 Effective Date . “Effective Date” shall mean the date of the last signature to this Agreement.

1.13 Ercros . “Ercros” shall mean Ercros, S.A., a Spanish company with a principal place of business at Paseo del Deleite s/n, 28300 Aranjuez, Spain.

1.14 ERN Competitor . “ERN Competitor” shall mean the companies listed on ANNEX 1.

1.15 ERN Intellectual and Industrial Property . “ERN Intellectual and Industrial Property” shall mean any Intellectual and Industrial Property, in any form whatsoever, which is provided to Zavante by, and/or on behalf of ERN, and which was owned by and/or licensed to ERN prior to being provided to Zavante including, without limitation, all information, formulations, know-how, and quality and manufacturing processes related to the finished Product and any General Developments or Product Developments supplied by ERN, directly or indirectly, and any Technical Documents and information related thereto.

1.16 ERN Knowledge Price . “ERN Knowledge Price” shall mean the price listed on ANNEX 2.

1.17 FD&C Act . “FD&C Act” shall mean the United States Federal Food, Drug and Cosmetic Act, as amended.

1.18 FDA . “FDA” shall mean the United States Food and Drug Administration, or any successor entity.

1.19 First Commercial Sale . “First Commercial Sale” shall mean the first sale or other commercial disposition by Zavante or any of Zavante’s Affiliates or licensees of Commercial Product for value in an arm’s length transaction with a Third Party for use by the general public.

1.20 General Developments . “General Developments” means any and all inventions, discoveries, know-how, information, data, writings, and other Intellectual and Industrial Property, in any form whatsoever, both tangible and intangible, developed by ERN in the course of performance under this Agreement which do not specifically relate to the Product, the API, or the API Mixture.

1.21 Initial Term . “Initial Term” shall have the meaning set forth in Section 7.1 hereof.

1.22 Intellectual and Industrial Property . “Intellectual and Industrial Property” includes General Developments and Product Developments, and shall mean trademarks, service marks, trade names, domain names, trade dress, logos, patents, inventions, discoveries, technology, know-how, trade secrets, data, registered and unregistered design rights, copyrights, author rights, database and sui generis rights and all other similar rights in any part of the world including, where such rights are obtained or enhanced by registration, any registration of such rights and applications, and rights to apply for such registrations.

1.23 Milestone Payment . “Milestone Payment” shall have the meaning set forth in Section 5.1 hereof.

1.24 NDA or ANDA . “NDA” shall mean New Drug Application for the Product, as filed with the FDA; “ANDA” shall mean the Abbreviated New Drug Application for the Product, as filed with the FDA, whichever is applicable.

1.25 Original ERN-Zavante Agreement . “Original ERN-Zavante Agreement” shall have the meaning set forth in Section 2.1 hereof.

1.26 Product . “Product” shall mean fosfomycin sodium + succinic acid.

1.27 Product Approval . “Product Approval” shall mean final FDA approval of Zavante’s New Drug Application (“NDA” or “ANDA”).

1.28 Product Developments . “Product Developments” means any and all inventions, discoveries, know-how, information, data, writings and other Intellectual and Industrial Property, in any form whatsoever, both tangible and intangible, developed by ERN or by Zavante in the course of performance under this Agreement that specifically relate to the Product, the API, or the API Mixture.

1.29 Technical Documents. “Technical Documents” shall mean such technical documentation and data as required by the ICH guidelines and the FDA for submission of an NDA or ANDA for the Product.

1.30 Term . “Term” means any period described in Section 7.1.

1.31 Territory . “Territory” shall mean the United States of America, and its territories and possessions.

1.32 Third Party . “Third Party” or “Third Parties” shall mean any Party other than Zavante, ERN and their respective Affiliates.

1.33 Zavante Intellectual and Industrial Property . “Zavante Intellectual and Industrial Property” shall mean any Intellectual and Industrial Property, in any form whatsoever, which is provided to ERN by and/or on behalf of Zavante, or which is used by ERN with respect to its performance hereunder, and which was owned by and/or licensed to Zavante prior to being provided to ERN.

ARTICLE 2: DEVELOPMENT ACTIVITIES

2.1 Status of Prior Agreements . The Parties agree to revise the original version of this Agreement to remove the responsibility for ERN to provide commercial Product to Zavante, and allow Zavante to take direct responsibility for the manufacture and supply of the commercial Product in the Territory. As a result, this Agreement amends and restates, in its entirety, the Pharmaceutical Manufacturing and Exclusive Supply Agreement between the Parties, which was effective as of June 5, 2014, and amended on November 1, 2014 (the “Original ERN-Zavante Agreement”).

For the avoidance of doubt the Original ERN-Zavante Agreement shall not have any further effect as from the date hereof. By virtue of this Agreement: (i) the Original ERN-Zavante Agreement shall be deemed fully terminated; (ii) the Parties thereto shall be relieved from full performance of any obligations incurred prior thereunder; and (iii) no indemnification obligations shall survive such termination.

The Parties agree further that this Agreement shall only become valid and effective once the Amended and Restated Three-Way Agreement, by and between Laboratorios ERN, S.A., Ercros, S.A., and Zavante Therapeutics, Inc., is executed by all three parties thereto.

2.2 Manufacture of the Product for Commercial Sales .

2.2.1 Notwithstanding the limitations contained in Section 5.3, Zavante agrees that ERN may contract with Zavante’s Third Party manufacturer of the Product for the manufacture and supply of the Product for distribution, sale or other use by ERN or its Affiliates outside the Territory and outside the Adjacent Territory; provided that any such agreement between ERN and Zavante’s Third Party manufacturer contains provisions granting Zavante priority of supply of the Product in the event of any capacity shortfall.

2.2.2 If ERN wishes to serve as a contract manufacturer of the Product for Zavante’s commercial sale in the Territory on terms and conditions to be negotiated between the Parties, ERN must obtain prior written approval from Zavante, such approval not to be unreasonably withheld. Notwithstanding the foregoing, any such agreement between ERN and Zavante must take into consideration any then-existing quantity commitments made by Zavante to other contract manufacturers.

2.2.3 Zavante will be responsible for ensuring that it amends the NDA for the Product in a timely manner in the event that it changes the designated contract manufacturer of the Product for commercial sale in the Territory, provided that such new contract manufacturer has obtained FDA approval of its facilities and quality systems.

2.3 Development Responsibilities .

2.3.1 Each Party will use Commercially Reasonable Efforts to complete certain development activities required for NDA submission and/or in connection with the commercialization of the Product within the Territory, as set forth in ANNEX 3 to this Agreement (the “Development Responsibilities”). The Parties will mutually agree upon the protocols for the Development Responsibilities; however, in the event the Parties are unable to reach agreement, Zavante shall have final decision-making authority with respect to protocols for the Development Responsibilities. Each Party will be responsible for completing its designated Development Responsibilities within the timeframes set forth in ANNEX 3 , and shall bear all costs associated therewith, provided, however , that the Parties shall jointly complete and each Party shall bear half of the total costs associated with Development Responsibilities identified in ANNEX 3 as “shared.” In the event that FDA requires the completion of development activities that are not included in ANNEX 3 as part of the NDA approval process for the Product, ERN will cover the costs for such activities up to a cost of [**] euros (€[**]).

2.3.2 ERN has provided to Zavante its currently available part of the Technical Documentation for the IND to be approved by the FDA. ERN will use know-how and provide to Zavante its part of the Technical Documentation for the NDA to be approved by the FDA. ERN is performing a stability study according to ICH guidelines with Product produced at a cGMP-approved plant. The testing is being done partially with new NMR (Nuclear Magnetic Resonance) methodology, having no previous data about degradation products different from impurity A described

in the European Pharmacopoeia monograph for Disodium Fosfomycin. With this NMR methodology, ERN is detecting new degradation products that were not previously detected using prior methodology. The chemical structure of some of these new degradation products cannot be identified by NMR identification techniques. There is not an expectation of reducing degradation product content below the ICH standard identification threshold through changes in the manufacturing process of the Product. In order to perform its Commercially Reasonable Efforts for qualifying those degradation products in the Product, ERN will carry out with over-degraded drug product, the safety studies specifically listed in ANNEX 6 , in order to try to qualify, at least, the degradation products level present in the drug product obtained in the cGMP-approved plant, after [**] at [**]. No other information will be provided by ERN in order to fulfill its obligations relative to section 4.2.3.7.6 Impurities. Notwithstanding the foregoing, ERN will use Commercially Reasonable Efforts to assist Zavante in answering any questions FDA may have with regard to ERN’s information as listed in ANNEX 6 .

Zavante acknowledges that finalizing the characterization identification and qualification is a complex process for ERN with some uncertainty of result, and that ERN is only obliged to carry out its Commercially Reasonable Efforts during the process, and which, if it fails (for impossibility of achieving a technically acceptable result, or for the impossibility of ERN to act beyond its Commercially Reasonable Efforts), ERN will in no way be responsible for indemnifying Zavante for its investment in clinical studies for FDA approval, or in facilities or other kind of investment, which Zavante undertakes exclusively at its own risk and expense. In no case will ERN perform clinical studies for qualifying a degradation product.

2.3.3 All information, including reports and findings, and study results, are Intellectual and Industrial Property of ERN and ERN Confidential Information, and shall be disclosed to Zavante only for Zavante to disclose to the FDA as required for ERN and Zavante to perform their obligations hereunder and under the FD&C Act. ERN will provide Zavante with updated reports of its findings and Zavante will provide that information to the FDA as part of Zavante’s ongoing IND submission process.

2.3.4 Zavante will provide ERN with [**] advance notice of the need for Technical Documentation for the NDA. Following such notice period, ERN will provide its part of the Technical Documentation (which will be considered as Intellectual Property of ERN and ERN Confidential Information) for the NDA to Zavante within [**] of Zavante’s written request. Such Technical Documentation for the NDA will be in English and its content will be in accordance with the relevant sections of ANNEX 6 , and its format will comply with ICH guidelines. Zavante will review the Technical Documentation for the NDA prior to submitting the NDA and will give its comments or acceptance to ERN in writing. If there is any insufficiency in the Technical Documentation, ERN will use Commercially Reasonable Efforts to update the Technical Documentation according to Zavante’s reasonable request as quickly as possible. FDA has the final approval of the Technical Documentation and ERN will use Commercially Reasonable Efforts to address any comments or requests from FDA regarding ERN’s part of the Technical Documentation for the NDA.

2.3.5 The Technical Documentation for the NDA must include sterility and stability testing using final drug product assays for Phase 3 and for Commercial product, using cGMP and complying with ICH guidelines and FDA requirements for the designated facility that will make final Product.

2.4 Confirmation of Technical Documents : Zavante will confirm in writing to ERN if, to the best of its knowledge, the Technical Documents delivered by ERN to Zavante for inclusion in the NDA are acceptable for that purpose. Notwithstanding any such confirmation by Zavante, if FDA does not find the Technical Documents to be acceptable, or if FDA asks for new or additional Technical Documents, ERN shall remain responsible for providing Technical Documents that meet FDA’s requirements at its sole expense, and the obligations of the Parties under ANNEX 3 shall remain unchanged.

2.5 Disclosure/Development of Health Risk Data . Zavante agrees to disclose to ERN any information that is or becomes known by Zavante regarding health risks that may be involved in manufacturing the Product. Such information shall include, without limitation, OSHA required information, information regarding occupational exposure limits, toxicology studies and reports, and other health-related data. If reasonable industrial hygiene data is not available, ERN and Zavante will cooperate to develop necessary and reasonable data as mutually agreed.

2.6 Customs Documentation and Valuations . For samples or documentation delivered hereunder, Zavante shall be responsible for arranging customs documentation and valuations directly or indirectly through its designated customs broker. If Zavante requests ERN to assume these responsibilities and ERN agrees, ERN shall utilize its designated customs broker and shall state customs valuations that appropriately reflect contract costs. ERN’s reasonable costs in providing such customs services shall be invoiced to, and reimbursed by Zavante. Zavante shall be responsible for payment of all customs duties and related assessments.

ARTICLE 3: COORDINATORS; DIVESTMENT

3.1 Appointment of Coordinators . Within [**] after the signing of this Agreement by both Parties, Zavante and ERN shall each appoint an authorized representative and a backup representative (“Coordinators”) for the exchange of all communications, other than legal notices, related to the development activities for the Product. Each Party shall provide notice to the other Party as to the name and title of the individuals so appointed. Each Party may replace its Coordinators at any time for any reason by providing written notice to the other Party in accordance with Section 15.13 hereof.

3.2 Divestment of Products.

3.2.1 If during the term of this Agreement, Zavante elects to divest to any Third Party its Drug Rights, Zavante shall so inform ERN of any such divestment. Zavante shall also provide ERN with a letter advising ERN that Zavante has informed such Third Party of the terms and conditions of this Agreement, and that the Third Party assumes all the rights and obligations assumed by Zavante under this Agreement.

This is without prejudice to Section 15.6 of this Agreement and the assignment will be effective unless ERN has exercised its right to reject the assignment because the Third Party is an ERN Competitor. For the avoidance of doubt, Zavante’s exercise of its right to sublicense its rights to the ERN Intellectual and Industrial Property and ERN Confidential Information to a Third Party, as permitted under Section 10.2 shall not be considered a “divestment” of Drug Rights under this Agreement.

3.2.2 Pending transfer of any Divested Product hereunder to a Third Party, Zavante agrees to be responsible for any payment obligations that have accrued hereunder in respect of such Divested Product. Zavante also agrees to be responsible for FDA compliance with respect to any Divested Product until such time as Zavante and the Third Party have completed the transfer of this Agreement in accordance with Section 15.6 of this Agreement, that is, by formal written assignment that is in form acceptable to ERN, with such acceptance not to be unreasonably withheld. It shall not be unreasonable to withhold consent for an assignment to an ERN Competitor.

ARTICLE 4: WARRANTIES; SPECIFICATIONS; QUALITY

4.1 Disclaimer by ERN . ERN expressly disclaims (a) any warranty that the Products (i) will be fit for any particular purpose, or (ii) will not violate or infringe the patent or other Intellectual and Industrial Property rights of third Parties as to formulation or composition; (b) any other warranties with respect to the Product, express or implied, except as expressly stated in this Agreement; and (c) any warranties in respect of the formulation, composition, use, or distribution of the Product or in respect of the marketing and/or sale of the Product to third parties.

4.2 Mutual Warranties. Each Party hereby represents and warrants to the other (i) that all corporate action on the part of the Party, its officers and directors, necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of such Party under this Agreement has been taken; and (ii) that entering into this Agreement does not violate any other agreement or obligation binding upon the Party.

4.3 Limitation of Liability . Notwithstanding the foregoing warranties and representations and the further obligations of the Parties hereunder, in no event shall either Party be liable to the other Party for incidental, indirect, special, consequential or punitive damages, including without limitation any claim for damages based upon lost profits or lost business opportunity.

ARTICLE 5: MILESTONE PAYMENT; QUARTERLY SALES REPORTING; ERN KNOWLEDGE PRICE

5.1 Milestone Payment . Zavante shall notify ERN within [**] following: (a) Zavante’s receipt of written notification from FDA of the approval of the NDA; and (b) the date of the First Commercial Sale. Zavante shall make a one-time payment to ERN of [**] dollars (US$[**]), as an initial ERN Knowledge Price, within [**] after the First Commercial Sale (the “Milestone Payment”) after receiving ERN’s invoice for such initial payment.

5.2 [**] Sales Reporting; ERN Knowledge Price . Zavante will provide a copy to ERN of each purchase order issued to Ercros for the purchase of API Mixture concurrently with issuing each such purchase order to Ercros. Within [**] following the end of each [**] commencing after the [**], Zavante shall (a) provide to ERN a report summarizing the number of vials of the Product sold during such [**], and copies of all reports received by Zavante from its third party logistics providers showing the number of vials sold by such providers during the [**], and (b) pay to ERN the ERN Knowledge Price based on the number of vials sold during such [**] within [**] after receiving ERN’s invoice for each such payment. Additionally, commencing after the [**], Zavante shall periodically provide to ERN a copy of portions of Zavante’s audited [**] financial statements that show the number of vials of the Product sold to Third Parties during the respective audited period, if any. During the period commencing after the [**], and continuing through the Term, upon reasonable prior notice and not more than [**], ERN may have Zavante’s records audited by an independent certified public accountant selected by ERN and reasonably acceptable to Zavante for the sole purpose of verifying the accuracy of the ERN Knowledge Price under this Agreement. ERN shall bear the costs of any such audit. All of the reports data and information regarding sales of the Product and purchases of the API Mixture shall be Confidential Information of Zavante.

An example of the scheme of the information to be sent by Zavante is summarized in ANNEX 7.

5.3 ERN Obligations . ERN will send to Zavante an invoice for each ERN Knowledge Price payment and the Milestone Payment within [**] after receiving the relevant information from Zavante. Conditioned upon Zavante complying with the obligation to make the ERN Knowledge Price payments set forth in Section 5.2, neither ERN nor any of its Affiliates or licensees shall: (a) manufacture or supply API, API Mixture or Product to any Third Party for purposes of developing, testing, seeking regulatory approval for, marketing, selling or distributing the Product in the Territory, (b) disclose to any Third Party any information provided to ERN by or on behalf of Zavante in connection with this Agreement, (c) license, allow, enable, facilitate or assist in any way, directly or indirectly, any Third Party to use the API Mixture, or ERN Intellectual and Industrial Property, for purposes of developing, testing, seeking regulatory approval for, importing, marketing, selling or distributing the Product in the Territory, or (d) on its own behalf or on behalf of any Third Party, develop, test, obtain regulatory approval for, market, sell or distribute the Product in the Territory. In the event that Zavante is in default of its obligation to pay the ERN Knowledge Payment as required under Section 5.2, ERN shall promptly provide written notice of such default to Zavante.

ARTICLE 6: REGULATORY

ERN will provide Zavante with standard regulatory support as identified under the heading “Regulatory Support” in ANNEX 4 attached hereto. Protocols and study designs for such Regulatory Support will be mutually agreed upon and must comply with applicable FDA requirements. ERN shall also make available to Zavante, at Zavante’s request and expense, additional regulatory services as identified in ANNEX 4 attached hereto. Regulatory support

services that are identified in ANNEX 4 , shall be [**] to Zavante; additional regulatory consulting services (not listed in ANNEX 4 ) shall be billed at ERN’s [**]. Additional regulatory services and/or documentation may be provided by ERN, subject to the agreement of the Parties and subject to [**].

ARTICLE 7: TERM; TERMINATION

7.1 Term . Unless sooner terminated pursuant to the terms hereof, the term of this Agreement shall commence on the Effective Date and shall continue in force and effect until the ten (10) year anniversary of the Effective Date (the “Initial Term”). Unless otherwise terminated pursuant to the terms hereof, this Agreement shall be automatically renewed for an additional two (2) year term after the end of the Initial Term (and for successive two (2) year renewal terms thereafter) unless either Party provides written notice of termination to the other at least eighteen (18) months prior to the end of the Initial Term or any renewal term, as applicable. The Initial Term, together with any renewal terms, shall be referred to herein as the “Term.”

7.2 Termination by Mutual Agreement . This Agreement may be terminated at any time upon mutual written agreement between the Parties.

7.3 Termination for Default . This Agreement may be terminated by either Party in the event of the material breach or default by the other Party of the terms and conditions hereof, provided that the non-breaching Party shall first give to the defaulting Party written notice of the proposed termination or cancellation of this Agreement, specifying the grounds therefor. Upon receipt of such notice, the defaulting Party shall have [**] to respond by curing such default (or [**] with respect to a failure by Zavante to pay any amounts hereunder when due); or (other than with respect to Zavante’s failure to pay any amounts hereunder when due) by delivering to the other Party a certificate that such breach is not capable of being cured within such [**] and that the breaching Party is working diligently to cure such breach; but in no event shall the time period for curing such breach exceed an additional [**]. If the breaching Party does not so respond or fails so to work diligently and to cure such breach within the additional time set forth above, then the other Party may either suspend the Agreement indefinitely or terminate the Agreement. Termination of this Agreement pursuant to this Section 7.2 shall not affect any other rights or remedies that may be available to the non-defaulting Party.

7.4 Bankruptcy; Insolvency . Either Party may terminate this Agreement upon the occurrence of either of the following:

7.4.1 The entry of a decree or order for relief by a court having jurisdiction in respect of the other Party in an involuntary case under the Federal Bankruptcy Code, as now constituted or hereafter amended, or under any other applicable Spanish, federal or state insolvency or other similar law and the continuance of any such decree or order unstayed and in effect for a period of [**]; or

7.4.2 The filing by the other Party of a petition for relief under the Federal Bankruptcy Code, as now constituted or hereafter amended, or any other applicable federal or state insolvency or other similar law.

7.5 Termination by Zavante .

7.5.1 If the Product(s) is withdrawn from the market in the Territory due to safety reasons, or if the Product(s) is not approved by the FDA, this Agreement may be terminated by Zavante immediately upon written notice.

7.5.2 If FDA has objections to the Technical Documentation supplied by ERN, ERN and Zavante will agree how to solve the objections. If ERN is unwilling to address those objections in a timely manner, then Zavante may terminate this Agreement.

7.6 Termination by ERN. If Zavante has not obtained Product Approval within three (3) years of submission of the NDA, provided such non-approval is not due to manufacturing problems of Ercros, ERN may terminate this Agreement without any right to claim from Zavante any compensation for termination, without prejudice to any rights that ERN may have against Zavante as a result of any problem attributable to the gross negligence of Zavante .

7.7 Expiration; Termination; Consequences .

7.7.1 Zavante will pay the Indemnification Payment set forth in Annex 5 in the event that ERN terminates this Agreement in accordance with Section 7.3 for an uncured breach by Zavante of its obligations: (a) to notify ERN of the approval of the NDA in accordance with Section 5.1(a) or the date of First Commercial Sale in accordance with Section 5.1(b); (b) to provide to ERN in accordance with the provisions of Section 5.2: (i) a copy of purchase orders issued to Ercros, (ii) [**] summarizing the number of vials sold during each [**], or (iii) copies of reports from third party logistics providers showing the number of vials sold by such provider during each [**]; or (c) to pay the ERN Knowledge Price in accordance with Section 5.2. Payment of the Indemnification Payment will be Zavante’s sole liability and ERN’s exclusive remedy for any such breach by Zavante, and Zavante shall not be required to pay the Indemnification Payment if this Agreement expires or is terminated for any reason other than those set forth in subsections (a), (b) or (c) of this Section 7.7.1.

7.7.2 Upon termination of this Agreement prior to the expiration date by Zavante in accordance with Sections 7.3, 7.4 or 7.5.2, the licenses granted to Zavante under Sections 10.1, 10.3 and 10.7 shall become perpetual and irrevocable.

7.7.3 Upon termination of this Agreement prior to the expiration date by ERN in accordance with Sections 7.3 or 7.4, the license granted to Zavante under Sections 10.1, 10.3 and 10.7, shall become non-exclusive.

7.7.4 Upon expiration or termination of this Agreement, the obligations of confidentiality and restrictions on use of Confidential Information under Article 14 hereof shall survive for the period provided therein.

ARTICLE 8: INDEMNIFICATION OF THIRD PARTY CLAIMS

8.1 Indemnification by Zavante . Zavante shall indemnify, defend and hold ERN, its Affiliates and their respective directors, officers, employees, agents, successors and assigns (collectively, the “ERN Indemnitees”), harmless from and against any damages, judgments, claims, suits, actions, liabilities, costs and expenses (including, but not limited to, reasonable attorneys’ fees) (collectively, “Losses”) to the extent directly attributable to (a) any Third Party claim of illness, injury, or death caused by the use of any Product manufactured by ERN hereunder in accordance with the Specifications; (b) any claim by any employee of ERN, its subcontractors, or any third party of illness, injury or death arising out of Zavante’s failure to inform ERN of health risks pursuant to Section 2.2 above; (c) any proceeding instituted by or on behalf of a Third Party based upon a claim that the manufacture, use or sale of the Product infringes a United States patent or any other proprietary rights utilized by ERN in in relation to the Product; (d) any Third Party (including patients and clinical trial participants) claims arising out of Zavante clinical trials or related to the FDA approval process as agreed to in this Agreement; (e) any claims brought by the FDA, the U.S. government or any U.S. agency arising out of the FDA approval process for the Product; (f) Third Party claims arising out of the commercial sale, distribution or use in the Territory of Product manufactured by ERN in accordance with the Specifications; or (g) gross negligence or willful misconduct by Zavante or its respective directors, officers, employees, agents, or representatives. Zavante’s indemnification obligations under this Section 8.1 will be reduced to the extent that indemnifiable Losses arise out of or in connection with any gross negligence, gross misconduct or material breach of this Agreement by an ERN Indemnitee.

8.2 Indemnification by ERN . ERN shall indemnify and hold Zavante, its Affiliates and their respective directors, officers, employees, agents, successors and assigns (collectively, the “Zavante Indemnitees”) harmless from and against any Losses to the extent directly attributable to (a) any Third Party claim of illness, injury or death caused by the use of any Clinical Product manufactured by ERN which does not conform to the Clinical Product specifications; (b) gross negligence or willful misconduct by ERN or its respective directors, officers, employees, agents, or representatives; and (c) ERN’s material breach of this Agreement including, without limitation, Section 12.1. ERN’s indemnification obligations under this Section 8.2 will be reduced to the extent that indemnifiable Losses arise out of or in connection with any gross negligence, gross misconduct or material breach of this Agreement by a Zavante Indemnitee.

8.3 Indemnification Procedures . A Party (the “Indemnitee”) which intends to claim indemnification under this Article 8 shall promptly notify the other Party (the “Indemnitor”) in writing of any action, claim or other matter in respect of which the Indemnitee or any of its Affiliates, or any of their respective directors, officers, employees or agents intend to claim such indemnification; provided, however, the failure to provide such notice within a reasonable period of time shall not relieve the Indemnitor of any of its

obligations hereunder except to the extent the Indemnitor is prejudiced by such failure. The Indemnitee, its Affiliates, and their respective directors, officers, employees and agents shall, at its own expense, cooperate fully with the Indemnitor and its legal representatives in the investigation, negotiation, compromise, settlement and defense of any action, claim or other matter covered by this indemnification, including, without limitation, by providing information, documentation, access to witnesses for written or oral testimony that is or may reasonably be considered to be relevant to the subject of indemnification set forth in this Article 13 or the obligations of the Indemnitor under such Article. The Indemnitor shall be in charge of and control of any such investigation, negotiation, compromise, settlement and defense, and shall have the right to select counsel with respect thereto, provided that the Indemnitor shall promptly notify the Indemnitee of all material developments in the matter. In no event shall the Indemnitee compromise or settle any such matter without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; nor shall the non-consenting Party be bound by any such settlement in the absence of such consent. The Indemnitee shall have the right, but not the obligation, to be represented by counsel of its own selection and at its own expense.

When providing notice of an infringement claim, such notice shall (i) identify the nature of the claim with as much specificity as is reasonably available to the Indemnitee and (ii) identify, initially and on an on-going basis, any other person/entity having a potential indemnification obligation to the Indemnitee to whom the Indemnitee has provided notice of the Loss. The Indemnitor shall not have any right, without the Indemnitee’s written consent, which consent shall not be unreasonably withheld, to settle any such claim if such settlement arises from or is part of any criminal action, suit or proceeding or contains a stipulation to or admission or acknowledgement of, any liability or wrongdoing (whether in contract, tort or otherwise) on the part of the Indemnitee, calls for or requires any performance by the Indemnitor over and above the amount for which the Indemnitee is responsible under this Article 8, or requires any specific performance or non-pecuniary remedy by the Indemnitor. The Indemnitee shall have the right to participate in the defense of a claim with counsel of its choice at its own expense. Except in the case of a settlement having been entered into by the Indemnitor without the Indemnitee’s consent, the Indemnitor’s assumption of the defense of any claim asserted to be within the scope of the indemnity shall not prejudice the determination of whether a claim is properly subject to indemnification hereunder nor waive the Indemnitor’s right at any time to disclaim obligations under this Article 8.

8.4 Survival of Indemnification Obligations . The provisions of this Article 13 shall survive the expiration or termination of this Agreement.

ARTICLE 9: CONFIDENTIALITY

9.1 During the term of this Agreement and for a period of [**] following termination of this Agreement, each of Zavante and ERN agrees not to publish, disclose or use for any purpose other than its performance hereunder, any information disclosed by the other Party which is ERN Intellectual and Industrial Property or Zavante Intellectual and Industrial Property, respectively, or which is designated as proprietary or confidential (“Confidential Information”), including, without limitation, information stored on audio or video tapes

and disks, or information or knowledge visually acquired by or generated by Zavante or ERN personnel in the form of written notes and memoranda memorializing information or knowledge acquired visually, aurally or orally in the course of either Party’s performance hereunder.

9.2 Each Party (the “Receiving Party”) shall limit disclosure of Confidential Information received hereunder from the disclosing party (the “Disclosing Party”) to only those officers and employees, and in the case of Zavante, consultants, of the Receiving Party (or its Affiliates’) who are directly concerned with the performance of this Agreement, on a need-to-know basis. Each Party shall advise such officers or employees, and in the case of Zavante, consultants, upon disclosure of any Confidential Information to them of the confidential nature of the Confidential Information and the terms and conditions of this Article 14, and shall use all reasonable safeguards to prevent unauthorized disclosure of the Confidential Information by such officers and employees, and in the case of Zavante, consultants.

9.3 Both Parties agree that the following shall not be considered Confidential Information subject to this Agreement:

9.3.1 information that is in the public domain by publication or otherwise, provided that such publication is not in violation of this Agreement or any other confidentiality agreement to which one of the Parties is bound;

9.3.2 information that the Receiving Party can establish in writing was in the Receiving Party’s possession prior to the time of disclosure by the Disclosing Party and was not acquired, directly or indirectly, from the Disclosing Party, other than a disclosure that originated from the Disclosing Party without restriction on further disclosure;

9.3.3 information that the Receiving Party lawfully receives from a Third Party; provided, however, that such Third Party was not obligated to hold such information in confidence;

9.3.4 information that, prior to the Disclosing Party’s disclosure thereof, was independently developed by the Receiving Party without reference to any Confidential Information as established by appropriate documentation; and

9.3.5 information that the Receiving Party is compelled to disclose by a court, administrative agency, or other tribunal; provided however, that in such case the Receiving Party shall immediately give as much advance written notice as feasible to the Disclosing Party to enable the Disclosing Party to exercise its legal rights to prevent and/or limit such disclosure. In any event, the Receiving Party shall disclose only that portion of the Confidential Information that, in the opinion of the Receiving Party’s legal counsel, is legally required to be disclosed and will exercise reasonable best efforts to ensure that any such information so disclosed will be accorded confidential treatment by said court, administrative agency or tribunal.

9.4 All Confidential Information shall remain the property of the Disclosing Party. Upon the termination of this Agreement, or at any time upon the request of the other Party, the Receiving Party shall immediately return or destroy any Confidential Information in the Receiving Party’s possession, custody or control, except that the Receiving Party may keep one (1) physical copy for archival purposes. Confidential Information in digital form may be retained for archival and/or regulatory purposes only if stored in a way that restricts access to persons with a legitimate need to know and Commercially Reasonable Efforts are used to prevent additional copies from being made. The Disclosing Party’s failure to request the return of Confidential Information shall not relieve the Receiving Party of its confidentiality obligations under this Agreement.

9.5 Each Party acknowledges and expressly agrees that the remedy at law for any breach by it of the terms of this Article 9 shall be inadequate and that the full amount of damages which would result from such breach are not readily susceptible to being measured in monetary terms. Accordingly, in the event of a breach or threatened breach by either Party of this Article 9, the other Party shall be entitled to immediate injunctive relief prohibiting any such breach and requiring the immediate return of all Confidential Information. The remedies set forth in this Section 9.5 shall be in addition to any other remedies available for any such breach or threatened breach, including the recovery of damages from the breaching Party.

9.6 The terms and conditions of this Agreement, but not the fact of its existence, shall constitute Confidential Information of Zavante, except that either Party may disclose such terms and conditions to its Affiliates in accordance with Sections 9.2 and 13.2 hereof.

ARTICLE 10: INTELLECTUAL AND INDUSTRIAL PROPERTY

10.1 All ERN Intellectual and Industrial Property is the property of ERN. Zavante shall have, and ERN hereby grants to Zavante, an exclusive (even as to ERN and its Affiliates), non-transferable (except as permitted under Section 15.6), and without any right to sublicense (except as permitted under Section 10.3), license for the Territory to exploit, reproduce and distribute any ERN Intellectual and Industrial Property and ERN Confidential Information (including, for the avoidance of doubt, any copyrights included in the ERN Intellectual and Industrial Property), to the maximum extent permitted under law, as reasonably required by Zavante to obtain regulatory approval for and commercialize the Product in the Territory, which license shall include, without limitation, the right to disclose, report and include any ERN Intellectual and Industrial Property and any General Developments in any filings or regulatory submissions to FDA or any other regulatory bodies in the United States or elsewhere in connection with the Product including, without limitation, in order to obtain or extend marketing exclusivities and patent protection for the Product in the Territory. Except as set forth in Section 10.3, below, Zavante shall acquire no other right, title or interest in the ERN Intellectual and Industrial Property and Confidential Information as a result of its performance hereunder.

10.2 All Zavante Intellectual and Industrial Property shall be the property of Zavante. ERN shall have, and Zavante hereby grants to ERN, a non-exclusive, non-transferable, and without any right to sublicense, license for the Territory to exploit, reproduce and distribute

any Zavante Intellectual and Industrial Property and Zavante Confidential Information solely to the extent necessary to assist ERN in its performance hereunder, and to the maximum extent permitted under law. ERN shall acquire no other right, title or interest in the Zavante Intellectual and Industrial Property and Zavante Confidential Information as a result of its performance hereunder.

10.3 Zavante shall have the right to sublicense any of its rights granted under Section 10.1 to any of its Affiliates, and to any Third Party solely in connection with the manufacture of the Commercial Product to obtain Commercial Product Approval and for the importation, use, marketing, promotion, sale, and offer for sale of the Commercial Product by Zavante within the Territory during the Term.

10.4 License Limitations . Except as set forth in Section 7.7, the licenses granted in Sections 10.1 and 10.3 shall be (i) limited in term to the Term of this Agreement; and (ii) royalty-free other than the ERN Knowledge Payments due under this Agreement.

10.5 General Developments . General Developments shall remain the property of ERN, however Zavante shall have, and ERN hereby grants to Zavante, a non-exclusive, royalty-free license in the Territory to exploit, reproduce and distribute such General Developments, to the maximum extent permitted under law, in connection with the sale and distribution of the Product during the Term of this Agreement.

10.6 In the event that ERN decides to file one or more patent applications (or file any other exclusive rights, or otherwise constitute as exclusive rights) covering, partially or totally, a Product Development not belonging to ERN, or Zavante decides to file one or more patent applications (or file any other exclusive rights, or otherwise constitute as exclusive rights) covering, partially or totally, an ERN General or Product Development, as applicable, using Intellectual and Industrial Property (as defined in this Agreement) of the other Party, before the patent or any other exclusive rights or other constituted exclusive rights is filed, the Parties will negotiate in good faith how the rights that emanate from the patent or from the exclusive rights, or the newly constituted exclusive rights, will be shared. In the event of lack of consent by the non-filing or non-constituting Party, which consent shall not be unreasonably withheld, no Party shall be entitled to file a patent (or an exclusive right, or constitute an exclusive right) using Intellectual and Industrial Property of the other Party. In case of agreement, in the event of the application of a patent, the non-filing Party shall, at the filing Party’s request and expense, assist the first Party in the preparation and prosecution of such patent application(s) and shall execute all documents deemed necessary by the filing Party for the filing thereof.

10.7 The owner of such patents as described in Section 10.6 grants to the other Party a non-exclusive, royalty-free license to use such patents as necessary to comply with the Parties’ obligations under this Agreement and, in the case of Zavante, as reasonably required by Zavante to obtain regulatory approval for and commercialize the Product in the Territory.

10.8 In no circumstance without the written permission of ERN shall Zavante be entitled to reverse engineer the API, the API Mixture or the Product to circumvent ERN Intellectual and Industrial Property rights or ERN Confidential Information.

ARTICLE 11: FORCE MAJEURE

11.1 Effects of Force Majeure . Neither Party shall be held liable or responsible for failure or delay in fulfilling or performing any of its obligations under this Agreement in case such failure or delay is due to any condition beyond the reasonable control of the affected Party including, without limitation, Acts of God, strikes or other labor disputes, war, riot, earthquake, tornado, hurricane, fire, civil disorder, explosion, accident, flood, sabotage, lack of or inability to obtain adequate fuel, power, materials, labor, containers, transportation, supplies or equipment, breakage or failure of properly maintained machinery or apparatus, national defense requirements, or supplier strike, lockout or injunction (a “Force Majeure Event”). Such excuse shall continue as long as the Force Majeure Event continues, provided, however, that Zavante may cancel without penalty any and all Purchase Orders in the event ERN is unable to fulfill an outstanding Purchase Order within sixty (60) days of its scheduled delivery date due to a Force Majeure Event. Upon cessation of such Force Majeure Event, such Party shall promptly resume performance on all Purchase Orders that have not been terminated.

11.2 Notice of Force Majeure Event . In the event either Party is delayed or rendered unable to perform due to a Force Majeure Event, the affected Party shall give notice thereof and its expected duration to the other Party promptly after the occurrence of the force majeure event; and thereafter, the obligations of the affected Party will be suspended during the continuance of the Force Majeure Event. The affected Party shall use Commercially Reasonable Efforts to remedy the Force Majeure Event with all reasonable dispatch, but such obligation shall not require the settlement of strikes or labor controversies on terms unfavorable to the affected Party.

ARTICLE 12: LEGAL COMPLIANCE; AUTHORIZATION

12.1 Legal Compliance . Each Party shall comply in all material respects with all laws and regulations applicable to the conduct of its business pursuant to this Agreement, including, but not limited to, the FD&C Act and applicable EU and Spanish regulations. In addition, both Parties shall comply with all anti-corruption and anti-bribery laws and regulations, including but not limited to, the U.S. Foreign Corrupt Practices Act (FCPA). ERN and its respective officers, directors, employees, agents and representatives, represent that they have not and will not pay, offer or promise to pay or authorize the payment of any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a third party, to any official or employee of any governmental authority, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of (i) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or such public international organization or such political party, (ii) inducing such person to use his influence with such governmental agency or such public international organization or such political party to affect or influence any act or decision thereof, or (iii) securing any improper advantage.

12.2 Authorization .

12.2.1 ERN hereby represents and warrants to Zavante that all corporate action on the part of ERN and its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of ERN hereunder has been taken.

12.2.2 Zavante hereby represents and warrants to ERN that all requisite action on the part of Zavante and its officers and directors necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of Zavante hereunder has been taken.

ARTICLE 13: PRESS RELEASES; USE OF NAMES

13.1 Press Releases . Any press release, publicity or other form of public written disclosure related to this Agreement prepared by one Party shall be submitted to the other Party prior to release for approval, which approval shall not be unreasonably withheld or delayed by such other Party. Notwithstanding the foregoing, except as may be required by applicable law or regulations (including, without limitation, the rules of any public stock exchange if applicable to such Party), no Party shall issue any press release, publicity or other form of public written disclosure regarding this Agreement prior to Product Approval.

13.2 Use of Names . Except as expressly provided or contemplated hereunder and except as otherwise required by applicable law, no right is granted pursuant to this Agreement to either Party to use in any manner the trademarks or name of the other Party, or any other trade name, service mark, or trademark owned by or licensed to the other Party in connection with the performance of this Agreement. Notwithstanding the above, as may be required by applicable law, Zavante, ERN and their Affiliates shall be permitted to use the other Party’s name and to disclose the existence and terms of this Agreement in connection with securities or other public filings.

ARTICLE 14: DISPUTE RESOLUTION

14.1 Dispute Resolution . The Parties recognize that a bona fide dispute as to certain matters may from time to time arise during the term of this Agreement that relates to either Party’s rights and/or obligations hereunder. In the event of the occurrence of such a dispute, either Party may, by notice to the other Party, have such dispute referred to their senior officers as may be designated by each Party for attempted resolution by good faith negotiations to be held within [**] after such notice is received. In the event that the dispute is unable to be resolved by such negotiations, the dispute shall be arbitrated in law under the arbitration rules of the International Chamber of Commerce by a tribunal of three (3) arbitrators under said rules, under Spanish law (as per Section 15.15). The arbitrators shall have the power to allocate costs and to award a reasonable attorneys’ fee to the prevailing Party or Parties, including fees incurred in any judicial action taken in support of the arbitration. The Parties agree to obey and accept the arbitration award as final and binding and waive their respective rights to resort to any other competent jurisdiction except in support of the arbitration. The arbitration will take place in the English language, although the Parties are allowed to submit documents originally drafted in Spanish without translation, and the seat of the arbitration will be Barcelona, Spain.

ARTICLE 15: MISCELLANEOUS

15.1 Insurance . Zavante must include ERN as an additional insured on the Clinical Trial policy for all studies conducted by Zavante using the Product. The ERN coverage level will be the same as that for Zavante and with the same limits. With this inclusion, Zavante releases ERN for clinical claims that may arise during the clinical trials required to obtain approval of the NDA (or ANDA).

15.2 Once the Product is marketed by Zavante in the Territory, Zavante shall at all times maintain insurance coverage with sound and reputable independent insurers. Zavante shall maintain appropriate liability coverage in the amount of at least [**] ($[**]) US dollars or [**]€) euros. Logically, such policy should include US sales. There is no requirement to include the other Party as Additional Insured once the Product is approved by the FDA.

15.3 Each Party shall, upon reasonable request of the other Party, produce satisfactory evidence that all insurance premiums have been paid and kept up to date and are kept in accordance with local insurance laws or regulations from time to time in force, or shall furnish appropriate certificates of insurance showing proof of coverage.

15.4 Independent Contractors . The relationship between Zavante and ERN is that of independent contractors and nothing herein shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between Zavante and ERN. Neither Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement or undertaking with any Third Party.

15.5 Mutual Assistance . To assist the other Party in its performance of this Agreement, each Party shall provide the other Party upon request, in a timely fashion, with all relevant information, documentation and data relating to Product safety. If requested by the other Party, each Party shall provide such support or information (or an explanation of the legitimate reason for any delay and a projected date by which such support or information will be provided) within [**] of receipt of a written request from the other Party. In the event a Party is requested to review or approve any information, documentation, data or samples prepared or supplied by or on behalf of the other Party, it shall complete such review and approval process within [**].

15.6 Assignment . This Agreement may not be assigned or otherwise transferred, neither partially nor in full, by either Party without the prior written consent of the other Party, which consent shall not unreasonably be withheld, except (a) in connection with a merger, (b) in connection with the transfer of all or substantially all of a Party’s assets associated with this Agreement, or (c) to a Party’s Affiliate. Any purported assignment in violation of the preceding sentence shall be void. It shall not be unreasonable to withhold consent for an assignment to an ERN Competitor. Any permitted assignee shall assume all obligations of its assignor under this Agreement, and the Agreement will continue for the duration of the Term under the existing terms and conditions. No assignment shall relieve either Party of responsibility for the performance of any obligation that accrued prior to the effective date of such assignment.

15.7 Continuing Obligations . Termination, assignment or expiration of this Agreement shall not relieve either Party from full performance of any obligations incurred prior thereto.

15.8 Waiver . Neither Party’s waiver of any breach or failure to enforce any of the terms and conditions of this Agreement, at any time, shall in any way affect, limit or waive such Party’s right thereafter to enforce and compel strict compliance with every term and condition of this Agreement.

15.9 Severability . Each Party hereby expressly agrees that it has no intention to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries; that if any word, sentence, paragraph, clause or combination thereof in this Agreement is found by a court or executive body with judicial powers having jurisdiction over this Agreement or either Party hereto, in a final unappealed order, to be in violation of any such provisions in any country or community or association of countries, such words, sentences, paragraphs, clauses or combination shall be inoperative in such country or community or association of countries and the remainder of this Agreement shall remain binding upon the Parties, so long as enforcement of the remainder does not violate the Parties’ overall intentions in this transaction.

15.10 Headings . The headings in this Agreement are for convenience of reference only and shall not affect its interpretation.

15.11 Construction . This Agreement has been jointly prepared on the basis of the mutual understanding of the Parties and shall not be construed against either Party by reason of such Party’s being the drafter hereof or thereof.

15.12 Annexes, Schedules and Attachments . Any and all annexes, schedules and attachments referred to herein form an integral part of this Agreement and are incorporated into this Agreement by such reference.

15.13 Notices . All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered personally or sent by an internationally-recognized courier service guaranteeing three (3) day delivery, charges prepaid, and shall be deemed to have been given upon mailing. Any such notices shall be addressed to the receiving Party at such Party’s address set forth below, or at such other address as may from time to time be furnished by similar notice by either Party:

If to ERN:

Laboratorios ERN, S.A.
499 Pedro IV st.
08020 Barcelona, Spain
Attn: David Solanes López

with a copy (receipt of which shall not constitute notice) to:

Laboratorios ERN, S.A.
228 Perú st.
08020 Barcelona, Spain
Attn: [**]

If to Zavante:

Zavante Therapeutics, Inc.
11750 Sorrento Valley Road
Suite 250, San Diego, CA 92121
United States of America
Attn: Chief Executive Officer

with a copy (receipt of which shall not constitute notice) to:

Zavante Therapeutics, Inc.
11750 Sorrento Valley Road
Suite 250, San Diego, CA 92121
United States of America
Attn: Chief Operating Officer

15.14 Counterparts . This Agreement and any amendment or supplement hereto may be executed in two counterparts and delivered via electronic means, and any Party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. The execution of this Agreement and any such amendment or supplement by any Party hereto will not become effective until counterparts hereof have been executed by both Parties hereto.

15.15 Governing Law; Entire Agreement . The validity, interpretation and performance of this Agreement shall be governed and construed in accordance with the laws of Spain, and with an express exclusion of the United Nations Convention on Contracts for the International Sale of Goods. This Agreement constitutes the full understanding of the Parties and a complete and exclusive statement of the terms of their agreement and supersedes all prior agreements. No terms, conditions, understanding, or agreement purporting to modify or vary the terms of this Agreement shall be binding unless hereafter made in writing and signed by the Party to be bound. No modification to this Agreement shall be effected by the acknowledgment or acceptance of any Purchase Order or shipping instruction forms or similar documents containing terms or conditions at variance with or in addition to those set forth herein.

15.16 Annexes . The following annexes are attached hereto and incorporated herein by reference:

ANNEX 1:                                       ERN Competitors
ANNEX 2:                                       ERN Knowledge Price
ANNEX 3:                                       Development Responsibilities
ANNEX 4:                                       Additional Regulatory Support
ANNEX 5:                                       Indemnification Payment

ANNEX 6: Safety Testing
ANNEX 7: Scheme of the information to be sent by Zavante

[Signatures on following page]

IN WITNESS WHEREOF, the Parties have caused this Amended and Restated Pharmaceutical Manufacturing and Supply Agreement to be executed by their respective duly authorized representatives as of the Effective Date.

Laboratorios ERN, S.A.


By:	/s/ David Solanes L ópez

Name: David Solanes López

Title: General Manager


Zavante Therapeutics, Inc.


By:	/s/ Theodore R. Schroeder

Name: Theodore R. Schroeder

Title: Chief Executive Officer

ANNEX 1: ERN COMPETITORS

[**]

ANNEX 2: ERN KNOWLEDGE PRICE

ERN Knowledge Price : [**] Euros per vial of [**]g of Product sold by Zavante.

If the final dosage of the Product is different than [**]g the parties will apply a direct calculation in the ERN Knowledge price per vial. For example, if the vial contains [**]g of Product, the payment per vial will be [**] Euros (i.e. [**]).

ANNEX 3: DEVELOPMENT RESPONSIBILITIES

ERN will be responsible to prepare and deliver to Zavante Module 2.3. and all of Module 3 in e-CTD format for the Product, including the information indicated below:

Responsibility
F = Financial
T = Technical

Estimated
Completion

Estimated

Budget

Item

Zavante

ERN

Shared

Date

Cost

Reference

[**]

[**][**][**]

[**]

Zavante will be responsible to prepare and compile the full dossier for the Product in e-CTD format to submit to the FDA, including Modules 1, 2 (except 2.3.), 4, 5 and 6, and to add to this information Modules 2.3 and 3 prepared by ERN.

ANNEX 4: REGULATORY SUPPORT

Zavante is responsible for submitting the registration package for regulatory agency approval in the Territory within a mutually agreed time from receipt of the package from ERN (data only package). ERN will provide standard regulatory support for Commercial Product to include:

· ERN will provide to Zavante all required manufacturing-associated data to support Zavante’s filing of the Annual Product Review (APR) with the FDA

· Cooperation with regulatory agency for pre-approval inspections (PAI)

ANNEX 5: INDEMNIFICATION PAYMENT

Year*		Indemnification Payment (Euros)
1		10,300,000
2		10,250,000
3		10,100,000
4		9,350,000
5		7,350,000
6		5,850,000
7		5,850,000
8		5,850,000

* Following the Effective Date.

In the event the Agreement is terminated by ERN pursuant to Section 7.7.1 on any date other than on an anniversary of the Effective Date, the Indemnification Payment owed by Zavante will be prorated in accordance with the following example:

If the termination date occurs 3 years and 115 days after the Effective Date, the Indemnification Payment will be € 9,863,698.63; i.e., the Year 4 Indemnification Payment amount set forth in the table above (€ 9,350,000) plus a pro-rated portion of the Year 3 Indemnification Payment (€513,698.63), calculated as follows: ((€10,100,000 — €9,350,000)/365)*(365-115)).

ANNEX 6: Safety Testing

Accordingly with Option1 of ICH guideline S2 (R1) on genotoxicity testing and data interpretation for pharmaceuticals intended for human use , the ERN’s Commercially Reasonable Efforts for performing the qualification of degradation product profile of the Product will be:

About genotoxicity,

i. A test for gene mutation in bacteria.

OECD Test No. 471: Bacterial Reverse Mutation Test

In parallel, one of the following tests:

ii. A cytogenetic test for chromosomal damage (the in vitro metaphase chromosome aberration test or in vitro micronucleus test), or an in vitro mouse lymphoma Tk gene mutation assay.

Chromosome Aberration: OECD Test No. 473: In vitro Mammalian Chromosome Aberration Test

Micronucleus: OECD Test No. 487: In Vitro Mammalian Cell Micronucleus Test

MLA: OECD Test No. 476: In vitro Mammalian Cell Gene Mutation Test

In case the results would not be clearly negative:

iii. An in vivo test for genotoxicity, generally a test for chromosomal damage using rodent hematopoietic cells, either for micronuclei or for chromosomal aberrations in metaphase cells.

Chromosome Aberration: OECD Test No. 475: Mammalian Bone Marrow Chromosome Aberration Test

Micronucleus: OECD Test No. 474: Mammalian Erythrocyte Micronucleus Test

About general toxicity,

iv. An Acute Oral Toxicity in rats (Limit dose): OECD Test No. 423 . A comparative study of three arm single-dose intravenous toxicity study, with a 14-day observation period, should be performed.

Depending on the results of the previous studies (genotoxicity and single-dose study), it could be necessary to perform a repeated dose study.

ANNEX 7: Scheme of the information to be sent by Zavante (for example only)

Amendment No. 1 to

AMENDED AND RESTATED

PHARMACEUTICAL MANUFACTURING

AND EXCLUSIVE SUPPLY AGREEMENT

This Amendment No. 1 (this “ Amendment ” ) to the Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement, dated as of 28 July, 2016 (the “ Agreement ”), by and between Laboratorios ERN, S.A., a Spanish Company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain (“ERN”) and Zavante Therapeutics, Inc., a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, will be effective as of December 1, 2016 (the “ Amendment Effective Date ”) .

W I T N E S S:

WHEREAS, the Parties have entered into and now desire to amend the Agreement to add an additional study to Annex 3;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.

2. Amendments to the Agreement . As of the Amendment Effective Date (defined below), the Agreement is hereby amended or modified as follows:

(a) Annex 3(1), “Addendum to Development Responsibilities,” attached hereto shall be added to Annex 3 of the Agreement. All other elements of Annex 3 shall remain unchanged.

3. Date of Effectiveness; Limited Effect . Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

Laboratorios ERN, S.A.		Zavante Therapeutics, Inc.

By:	/s/David Solanes Lopez	By:	/s/Theodore R. Schroeder


Name: David Solanes Lopez		Name: Ted R. Schroeder
Title: General Manager /s/5/12/2016		Title: CEO

ANNEX 3(1): Addendum to DEVELOPMENT RESPONSIBILITIES

Responsibility
F = Financial
T = Technical

Estimated

Item

Zavante

ERN

Shared

Completion Date

Cost

Budget Reference

[**]

Amendment No. 2 to
AMENDED AND RESTATED
PHARMACEUTICAL MANUFACTURING
AND EXCLUSIVE SUPPLY AGREEMENT

This Amendment No. 2 (this “ Amendment ”) to the Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement, dated as of 28 July, 2016 as amended on December 5, 2016 (the “ Agreement ”), by and between Laboratorios ERN, S.A., a Spanish Company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain (“ERN”) and Zavante Therapeutics, Inc., a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, will be effective as of March 1, 2017 (the “ Amendment Effective Date ”).

W I T N E S S:

WHEREAS, the Parties have entered into and now desire to further amend the Agreement to add an additional study to Annex 3;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.

2. Amendments to the Agreement . As of the Amendment Effective Date (defined below), the Agreement is hereby amended or modified as follows:

(a) Annex 3(2), “Addendum to Development Responsibilities,” attached hereto shall be added to Annex 3 of the Agreement. All other elements of Annex 3 shall remain unchanged.

3. Date of Effectiveness; Limited Effect . Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

Laboratorios ERN, S.A.		Zavante Therapeutics, Inc.

By:	/s/David Solanes Lopez	By:	/s/Theodore R. Schroeder


Name: David Solanes Lopez		Name: Ted R. Schroeder
Title: General Manager		Title: CEO

ANNEX 3(2): Addendum to DEVELOPMENT RESPONSIBILITIES

Responsibility
F = Financial
T = Technical

Estimated

Item

Zavante

ERN

Shared

Completion Date

Cost

Budget Reference

[**]

Amendment No. 3 to
AMENDED AND RESTATED
PHARMACEUTICAL MANUFACTURING
AND EXCLUSIVE SUPPLY AGREEMENT

This Amendment No. 3 (this “ Amendment ”) to the Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement, dated as of 28 July, 2016 as amended on December 1, 2016 and on March 1, 2017 (the “ Agreement ”), by and between Laboratorios ERN, S.A., a Spanish Company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain (“ ERN ”) and Zavante Therapeutics, Inc., a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121, will be effective as of May 1, 2017 (the “ Amendment Effective Date ”).

W I T N E S S:

WHEREAS, the Parties have entered into and now desire to further amend the Agreement to add two additional studies to Annex 3;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.

2. Amendments to the Agreement . As of the Amendment Effective Date (defined below), the Agreement is hereby amended or modified as follows:

(a) Annex 3(2), “Addendum to Development Responsibilities,” attached hereto shall be added to Annex 3 of the Agreement. All other elements of Annex 3 shall remain unchanged.

3. Date of Effectiveness; Limited Effect . Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

Laboratorios ERN, S.A.		Zavante Therapeutics, Inc.

By:	/s/David Solanes Lopez	By:	/s/Theodore R. Schroeder


Name: David Solanes Lopez		Name: Ted R. Schroeder
Title: General Manager		Title: CEO

ANNEX 3(3): Addendum to DEVELOPMENT RESPONSIBILITIES

Responsibility
F = Financial
T = Technical

Estimated

Item

Zavante

ERN

Shared

Completion Date

Cost

Budget Reference

[**]

Amendment No. 4 to
AMENDED AND RESTATED
PHARMACEUTICAL MANUFACTURING
AND EXCLUSIVE SUPPLY AGREEMENT

This Amendment No. 4 (this “ Amendment ”) to the Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement, dated as of 28 July, 2016, as amended on December 1, 2016, March 1, 2017, and May 1, 2017 (the “ Agreement ”), by and between Laboratorios ERN, S.A., a Spanish Company with a principal place of business at 499 Pedro IV, 08020 Barcelona, Spain (“ ERN ”) and Zavante Therapeutics, Inc., a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121 (“ Zavante ”), will be effective as of December, 20th, 2017 (the “ Amendment Effective Date ”) .

W I T N E S S:

WHEREAS, the Parties desire to amend the Agreement to replace Annex 3 of the Agreement with a new version of Annex 3 , and to revise the financial responsibilities of the Parties for the Development Responsibilities (as defined in Section 2.3.1. of the Agreement) set forth therein;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.

2. Amendments to the Agreement . As of the Amendment Effective Date (defined below), the Agreement is hereby amended or modified as follows:

(a) ANNEX 3 , “ Development Responsibilities ’” of the Agreement is hereby superseded and replaced, in its entirety, with the version of ANNEX 3 attached to this Amendment. As referenced in Section 15.12 of the Agreement, the attached version of ANNEX 3 shall form an integral part of the Agreement and is incorporated therein by this reference.

(b) Section 2.3.1 of the Agreement is hereby amended to read, in its entirety (and in substitution of the original Section 2.3.1 of the Agreement), as follows:

2.3.1 Development Responsibilities . Each Party will use Commercially Reasonable Efforts to complete certain development activities required for NDA submission and/or in connection with the commercialization of the Product within the Territory, as set forth in ANNEX 3 to this Agreement (the “Development Responsibilities”) according to the following provisions:

2.3.1.1 Each Party will be responsible for completing its designated Development Responsibilities (as set forth in ANNEX 3 ), and shall bear [**] costs associated therewith, provided, however , that the Parties shall jointly complete and each Party shall bear [**] of

the total costs associated with Development Responsibilities identified in ANNEX 3 as “shared” (the “Shared Development Responsibilities”).

2.3.1.2 The Parties will mutually agree upon the protocols and costs for the Development Responsibilities and Zavante shall confer with ERN on any change to the Development Responsibilities listed in ANNEX 3 , or to any new activities required by the FDA that Zavante intends to include as new Development Responsibilities under this Agreement. Notwithstanding the foregoing, but subject to Sections 2.3.1.3 and 2.3.1.4, and to Section 2.3.1.5 with respect to Shared Development Responsibilities, in the event the Parties are unable to reach agreement on such protocols and costs, Zavante shall have final decision-making authority with respect to protocols and costs for the Development Responsibilities.

2.3.1.3 Notwithstanding the foregoing, ERN’s share of the total costs associated with the Development Responsibilities (including amounts reimbursed to Zavante prior to the Amendment Effective Date) shall not exceed [**] U.S. Dollars (USS $[**]), even if the actual costs of the Development Responsibilities exceed the estimated amounts in ANNEX 3 . This amount shall be understood to be the total amount to be paid by ERN for all Development Responsibilities (including, without limitation, Shared Development Responsibilities), independently of ownership of any Intellectual and Industrial Property Rights related thereto, which shall be governed by Section 10.8.

2.3.1.4 For the avoidance of doubt, and without prejudice to the obligations that Zavante decides to assume on its own behalf due to Zavante’s final decision-making authority under Section 2.3.1.2, neither Party shall have any financial or technical obligation with respect to any Development Activity that is not included in ANNEX 3 unless an amendment to the Agreement incorporating such Development Activity is executed by authorized representatives of both Parties.

2.3.1.5 Shared Development Responsibilities - Procedures .

2.3.1.5.1 The Parties will agree in writing as to which Party will be the “Lead Party” with respect to the preparation, execution, monitoring, contracting and paying the selected service provider for each of the Shared Development Responsibilities initiated following the Amendment Effective Date.

2.3.1.5.2 The Lead Party for each Shared Development Responsibility will be responsible for developing the protocol and, unless a budget is already included in ANNEX 3 , a budget of estimated costs for such Shared Development Responsibility.

2.3.1.5.3 If requested in writing by the other Party, the Lead Party shall endeavor to obtain [**] budget quotes from qualified service providers.

2.3.1.5.4 The other Party shall notify the Lead Party in writing of any objections within [**] after receiving a copy of the protocol and budget estimate. Failure to provide any objection within such three-day period shall be deemed to be approval of such protocol and budget estimate. The Lead Party and the other Party shall work together in good faith to resolve any such objections in a timely manner.

2.3.1.5.5 Subject to Section 2.3.1.3, the other Party agrees to reimburse the Lead Party for its [**] of the costs for each Shared Development Responsibility within [**] of receiving an invoice from the Lead Party. With each such invoice, the Lead Party shall include copies of all invoices and receipts from service providers for the Shared Development Responsibilities.

10.9 Developed Intellectual Property and Confidential Information. As between the Parties and subject to the terms of this Agreement, each Party shall jointly own all right, title and interest in and to all Intellectual and Industrial Property and all other information, reports and findings, methods, procedures, study results and inventions developed as a result or in the course of completing the Development Responsibilities (including Shared Development Responsibilities), whether completed before the Amendment Effective Date or afterwards and irrespective of inventorship (“Developed Intellectual Property”). Additionally, all Developed Intellectual Property shall be considered Confidential Information of both Parties.

10.9.1 Each Party will have the right, subject to the terms of this Agreement, to make, have made, use, offer to sell, sell and import Products incorporating the Developed Intellectual Property and freely exercise, transfer, assign, license, encumber, enforce and otherwise exploit (“Exploit”) its rights in the Developed Intellectual Property without the consent, joinder, or participation of, or payment or accounting, to the other Party, provided , that, Zavante’s rights to Exploit the Developed Intellectual Property shall apply only within the Territory, and ERN’s rights to

Exploit the Developed Intellectual Property shall apply only outside of the Territory. For the avoidance of doubt, ERN shall have no right to Exploit the Developed Intellectual Property within the Territory, and Zavante shall have no right to Exploit the Developed Intellectual Property outside of the Territory. Each Party will, and hereby does, assign, license and otherwise transfer, and shall cause its Affiliates to assign, license and otherwise transfer, to the other Party and its permitted successors and assigns, without requirement of additional consideration, all such right, title and interest in and to the Developed Intellectual Property as is necessary to fully effect the provisions of this Section 10.9.

10.9.2 Each Party shall promptly disclose to the other Party all such information, reports and findings, methods, procedures, study results and inventions developed as a result or in the course of completing the Development Responsibilities (including Shared Development Responsibilities), whether developed prior to or after the Amendment Effective Date.

10.9.3 Without prejudice to the agreements contained in this Section 10.9, all Developed Intellectual Property and Developed Confidential Information shall be subject to Zavante’s rights under Sections 10.1, 10.3 and 10.7 of the Agreement, and to ERN’s rights under Section 10.2.

10.9.4 The Parties shall use commercially reasonable efforts to address all issues concerning the inventorship, or ownership of, or any rights to, Developed Intellectual Property, in a fair and equitable manner and in accordance with the requirements of applicable patent law to achieve the goals of this Agreement. If a dispute arises concerning the Developed Intellectual Property, it shall be resolved in accordance with Article 14 of the Agreement.

3. Date of Effectiveness; Limited Effect . Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect.

In the event of any conflict between the terms of the Agreement or the amendments thereto stated herein, the amendments will prevail.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

Laboratorios ERN, S.A.		Zavante Therapeutics, Inc.

By:	/s/David Solanes Lopez	By:	/s/Theodore R. Schroeder

Name: David Solanes Lopez		Name: Ted R. Schroeder
Title: General Manager		Title: CEO

ANNEX 3: DEVELOPMENT RESPONSIBILITIES

Zavante will be responsible to prepare and compile the full dossier for the Product in e-CTD format to submit to the FDA, including Modules 1, 2, 4, 5 and 6. ERN will be responsible to review Module 2.3 and all of Module 3 prepared by Zavante in e-CTD format for the Product.

Development Activity	Responsibility T=Technical F=Financial	ERN payment received(2)	Budget
[]**	Shared T & F	[**]	[**]
[]**	Shared T & F	[**]	[**]
[]**	Shared T & F	[**]	[**]
[]**	Zavante T & F Shared T&F	[**]	[**]
[]**	Shared T&F	[**]	[**]
[]**	Shared T&F		[**]
[]**	Shared T&F		[**]
[]**	Shared T&F		[**]
[]**	Shared T, ERN F		[**]
Total Development Estimate		[**]	[**]

Note [**]

Exhibit 10.10

April 19, 2017

Confidential

Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Double asterisks denote omission.

Manufacturing & Supply Agreement

This Manufacturing and Supply Agreement (the “ Agreement ”) is made as of this 25 day of April, 2017 (the “ Effective Date ”), by and between Zavante Therapeutics, Inc. , a corporation organized under the laws of the State of Delaware, USA, with a place of business located at 11750 Sorrento Valley Road, Suite 250, San Diego California 92121, USA (“ Zavante ”) and Fisiopharma , S.r.l ., a corporation organized under the laws of Italy, with a place of business located at Via Andrea Appiani, 22, 20121 Milano, Italy (“ Fisiopharma ”).

WHEREAS, Zavante holds certain intellectual property rights to a finished dosage form of fosfomycin disodium for intravenous injection (the “ Finished Drug Product ”)

WHEREAS, Fisiopharma is a manufacturer of finished and bulk drug products wishes to manufacture and supply fosfomycin disodium for intravenous injection in the primary container closure system (“ Bulk Drug Vials ”) to Zavante on an exclusive basis for the Territory (as such term is defined below);

WHEREAS, Zavante desires a supply of commercial quantities of Bulk Drug Vials; and

WHEREAS, Zavante and Fisiopharma also desire to enter into a Quality Agreement with respect to the manufacturer of the Bulk Drug Vials, as provided herein;

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, Fisiopharma and Zavante (each, a “ Party ” and, collectively, the “ Parties ”) agree as follows.

1. Scope of Agreement

1.1 This Agreement shall apply to all purchases of Bulk Drug Vials by Zavante from Fisiopharma-during the term of this Agreement.

1.2 This Agreement does not constitute a purchase order. Purchases under this Agreement shall be made only with purchase orders issued by Zavante to Fisiopharma (each, a “ Purchase Order ”). The Purchase Order shall set forth the quantities of Bulk Drug Vials desired, the desired delivery date and the desired destination for delivery. All terms and conditions of the Purchase Orders shall apply, provided that in the event of a conflict between the terms of any Purchase Order, order acknowledgement, packaging slip or other documentation, and the terms of this Agreement, the terms of this Agreement shall control, unless such documentation expressly states that it overrides conflicting terms of this Agreement and is signed by each of the Parties.

1.3 All Bulk Drug Vials sold by Fisiopharma to Zavante will be manufactured by Fisiopharma in accordance with the terms of this Agreement.

2. Technology Transfer

2.1 Technology Transfer . Zavante shall assist Fisiopharma with the transfer of the relevant manufacturing and analytical technology required to manufacture the Bulk Drug Vials at Fisiopharma’s facility located at Nucleo Industriale, 84020, Palomonte (SA), Italy (the “ Facility ”), to the extent such transfer is consistent with Zavante’s legal obligations to any third parties. Zavante shall bear the costs associated with such technology transfer in accordance with the amounts set forth in Schedule A . Under no circumstances will Zavante be liable for

any additional costs associated with technology transfer except pursuant to a written amendment to this Agreement or a Purchase Order issued by Zavante and subject to the terms and conditions of this Agreement. Payment terms for reimbursement of technology transfer costs shall be net [**] following Zavante’s acceptance of the completed Technology Transfer Deliverables (as set forth in Schedule A ).

3. Manufacturing

3.1 Fisiopharma shall manufacture, test, package, store, code, release and deliver the Bulk Drug Vials at the Facility, in accordance with the specifications set forth on Schedule B attached hereto, as may be updated by Zavante from time to time upon written notice to Fisiopharma (the “ Specifications ”), Applicable Laws (as defined in Section 9.1.1), the NDA (as defined in Section 3.4), and the Quality Agreement (as defined in Section 10.1). Fisiopharma shall procure and provide all labels, packaging, materials components and containers required to manufacture the Bulk Drug Vials in accordance with the Specifications, except for the API Mixture, which will be provided by Zavante in accordance with Section 3.6. If Fisiopharma wishes to make any change to the Specifications (including, but not limited to, any change that could affect the purity, potency, identity and/or physical properties of the Bulk Drug Vials or the site of its manufacture), or if Fisiopharma believes that a change is required by (a) any regulatory agency which has jurisdiction over Zavante, Fisiopharma and/or the Bulk Drug Vials; or (b) the U.S. Pharmacopoeia, Fisiopharma shall notify Zavante in writing in advance thereof and comply with the requirements of Sections 3.2 and 3.3 prior to implementing such change. Such notification shall describe the proposed change in sufficient detail so as to permit Zavante to understand the reasons for the proposed change and evaluate the impact of such change on its development plans, its plans to seek regulatory approval and its commercialization plans with respect to Bulk Drug Vials.

3.2 If any change to the Specifications requires the approval of the U.S. Food and Drug Administration and any successor agency of the U.S. government (the “ FDA ”), other governmental agency or any foreign regulatory agency equivalent to the FDA, each having jurisdiction over Bulk Drug Vials or Zavante’s marketing of the Bulk Drug Vials (each a “ Regulatory Agency ”), such change shall not be implemented until each Regulatory Agency has approved such change in writing and Zavante has had sufficient time to adopt and implement such change into its operations. For the avoidance of doubt, Fisiopharma shall not supply to Zavante hereunder, and Zavante shall have no obligation to accept any Bulk Drug Vials from Fisiopharma manufactured in contravention of this Section 3.2.

3.3 Without limiting the generality of Sections 3.1 or 3.2, under no circumstances shall Fisiopharma change the Specifications without Zavante’s prior written approval, in its sole discretion.

3.4 Fisiopharma will undertake, at its own cost and expense, all commercially reasonable steps necessary to enable Zavante to secure from the relevant Regulatory Agencies approval of Fisiopharma as a source of supply of Bulk Drug Vials to be marketed in the United States, its territories and possessions (the “ Territory ”). Without limiting the generality of the foregoing, Fisiopharma will supply to Zavante, as soon as possible, sufficient quantities of Bulk Drug Vials to enable Zavante to support the filing of one or more New Drug Application (or Abbreviated New Drug Application, if applicable) (the “ NDA ”), together with all amendments and supplements thereto, referencing Fisiopharma as its supplier of Bulk Drug Vials. Fisiopharma will be responsible for procuring and maintaining all regulatory filings and any other compliance efforts related to the Facility and the manufacturing the Bulk Drug Vials that are required in order to obtain approval from the FDA of Zavante’s NDAs referencing Bulk Drug Vials and equivalent approvals from Regulatory Agencies in the Territory, at no additional cost to Zavante. However, in the event that Fisiopharma is assessed fees as a “Foreign FDF Facility” under the U.S. Generic Drug User Fee Amendments of 2012 (U.S. Pub. L. 112-144, Title III) (“ GDUFA ”) as a direct result of Fisiopharma’s supply of the Bulk Drug Vials to Zavante under this Agreement, Fisiopharma will invoice Zavante for Zavante’s portion of the “Foreign FDF Facility” GDUFA fee, and Zavante will pay the invoiced amount promptly. Notwithstanding the foregoing, in the event that Fisiopharma is assessed fees as a “Foreign FDF Facility” under

GDUFA in connection with manufacturing activities performed for any Third Parties in addition to Zavante, the amount of such fee charged to Zavante will be shared equally between Zavante and such Third Parties.

3.5 Fisiopharma shall test, or have tested, each lot of Bulk Drug Vials manufactured for Zavante by Fisiopharma, using the analytical testing methodologies that are set forth in the Specifications. With each shipment of Bulk Drug Vials, Fisiopharma shall deliver to Zavante certificates of analysis and compliance from Fisiopharma: (a) stating that the Bulk Drug Vials being shipped have been tested and conform to the Specifications; (b) setting forth in detail the testing methodology employed by Fisiopharma in making the foregoing determination and the results generated by such tests; and (c) confirming compliance with the regulations set forth in United States Code of Federal Regulations Section 21, Parts 210—211, 820 and Section 21 Subchapter C (Drugs) (“ cGMP ”) and other Applicable Laws.

3.6 Zavante shall purchase and arrange to have shipped to Fisiopharma [DDU (Incoterms 2010)] sufficient quantities of the active pharmaceutical ingredient, sterile fosfomycin sodium meeting European Pharmacopoeia 02/2008: 1329 monograph specifications (the “ API ”), blended with succinic acid (together, the “ API Mixture ”) exclusively for Fisiopharma to manufacture the Bulk Drug Vials for Zavante. Under no circumstances shall Fisiopharma: (a) use the API Mixture for any purpose other than manufacturing the Bulk Drug Vials for Zavante; (b) supply the API Mixture to any third party; or (c) make any disclosure of, or grant any license over, the API Mixture or any analytical methods, procedures or Confidential Information provided by Zavante or developed by Fisiopharma in the course of performing services for Zavante under this Agreement, without prior written approval from Zavante in its sole discretion. The initial value of the API Mixture is [**] Euros (€[**]) per Kilogram of API Mixture, subject to adjustment by Zavante from time to time.

3.7 Fisiopharma will give Zavante a monthly inventory report of the API Mixture held by Fisiopharma, which will contain the following information for the month:

3.7.1 Quantity Received : The total quantity of API Mixture that complies with the Specifications and is received at the Manufacturing Services Site during the applicable period);

3.7.2 Quantity Dispensed : The total quantity of API Mixture dispensed by Fisiopharma during the applicable period. The Quantity Dispensed is calculated by adding the Quantity Received to the inventory of API Mixture that complies with the Specifications held at the beginning of the applicable period, less the inventory of API Mixture that complies with the Specifications held at the end of the period. The Quantity Dispensed will only include API Mixture received and dispensed in commercial manufacturing of the Bulk Drug Vials and will not include any (a) API Mixture that must be retained by Fisiopharma as samples; (b) API Mixture contained in Bulk Drug Vials that must be retained as samples; (c) API Mixture used in testing (if applicable); and (d) API Mixture received or dispensed in technical transfer activities or development activities during the applicable period, including without limitation, any regulatory, stability, validation or test batches manufactured during the applicable period; and

3.7.3 Quantity Converted : The total amount of API Mixture contained in the Bulk Drug Vials manufactured with the Quantity Dispensed, delivered by Fisiopharma, and not rejected, recalled or returned in accordance with this Agreement due to Fisiopharma’s failure to manufacture the Bulk Drug Vials in accordance with Specifications, cGMP, and other Applicable Laws.

Within [**] after the end of each calendar year, Fisiopharma will prepare an annual reconciliation of API Mixture on the reconciliation report form including the calculation of the “ Actual Annual Yield” or “ AAY” for the Bulk Drug Vials during the calendar year. AAY is the percentage of the Quantity Dispensed that was converted to Bulk Drug Vials, and is calculated as follows: Quantity Converted during the calendar year multiplied by Quantity Dispensed during the calendar year, expressed as a percentage.

3.8 Unless otherwise agreed, after Fisiopharma has produced a minimum of [**] successful commercial production batches of Bulk Drug Vials and has produced commercial production batches for at least [**], the Parties will mutually agree on the target yield for the Product (“ Target Yield ”). The Target Yield will be revised annually to reflect the actual manufacturing experience as agreed to by the Parties.

If the Actual Annual Yield increases or decreases by more than [**] percent ([**]%) from the respective Target Yield in a calendar year, then the Parties agree to discuss, in good faith, an appropriate financial adjustment. It will not be a material breach of this Agreement by Fisiopharma if the Actual Annual Yield is less than the Target Yield.

3.9 The Parties agree to work together to develop and implement cost improvement measures related to the manufacture of the Bulk Drug Vials. Either Party may propose cost improvement measures, but the implementation of, and any investments required in connection with, such cost improvement investments shall require written approval of both Parties. Following agreement of the Parties, each Party will be entitled to receive reimbursement for reasonable costs which it incurred in developing and implementing such cost improvements. Cost improvement benefits shall be allocated equitably between the Parties and will be reflected in mutually agreeable adjustments to the Price.

4. Forecasts; Supply Commitment

4.1 In order to assist Fisiopharma in planning the production runs for the Bulk Drug Vials, Zavante shall use its commercially reasonable efforts to provide to Fisiopharma, at least [**] prior to the beginning of each [**], a [**] rolling forecast of the quantities of Bulk Drug Vials required by Zavante, by month, for the following [**] period. Zavante shall deliver the first such forecast to Fisiopharma as soon as reasonably practicable following the execution of this Agreement, and will update the forecast every [**] thereafter. Zavante may, at its discretion, update such forecast more frequently. It is understood that all such forecasts are intended to be Zavante’s estimates of its purchase requirements and they shall not be binding upon Zavante; however, Fisiopharma shall, at minimum, supply the amounts specified in Section 4.3.

4.2 After the Finished Drug Product has received approval for marketing from a Regulatory Agency and has been made generally commercially available (hereinafter “ Commercial Launch ”), Fisiopharma shall, within [**] after Zavante has provided its [**] forecast, notify Zavante in writing of any prospective problems it might have with respect to supplying Zavante’s forecasted order quantities. Upon receipt of such notice, the Parties shall promptly discuss the inability to supply the amounts forecasted by Zavante and work in good faith to agree upon revised forecast amounts. Failing agreement, Zavante’s last submitted forecast shall be deemed to be the new [**] forecast.

4.3 Zavante shall place firm Purchase Orders for Bulk Drug Vials with Fisiopharma at least [**] prior to requested delivery date, except for the Purchase Orders for the [**] after receipt of NDA Approval for the Bulk Drug Vials, which may be submitted only [**], respectively, prior to the requested delivery dates. Subject to such lead-time requirements, Fisiopharma shall deliver to Zavante’s designated facility during any given month, pursuant to Purchase Orders provided under Section 3.4, the amount specified in the Purchase Order therefor, which amount may be up to the greater of (a) the amount specified in the most recent forecast for such month or (b) [**] percent ([**]%) of Zavante’s average monthly purchases for the previous [**] (the “ Supply Commitment ”), depending in the agreed batch size. In addition, Fisiopharma shall use its best efforts to deliver any and all ordered amounts in excess of the Supply Commitment.

4.4 Zavante shall provide to Fisiopharma Purchase Orders for Bulk Drug Vials within the lead times set forth in Section 4.3 of this Agreement. Within [**] after the date that a Purchase Order is submitted (the “ Order

Date ”), Fisiopharma shall acknowledge receipt of Zavante’s Purchase Order and confirm that the amounts of Bulk Drug Vials ordered in the Purchase Order, subject to Section 4.3, will be timely supplied.

4.5 Fisiopharma agrees to maintain at the Facility a rolling [**] safety stock of all materials and components required to be used for the manufacture of the Bulk Drug Vials based on the [**] rolling forecast. Fisiopharma will promptly notify Zavante if Fisiopharma’s manufacturing capacity at the Facility will be insufficient to fill a Purchase Order submitted by Zavante. Such notice will include the expected duration of the shortage and its impact on the supply of Bulk Drug Vials to Zavante. Such notification shall not operate to relieve Fisiopharma of their obligations to deliver the ordered amounts of Bulk Drug Vials or affect Zavante’s right to pursue any remedies that may be available to it. Fisiopharma will use its best efforts to mitigate the impact on Zavante of shortages or other constrained capacity. The obligations of Fisiopharma to maintain the safety stock specified herein shall commence as of the Commercial Launch.

4.6 Zavante shall provide Fisiopharma a Long-Range Outlook of Zavante’s requirements for Bulk Drug Vials within [**] after filing the NDA with the FDA (“ Long-Range Outlook ”). The Long-Range Outlook shall be for [**] and Zavante shall update the Long-Ranch Outlook every [**] during the term of this Agreement. The initial Long-Range Outlook will be used by the Parties to mutually agree upon the appropriate manufacturing capacity to be reserved for production of Bulk Drug Vials for Zavante at the Facility. At each update of the Long-Range Outlook, the Parties will review the capacity reserve and may need to mutually agree upon one or more capacity plans to expand the manufacturing capacity for Bulk Drug Vials for Zavante (“ Capacity Increase Plan ”). The Capacity Increase Plan will identify in detail the scope of the activities to be performed with appropriate capacity triggers to ensure uninterrupted supply of Bulk Drug Vials. The Capacity Increase Plan must include all necessary Facility, process and infrastructure investments and corresponding changes in the Bulk Drug Vial pricing once additional capacity is online and supplying Bulk Drug Vials to Zavante. All Long-Range Outlooks are for planning purposes only and shall not be binding on any Party.

5. Order; Delivery

5.1 Each Purchase Order for Bulk Drug Vials shall specify the quantity of Bulk Drug Vials ordered and the required delivery date and destination, consistent with the terms of this Agreement. Such delivery dates are “on dock” at Zavante’s designated facility for such delivery. Deliveries must be made on normal business days of the designated facility unless otherwise coordinated.

5.2 Delivery of Product shall be EXW (Incoterms 2010) the Facility. Fisiopharma shall arrange for shipping of the Bulk Drug Vials, with a carrier designated by Zavante, in the manner customarily arranged for its own products from the point of manufacture to the destination specified by Zavante. Fisiopharma shall promptly notify Zavante of the expected delivery date of each order to enable receipt to be coordinated. Fisiopharma shall arrange for export clearances and loading at the port of departure. Expenses for special packaging, export or customs agents, shall be included in Fisiopharma’s invoice and paid by Zavante. Zavante shall arrange for insurance from the Facility to the ultimate destination and import customs clearances at the destination country. Zavante shall be responsible for all loading charges, freight, insurance, import customs clearances, export, special packaging, and other shipping expenses from the Facility to the ultimate destination. Title to the Bulk Drug Vials and risk of loss, delay or damage in transit for Bulk Drug Vials purchased by Zavante shall pass to Zavante when a shipment of the Product is placed at the disposal of Zavante’s carrier at the Facility.

5.3 Each shipment of Bulk Drug Vials shall include certificates of analysis and compliance, which include, without limitation, a statement of compliance with cGMP, and such other documentation and information as may be necessary or desirable for complying with import, export and customs laws, regulations and requirements as applicable.

6. Purchase Commitment; Price; Payment

6.1 Subject to Section 6.3, Zavante agrees to purchase from Fisiopharma the quantity of Bulk Drug Vials required to manufacture a minimum of [**] percent ([**]%) of the annual Finished Drug Product intended by Zavante for commercial sale in the Territory during the term of this Agreement (the “ Purchase Commitment ”). From time to time during the Term, Zavante will consider increasing the Purchase Commitment based upon Fisiopharma’s on-time delivery performance and manufacturing capacity for the Bulk Drug Vials. Notwithstanding the foregoing, (a) Zavante shall be entitled to take such steps as are necessary to qualify one or more alternative Bulk Drug Vials suppliers at any time during the term of this Agreement; and (b) Zavante shall be relieved of such Purchase Commitment in the event that Fisiopharma is unwilling or unable to manufacture and deliver the Purchase Commitment to Zavante.

6.2 The price for the Bulk Drug Vials purchased by Zavante hereunder is set forth in Schedule C (the “ Price ”).

6.3 Zavante shall have no obligation to comply with its Purchase Commitment in the event of breach by Fisiopharma of any of the terms set forth herein which breach is not cured within the period set forth in Section 11.2. In the event the Purchase Commitment terminates pursuant to this Section 6.3, Fisiopharma shall be obligated to continue to perform under the terms of this Agreement.

6.4 Fisiopharma shall issue its invoice to Zavante at the time of shipment. Each invoice shall set forth, in Euros, the applicable Price for the shipment properly determined in accordance with the provisions of this Agreement. Payment of the invoice by Zavante shall be within [**] following receipt of each such invoice. Payment shall be subject to the inspection and acceptance procedures set forth in Section 7. Zavante may withhold payment of that portion of any invoice that it disputes in good faith pending resolution of such dispute. All invoices and payments shall be in Euros.

7. Inspection of Shipments

7.1 Zavante shall visually inspect or have visually inspected the Bulk Drug Vials delivered hereunder for obvious damage and/or shortage (collectively, “ Obvious Damage ”) immediately upon receipt and shall provide Fisiopharma with written notice of any such Obvious Damage within [**] after receipt. Zavante shall be deemed to have accepted any shipment of Bulk Drug Vials but only with respect to Obvious Damage, unless Fisiopharma receives the written notice required within the [**] time period specified above. At its discretion, Zavante may also test, or have tested, any lot of Bulk Drug Vials supplied to Zavante.

7.2 Promptly after discovery, Zavante may provide Fisiopharma with written notice of any non-obvious damage, including adulteration of the Bulk Drug Vials, failure to meet Specifications, or other latent damage (collectively, “ Non-Obvious Damage ”). Obvious Damage and Non-Obvious Damage shall hereinafter be collectively referred to as “ Damage. ”

7.3 Zavante may reject any portion of any shipment of Bulk Drug Vials which contains any Damage by providing written notice to Fisiopharma of its rejection. Zavante agrees to provide Fisiopharma’s Quality Control Department with documentation of Damage to confirm the existence thereof in connection with any notice of rejection.

7.4 If Fisiopharma and Zavante disagree as to the existence of Damage, then they will diligently and in good faith repeat the analyses of samples from the shipment in question and implement suitable controls to determine the source of the discrepancy in results and the cause of any detected Damage, applying all objective and sound principles of scientific investigation. If, after such repeated analyses, Fisiopharma and Zavante continue to disagree,

they will then submit representative samples of the shipment to a mutually acceptable independent testing lab and the results of said lab shall be binding on Fisiopharma and Zavante. The costs associated with such submission shall be borne by the Party against which the lab decided.

7.5 Provided Zavante provides notice of the Damage claimed within [**] of receipt of the allegedly Damaged Bulk Drug Vials in the case of Obvious Damage and promptly following the date on which Zavante becomes aware of the allegedly Damaged Bulk Drug Vials in the case of Non-Obvious Damage, whether or not Fisiopharma accepts Zavante’s basis for rejection, promptly on receipt of a notice of rejection and/or shortage, Fisiopharma shall, at Zavante’s request, reimburse Zavante for the cost of the API Mixture used to manufacture such Damaged Bulk Drug Vials and (a) at no additional cost to Zavante, deliver to Zavante quantities of replacement Bulk Drug Vials equal to the rejected or short quantities as soon as reasonably practicable thereafter, and in no event more than [**] after such notice is given; or (b) refund the invoice price for the Damaged Bulk Drug Vials. Fisiopharma will use expedited means of transport, if so requested by Zavante, at Zavante’s expense unless the Bulk Drug Vials being replaced are determined to have been Damaged. Any return of Damaged Bulk Drug Vials to Fisiopharma shall be at Fisiopharma’s expense.

8. Confidentiality and Intellectual Property Rights

8.1 Confidentiality . During the term of this Agreement and for a period of [**] following termination of this Agreement, Fisiopharma agrees not to publish, disclose or use for any purpose other than its performance hereunder, any Zavante Intellectual Property (as such term is defined in Section 8.2), or any information which is designated by Zavante as proprietary or confidential, including any and all technical information related to the API, the API Mixture or the Bulk Drug Vials (collectively, the “ Products ”), and any know-how associated therewith, whether or not identified or labeled as confidential information (“ Confidential Information ”), including, without limitation, information stored on audio or video tapes and disks, or information or knowledge visually acquired by or generated by Fisiopharma personnel in the form of written notes and memoranda memorializing information or knowledge acquired visually, aurally or orally in the course of its performance hereunder. Fisiopharma shall limit disclosure of Confidential Information to only those of its officers and employees who are directly concerned with the performance of this Agreement, on a need-to-know basis. Fisiopharma shall advise such officers or employees, upon disclosure of any Confidential Information to them, of the confidential nature of the Confidential Information and the terms and conditions of this Section 8.1, and shall use all reasonable safeguards to prevent unauthorized disclosure of the Confidential Information by such officers and employees.

The Parties agree that the following shall not be considered Confidential Information subject to this Agreement: (a) information that is in the public domain by publication or otherwise, provided that such publication is not in violation of this Agreement; (b) information that Fisiopharma can establish in writing was in its possession prior to the time of disclosure by Zavante and was not acquired, directly or indirectly, from Zavante; (c) information that Fisiopharma lawfully receives from a third party; provided, however, that such third party was not obligated to hold such information in confidence; (d) information that, prior to the Zavante’s disclosure thereof, was independently developed by Fisiopharma without reference to any Confidential Information as established by appropriate documentation; and (e) information that Fisiopharma is compelled to disclose by a court, administrative agency, or other tribunal; provided however , that in such case Fisiopharma shall immediately give as much advance written notice as feasible to Zavante to enable Zavante to exercise its legal rights to prevent and/or limit such disclosure. In any event, Fisiopharma shall disclose only that portion of the Confidential Information that, in the opinion of Fisiopharma’s legal counsel, is legally required to be disclosed and will exercise its best efforts to ensure that any such information so disclosed will be accorded confidential treatment by said court, administrative agency or tribunal.

All Confidential Information shall remain the property of Zavante. Upon the termination of this Agreement, or at any time upon the request of Zavante, Fisiopharma shall immediately return or destroy any Confidential

Information in Fisiopharma’s possession, custody or control, except that Fisiopharma may keep one (1) physical copy for archival purposes. Confidential Information in digital form may be retained for archival and/or regulatory purposes only if stored in a way that restricts access to persons with a legitimate need to know and commercially reasonable efforts are used to prevent additional copies from being made. Zavante’s failure to request the return of Confidential Information shall not relieve Fisiopharma of its confidentiality obligations under this Agreement.

Fisiopharma acknowledges and expressly agrees that the remedy at law for any breach by it of the terms of this Section 8.1 shall be inadequate and that the full amount of damages which would result from such breach are not readily susceptible to being measured in monetary terms. Accordingly, in the event of a breach or threatened breach by Fisiopharma of this Section 8.1, Zavante shall be entitled to immediate injunctive relief prohibiting any such breach and requiring the immediate return of all Confidential Information. The remedies set forth in this Section 8.1 shall be in addition to any other remedies available for any such breach or threatened breach, including the recovery of damages from Fisiopharma. The terms and conditions of this Agreement, but not the fact of its existence, shall constitute Confidential Information of Zavante.

8.2 Intellectual Property .

(a) For the purposes of this Agreement, “ Zavante Intellectual Property ” shall refer to (i) all inventions, discoveries, know-how, information, data, writings, and other intellectual property, in any form whatsoever, both tangible and intangible, developed by or on behalf of Fisiopharma, Zavante or Zavante’s licensor for the Products, in the course of performance under this Agreement that relate, directly or indirectly, to any of the Products (each, an “ Product Development ”); and (ii) all trademarks, service marks, trade names, domain names, trade dress, logos, patents, patent applications, inventions, discoveries, technology, know-how, trade secrets, data, registered and unregistered design rights, copyrights, author rights, database and sui-generis rights and all other similar rights in any part of the world including, where such rights are obtained or enhanced by registration, any registration of such rights and applications, and rights to apply for such registrations, owned by or licensed to Zavante prior to the Effective Date. All Zavante Intellectual Property is and shall remain the property of Zavante. Zavante hereby grants to Fisiopharma, a non-exclusive, non-transferable, and without any right to sublicense, license to use, exploit, reproduce and distribute any Zavante Intellectual Property solely to the extent necessary to perform Fisiopharma’s obligations to manufacture the Bulk Drug Vials for Zavante hereunder, and solely during the Term of this Agreement. Fisiopharma shall acquire no other right, title or interest in the Zavante Intellectual Property as a result of its performance hereunder, and for no other purpose.

(b) In the event that Zavante decides to file one or more patent applications (or file any other exclusive rights, or otherwise constitute as exclusive rights) covering, partially or totally, any Product Development, Fisiopharma shall, at Zavante’s request and expense, assist Zavante in the preparation and prosecution of such patent application(s) and shall execute all documents deemed necessary by Zavante for the filing thereof.

(c) In no circumstance without the written permission of Zavante shall Fisiopharma be entitled to reverse engineer the API, the API Mixture or the Bulk Drug Vials to circumvent any Zavante Intellectual Property or Confidential Information.

9. Representations and Warranties

9.1 Fisiopharma hereby represents, warrants and covenants as follows:

9.1.1 At all times during the term of this Agreement, Fisiopharma’s facilities shall remain in compliance with, and the Bulk Drug Vials shall be manufactured and delivered in compliance with, all Applicable Laws, including but not limited to, the provisions of the Federal Food, Drug and Cosmetic Act, as amended from time to time (the “ Act ”); cGMP, including the FDA’s Guidance for Industry, Manufacturing, Processing or Holding

Active Pharmaceutical Ingredients, March 1998, and any updates thereto; FDA’s regulations for drug establishment registration; the Specifications; the other rules and regulations promulgated under the Act relating to the manufacture of pharmaceutical products; and equivalent laws, regulations and standards promulgated by Regulatory Agencies in all jurisdictions for which Zavante has given notice to Fisiopharma (collectively, the “ Applicable Laws ”).

9.1.2 No Bulk Drug Vials constituting or being a part of any shipment to Zavante shall at the time of any such shipment be adulterated within the meaning of the Act, or the rules and regulations promulgated thereunder, as such law, rule or regulation is constituted and in effect at the time of any such shipment.

9.1.3 All Bulk Drug Vials supplied to Zavante hereunder: (a) shall comply with the Specifications; (b) shall have been manufactured, stored and shipped in accordance with the Specifications, applicable approvals from Regulatory Agencies and all Applicable Laws; (c) may be introduced into public commerce consistent with the intended use for Bulk Drug Vials pursuant to Applicable Laws; and (d) will have, at the time of shipment, a remaining shelf life of not less than the then-current, registered shelf life for the Bulk Drug Vials less [**]. As an example, if the registered shelf life is [**], Zavante will only be required to accept product with [**] of remaining shelf life. Exceptions to the shelf life requirements set forth in this Section 9.1.3 will be discussed in a good faith by the Parties.

9.1.4 All necessary licenses, permits or approvals required by Applicable Laws in connection with the manufacture, storage, and shipment of Bulk Drug Vials, including without limitation permits related to manufacturing facilities shall be obtained and maintained.

9.1.5 Fisiopharma will: (a) respond fully and accurately to all inquiries directed to it by the FDA or any other Regulatory Agency that may impact the quality or timely delivery of Bulk Drug Vials and promptly notify Zavante of same; (b) assist Zavante in responding to inquiries directed to Zavante by the FDA or other Regulatory Agencies; and (c) provide the FDA or other Regulatory Agencies with such information and data as is requested by the FDA or other Regulatory Agencies with respect to the manufacture, use, route of synthesis and testing of the Bulk Drug Vials.

9.1.6 The Facility is in full compliance with cGMP.

9.1.7 Fisiopharma has disclosed to Zavante all warning letters or similar notices relating to its manufacturing facilities or import alerts (including FDA Form 483’s), if any, for products manufactured in its facilities issued during the last [**] and Fisiopharma will during the term disclose in timely fashion all such letters, alerts and notices.

9.1.8 Fisiopharma has, and shall maintain, sufficient facilities, personnel and resources to meet its obligations to supply Bulk Drug Vials under this Agreement.

9.1.9 Fisiopharma is not aware of any claim by a third party that Fisiopharma’s process for manufacturing the Bulk Drug Vials supplied hereunder would infringe, misappropriate or violate any patent, trade secret or other intellectual property right of such third party.

9.1.10 Fisiopharma does not employ, engage or otherwise use any child or forced labor in any form, and will comply with all Applicable Laws regarding employee compensation, employment rights, health and safety conditions and environmental protection.

9.2 Zavante hereby represents, warrants and covenants that, to Zavante’s knowledge (after reasonable inquiry and investigation), the Bulk Drug Vials will not infringe, misappropriate or violate any third party patent, trade secret or other intellectual property right in effect during the term of this Agreement in the United States or

Canada (provided, that Zavante’s representation does not extend to any infringement, misappropriation or violation that arises out of or relates to Fisiopharma’s process for manufacturing the Bulk Drug Vials).

9.3 Each Party represents and warrants that all corporate action on its part and on the part of each of its officers and directors necessary for the authorization, execution and delivery of this Agreement has been taken, it has the full right and authority to enter into this Agreement and perform its obligations hereunder and that it is not aware of any obligations owed to third parties that would conflict with its ability to perform its obligations hereunder.

9.4 If requested in writing by Zavante, Fisiopharma shall permit Zavante or its authorized representatives to inspect Fisiopharma’s facilities and records and be given access to Fisiopharma’s personnel (at reasonable times, upon reasonable advance notice and in the company of an Fisiopharma representative, as the case may be, during normal business hours), to the extent Zavante deems reasonably necessary to enable Zavante to verify compliance by Fisiopharma with its obligations under this Agreement and to verify compliance with any Applicable Laws.

9.5 Zavante shall provide Fisiopharma copies of product complaints, or notices or inquiries from the FDA or other Regulatory Agencies, which raise issues with respect to the manufacture or product quality of the Bulk Drug Vials provided by Fisiopharma to Zavante. Fisiopharma shall fully and appropriately investigate such matters and provide Zavante with a report of its investigation. In the event that Fisiopharma receives any complaint, claims or adverse reaction reports regarding Finished Drug Product or Bulk Drug Vials, including notices from the FDA regarding any alleged regulatory non-compliance of Finished Drug Product, Fisiopharma shall promptly and not more than [**] after receipt, provide to Zavante all information contained in the complaint, report or notice and such additional information regarding Finished Drug Product as Zavante may reasonably request. Fisiopharma shall comply, at a minimum, with FDA requirements for complaint handling with respect to such complaints, claims or adverse reaction reports.

9.6 Zavante and Fisiopharma each further represents and warrants that it shall comply with all Applicable Laws in the performance of its obligations hereunder.

9.9 Fisiopharma shall promptly notify Zavante of any problems or unusual production situations that have, or are reasonably likely to have, an adverse effect on Fisiopharma’s ability to perform its obligations hereunder or to deliver the Bulk Drug Vials to Zavante in a timely manner. In addition, Fisiopharma shall notify and, if applicable, provide copies of any notices or communications to, Zavante of any FDA or other governmental agency inspection, investigation or other inquiry or communication relating to the manufacture of the Bulk Drug Vials or to any facility at which the Bulk Drug Vials is manufactured, including, but not limited to, any FDA FORM 483 or warning letter, promptly and not more than [**] after Fisiopharma becomes aware of such inspection, investigation or other inquiry or communication and shall promptly thereafter provide to Zavante a written summary of all findings and corrective actions taken or planned by Fisiopharma, including any written responses from Fisiopharma to the FDA or other governmental agency. Such notices shall not operate to relieve Fisiopharma of their obligations to deliver the ordered amounts of Bulk Drug Vials or affect Zavante’s right to pursue any remedies that might be available to it.

9.10 Fisiopharma each covenants that it will not in the performance of its obligations under this Agreement use the services of any person debarred or suspended under 21 U.S.C. § 335(a) or (b). Fisiopharma each represents that it does not currently have, and covenants that it will not hire, as an officer or an employee, any person who has been convicted of a felony under the laws of the United States for conduct relating to the regulation of any drug product under the Act.

9.11 Each Party shall maintain insurance as follows:

9.11.1 Fisiopharma shall maintain commercial general liability insurance and product liability insurance with a minimum limit per occurrence or accident of €[**] and an annual aggregate limit of €[**] for the term of this Agreement and for [**] thereafter. Upon request, Fisiopharma shall € provide Zavante with copies of insurance certificates reflecting the above.

9.11.2 Zavante shall maintain commercial general liability insurance with a minimum limit per occurrence or accident of $[**] and an annual aggregate limit of $[**] and product liability insurance with a minimum limit per occurrence or accident of $[**] and an annual aggregate limit of $[**] for the term of this Agreement and for [**] thereafter. Notwithstanding the foregoing, Zavante shall increase its insurance coverage as reasonably prudent in connection with the Commercial Launch. Upon request, Zavante will provide to Fisiopharma copies of insurance certificates reflecting the above.

9.1 Fisiopharma shall immediately notify Zavante of any information of the following kind about Bulk Drug Vials provided to Zavante:

9.12.1 information indicating that shipped product has not been manufactured or supplied in accordance with the Specifications, cGMP, this Agreement or in compliance with Applicable Laws; and

9.12.2 information concerning any bacteriological contamination, or any significant chemical, physical or other changes or deterioration in the API Mixture, the shipped Bulk Drug Vials, or the failure of one or more shipped lots of Bulk Drug Vials to meet Specifications, including stability parameters.

10. Quality and Regulatory Matters.

10.1 Quality Agreement . Within [**] following the execution of this Agreement, but before production of Registration Lots (as such term is defined in Schedule A ) the Parties shall in good faith negotiate and execute a Quality Agreement concerning the Bulk Drug Vials (the “ Quality Agreement ”). Upon execution and delivery of the Quality Agreement by both Zavante and Fisiopharma, the Quality Agreement shall automatically become part of this Agreement, and any breach of the Quality Agreement shall be deemed a breach of this Agreement.

10.1.1 The terms contained in the Quality Agreement are intended to complement the terms of this Agreement, and they shall be interpreted as complementary to the extent possible. In the event of a conflict between the terms of the Quality Agreement and the terms of this Agreement, the terms of the Quality Agreement shall control with respect to quality control and quality assurance matters related to the Bulk Drug Vials (including, without limitation, manufacturing, testing, storage, release, change management and validation activities), and this Agreement shall control with respect to all other matters. The inclusion of a particular term or level of detail in the Quality Agreement where such term or level of detail is absent from this Agreement shall not be deemed to constitute a conflict between the two agreements. Only where competing terms in the two agreements conflict in terms of the principal focus of an express prescription or prohibition in the agreements shall a conflict between the two agreements be deemed to exist.

10.2 Recalls . Fisiopharma and Zavante will each maintain records necessary to permit voluntary and involuntary recalls or other related actions of Finished Drug Product delivered by Zavante to its customers (collectively, “ Recalls ”). Each Party will promptly notify the other by telephone (to be confirmed in writing) of any information which might affect the marketability, safety or effectiveness of the Finished Drug Product or which might result in the Recall or seizure of the Finished Drug Product. Upon receiving this notice or upon this discovery, Fisiopharma will stop making any further shipments of any Bulk Drug Vials in its possession or control until a decision has been made whether a Recall or some other corrective action is necessary. Zavante will have the

responsibility for handling customer returns of the Finished Drug Product, and Fisiopharma will give Zavante any assistance that Zavante may reasonably require to handle any such returns.

10.2.1 The decision to initiate a Recall or to take some other corrective action, if any, will be made and implemented by Zavante. As used herein, the term, “Recall” will include any action (i) by Zavante to recover title to or possession of quantities of the Finished Drug Product sold or shipped to third parties (including, without limitation, the voluntary withdrawal of Finished Drug Product from the market); or (ii) by any regulatory authorities to detain or destroy any of the Finished Drug Product. Recall will also include any action by either Party to refrain from selling or shipping quantities of the Finished Drug Product to third parties which would have been subject to a Recall if sold or shipped.

10.2.2 lf (i) any Regulatory Agency issues a directive, order or, following the issuance of a safety warning or alert about the Finished Drug Product, a written request that any Finished Drug Product should be Recalled, (ii) a court of competent jurisdiction orders a Recall, or (iii) Zavante determines that any Finished Drug Product should be Recalled or that a “Dear Doctor” letter is required relating the restrictions on the use of any Finished Drug Product, Fisiopharma will co-operate as reasonably required by Zavante, having regard to all Applicable Laws.

10.3 Fisiopharma will permit Zavante or its representative to monitor and inspect, as reasonably needed, that portion of the Facility where the Bulk Drug Vials is manufactured, packaged or stored and review such related documents as is reasonably necessary for the purpose of assessing Fisiopharma’s compliance with the cGMP, the Specifications, applicable manufacturing procedures, Applicable Laws and this Agreement. Zavante will have the right to have an employee or representative present at the Facility during the preparation for the manufacture of the Bulk Drug Vials, and such employee or representative will be free to examine all aspects of such manufacturing operations and comment thereon to Fisiopharma. Any Zavante employee or representative present at the Fisiopharma Facility will adhere to all applicable Fisiopharma policies, safety and security procedures.

10.4 Healthcare Provider or Patient Inquiries. Zavante will have the sole responsibility for responding to questions and complaints from its customers. Questions or complaints received by Fisiopharma from Zavante’s customers, healthcare providers or patients will be promptly referred to Zavante. Fisiopharma will co-operate as reasonably required to allow Zavante to determine the cause of and resolve any questions and complaints. This assistance will include follow-up investigations, including testing. In addition, Fisiopharma will give Zavante all mutually agreed upon information that will enable Zavante to respond properly to questions or complaints about the Finished Drug Product and Bulk Drug Vials as set forth in the Quality Agreement.

10.5 Reports. Fisiopharma will supply on an annual basis all data regarding the Bulk Drug Vials in its control, including release test results, complaint lest results, and all investigations (in manufacturing, testing, and storage), that Zavante reasonably requires in order to complete any filing under any applicable regulatory regime, including any Annual Report that Zavante is required to file with the FDA. At the Fisiopharma’s request, Zavante will provide a copy of the Annual Product Review Report to Fisiopharma.

10.6 Regulatory Filings.

10.6.1 Zavante will have the sole responsibility for filing and compiling all documents with all Regulatory Authorities and taking any other actions that may be required for the receipt and/or maintenance of Regulatory Authority approval for the commercial manufacture of the Finished Drug Product. Fisiopharma will assist Zavante, to the extent consistent with Fisiopharma’s obligations under this Agreement, to obtain Regulatory Authority approval for th e commercial manufacture of all Bulk Drug Vials as quickly as reasonably possible. At least [**] prior to filing any documents with any Regulatory Authority that incorporate data generated by Fisiopharma, Zavante will give Fisiopharma a copy of the documents incorporating this data to give Fisiopharma

the opportunity to verify the accuracy and regulatory validity of those documents as they relate to Fisiopharma generated data. At least [**] prior to filing with any Regulatory Authority any documentation which is or is equivalent to the FDA’s Chemistry and Manufacturing Controls (all such documentation herein referred to as “CMC”) related to any Marketing Authorization, such as an NDA, Zavante will give Fisiopharma a copy of the CMC as well as all supporting documents which have been relied upon to prepare the CMC. This disclosure will permit Fisiopharma to verify that the CMC accurately describes the work that Fisiopharma has performed and the manufacturing processes that Fisiopharma will perform under this Agreement. Zavante will give Fisiopharma copies of all FDA filings at the time of submission which contain CMC information regarding the Product.

11. Indemnification

11.1 Zavante hereby agrees to and shall defend, indemnify, and hold harmless Fisiopharma, their affiliates and each of their respective employees, officers, directors and agents (the “ Supplier Indemnitees ”), from, against, and in respect of, any and all losses, judgments, damages, liabilities, suits, actions, expenses (including reasonable attorney’s fees), and proceedings arising from any claims of any third party to the extent resulting from:

11.1.1 any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Zavante under this Agreement;

11.1.2 any claim, complaint, suit, proceeding or cause of action against any of the Supplier Indemnitees alleging physical injury or death, brought by or on behalf of an injured party, or loss of service or consortium or a similar such claim, complaint, suit, proceeding or cause of action brought by a spouse, relative or companion of an injured party due to such physical injury or death, and in each case arising out of the Finished Drug Product manufactured from the Bulk Drug Vials, except to the extent resulting from (i) any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Fisiopharma under this Agreement, (ii) any negligence or willful misconduct of the Supplier Indemnitees in performing this Agreement, or (iii) any claim subject to Fisiopharma’s indemnification obligations under Section 11.2;

11.1.3 any negligence or willful misconduct of Zavante, its employees, officers and directors in performing this Agreement; and

11.1.4 any claim of patent infringement relating to the Bulk Drug Vials or the process for manufacturing Bulk Drug Vials (excluding any claim of patent infringement arising out of or relating to the Bulk Drug Vials or the process for manufacturing the Bulk Drug Vials), which claim, if true, would be in contravention of the representations, warranties and covenants of Zavante hereunder.

11.2 Fisiopharma hereby agrees to and shall defend, indemnify, and hold harmless Zavante, its affiliates and each of their respective employees, officers, directors and agents (the “ Zavante Indemnitees ”), from, against, and in respect of, any and all losses, judgments, damages, liabilities, suits, actions, expenses (including reasonable attorney’s fees), and proceedings arising from any claims of any third party to the extent resulting from:

11.2.1 any misrepresentation, breach of warranty, or the nonfulfillment of any obligation, covenant, or duty on the part of Fisiopharma under this Agreement;

11.2.2 any claim, complaint, suit proceeding or cause of action against any of the Zavante Indemnitees alleging physical injury or death, brought by or on behalf of an injured party, or loss of service or consortium or a similar such claim, complaint, suit, proceeding or cause of action brought by a spouse, relative or companion of an injured party due to such physical injury or death, and in each case arising out of the Bulk Drug Vials supplied by Fisiopharma to Zavante, except to the extent resulting from (i) any misrepresentation, breach of warranty, or the non-fulfillment of any obligation, covenant, or duty on the part of Zavante under this Agreement,

(ii) any negligence or willful misconduct of the Zavante Indemnitees in performing this Agreement, or (iii) any claim subject to Zavante’s indemnification obligations under Section 11.1;

11.2.3 any negligence or willful misconduct of Fisiopharma or their respective employees, officers or directors in manufacturing the Bulk Drug Vials or performing any other obligations under this Agreement; and

11.2.4 any claim of patent infringement relating to the Bulk Drug Vials supplied to Zavante or the process for manufacturing the Bulk Drug Vials supplied to Zavante which claim, if true, would be in contravention of the representations, warranties and covenants of Fisiopharma hereunder.

11.3 The indemnification obligations set forth in Sections 11.1 and 11.2 are subject to the following: (a) the indemnifying Party must be notified by or on behalf of the indemnified Party in writing promptly after a claim is made, a suit is filed, or an action or investigation is initiated (each, a “ Proceeding ”) against the indemnified Party, unless such delay does not materially prejudice the indemnifying Party; (b) subject to the provisions set forth in this Section 11.3, the indemnifying Party shall be permitted to defend, control, conduct and prosecute, in the indemnifying Party’s sole discretion and by counsel of the indemnifying Party’s choosing, the defense of such Proceeding brought against the indemnified Party; (c) the indemnifying Party shall have the right in its sole discretion to settle, compromise or otherwise terminate the Proceeding solely upon the payment of money; provided , that, there is no finding or admission of any violation by any indemnified Party of (i) any law, rule or regulation, or (ii) the rights of any person; and provided, further , that, no such settlement shall prohibit any indemnified Party from importing the Bulk Drug Vials into the United States and Canada or making, using or selling products in the United States and Canada made from such Bulk Drug Vials; (d) the indemnified Party shall refrain from settling (or endeavoring to settle, or entering into settlement negotiations with respect to) any such Proceeding without the indemnifying Party’s prior written consent; (e) except as may otherwise be required by law, the indemnified Party shall not compromise the position of the indemnifying Party by admission, statements, disclosure or conduct (collectively, “ Disclosure ”) in a way that could prejudice the defense, control, conduct or prosecution of said cause of action (it being understood that no indemnified Party shall be deemed to have violated this provision so long as such Party has acted in good faith to fulfill its obligations under this provision); and (f) the indemnified Party shall cooperate with the indemnifying Party in the defense, conduct, prosecution or termination of the Proceeding, including the furnishing of information and the assistance from employees of the indemnified Party at the indemnifying Party’s reasonable request and expense. With respect to clause (e) above, the indemnified Party will provide the indemnifying Party with prompt written notice in advance of any such Disclosure being made to permit the indemnifying Party to seek an appropriate protective order, restriction on response or withdrawal of the request for Disclosure. If, however, any such request for relief by the indemnifying Party is denied or is otherwise unavailable, the relevant indemnified Party may make the Disclosure without any liability to the indemnifying Party. The indemnified Party may, at its option and expense, participate in the indemnifying Party’s defense with counsel of its own choosing, and if the indemnified Party so participates, the Parties shall cooperate with one another in such defense in a commercially reasonable fashion.

Notwithstanding any provision in this Agreement to the contrary, Zavante shall at all times have the right to assume direction and control of the defense of any claim alleging infringement, misappropriation or violation of any patent, trade secret or other intellectual property right of any third party; provided , that Zavante will provide Fisiopharma with a reasonable opportunity to review and consult from time to time concerning the strategy and action plan (including possibly pursuing one or more licenses as appropriate), and in such event Fisiopharma shall cooperate and assist as requested in the defense of such claim and if Zavante finds it necessary or desirable to join Fisiopharma or ACS, or both, as parties, Fisiopharma shall execute all papers or perform such other acts as may reasonably be required by Zavante. Further, Fisiopharma shall settle not consent to the entry of any judgment with respect to any such claim, without Zavante’s prior written consent.

11.4 The indemnification rights provided for herein are in addition to, and not in substitution for, any and all remedies available to a Party under this Agreement or otherwise at law or in equity. Notwithstanding anything to the contrary in this Section 11, each Party may, and expressly reserves the right to, seek judicial relief from any court of competent jurisdiction in order to obtain an injunction or other equitable relief.

11.5 IN NO EVENT SHALL ANY OF THE PARTIES HERETO BE RESPONSIBLE OR LIABLE TO THE OTHER UNDER ANY PROVISION OF THIS AGREEMENT OR UNDER ANY THEORY OF NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY CONSEQUENTIAL, INDIRECT, SPECIAL, OR EXEMPLARY DAMAGES OR LOST PROFITS. FOR THE PURPOSE OF CLARITY, NOTHING IN THIS SECTION IS INTENDED TO LIMIT THE INDEMNIFICATION OBLIGATIONS OF ANY PARTY WITH RESPECT TO THE CHARACTERIZATION OF ANY CLAIM BY A THIRD PARTY AS CONSEQUENTIAL, INDIRECT, SPECIAL, OR EXEMPLARY DAMAGES OR LOST PROFITS.

12. Costs and Expenses of Recall

12.1 Zavante shall have sole control and responsibility for conducting all Recalls of units of any Finished Drug Product and Bulk Drug Vials; provided, however , that Fisiopharma agrees to reimburse Zavante for all of its reasonable costs and expenses incurred with respect to any Recalls arising out of any of the causes set forth in Sections 11.2.1 through 11.2.4. This Section 12 is intended to augment and not limit the indemnification provisions of Section 11 herein. The Quality Agreement shall include additional procedures, including specific responsibilities of both Parties, regarding Recalls of the Finished Drug Product and Bulk Drug Vials.

13. Term and Termination.

13.1 This Agreement shall be effective for a period of ten (10) calendar years from the Effective Date hereof (the “ Initial Term ”) and shall be automatically renewed for additional one (1) calendar year terms unless written notice of intent to terminate is provided by Zavante at least six (6) months prior to the expiration of the Initial Term or any extension term.

13.2 This Agreement may be terminated by (i) Zavante upon [**] written notice to Fisiopharma, as the case may be, of a failure by Fisiopharma to perform or observe any material covenant, condition or agreement to be performed or observed by it under this Agreement, unless such breach has been cured within the [**] notice period and (ii) Fisiopharma upon [**] written notice to Zavante of a failure by Zavante to perform or observe any material covenant, condition or agreement to be performed or observed by it under this Agreement, unless such breach has been cured within the [**] notice period; provided, however , that with respect to a failure to timely supply ordered quantities of Bulk Drug Vials under this Agreement, Fisiopharma combined shall have the right to cure such breach no more than once during the term of this Agreement unless otherwise agreed by Zavante in writing.

13.3 Zavante may terminate this Agreement effective immediately upon written notice to Fisiopharma in the event that (a) Fisiopharma dissolves, is declared insolvent or bankrupt by a court of competent jurisdiction; (b) a voluntary or involuntary petition of bankruptcy is filed in any court of competent jurisdiction by Fisiopharma; or (c) this Agreement is assigned by Fisiopharma for the benefit of creditors. Fisiopharma may terminate this Agreement effective immediately upon written notice to Zavante in the event that (x) Zavante dissolves, is declared insolvent or bankrupt by a court of competent jurisdiction; (y) a voluntary or involuntary petition of bankruptcy is filed in any court of competent jurisdiction by Zavante; or (z) this Agreement is assigned by Zavante for the benefit of creditors.

13.4 Zavante may terminate this Agreement upon thirty (30) days’ prior written notice to Fisiopharma (or a shorter period required by the agency with jurisdiction) in the event that any governmental agency takes any action, or raises any objection, that prevents Zavante from importing, exporting, purchasing or selling either the Bulk

Drug Vials or the Bulk Drug Vials for a period reasonably anticipated to endure for more than one hundred twenty (120) days.

13.5 In the event of termination of this Agreement by Zavante due to an uncured breach of this Agreement by Fisiopharma’s dissolution, insolvency or bankruptcy pursuant to Section 13.3, Fisiopharma will supply Bulk Drug Vials directly to Zavante, at Zavante’s election, under terms of an agreement no less favorable to Zavante than the terms herein.

13.6 Zavante may terminate this Agreement effective immediately upon written notice to Fisiopharma should any legal proceeding be instituted against Fisiopharma, which is reasonably likely to materially adversely impact Fisiopharma’s ability to properly perform under this Agreement or subject Zavante to any material risk of liability or loss.

13.7 In the event of termination of this Agreement by Zavante pursuant to Section 13.4, Zavante agrees to pay an amount equal to the Price for up to [**] of safety stock then actually held by Fisiopharma pursuant to Section 4.5 hereof (provided that Fisiopharma shall use best efforts to mitigate the cost to Zavante of such safety stock by utilizing such safety stock for other customers to the extent possible).

13.8 The provisions of this Section 13 as to termination shall not limit or restrict the rights of any Party to seek remedies or take measures that may be otherwise available to it at law or equity in connection with the enforcement and performance of obligations under this Agreement.

14. Notices

If to Zavante, to :	Zavante Therapeutics, Inc.
	11750 Sorrento Valley Road, Suite 250
	San Diego California 92121
	USA
	Attention: Chief Operating Officer
	Facsimile Number: +1 858-299-4940

If to Fisiopharma, to :	Fisiopharma, S.r.l.
	Nucleo Industriale
	84020 Palomonte (SA)
	Italy
	Attention: General Manager
	Facsimile Number: [**]
	Electronic Address: [**]

15. Miscellaneous

so affected (to the extent affected) shall be suspended during the period of, and only to the extent of, such disability. Said Party shall be excused by reason of said force majeure only so long as it is exercising its best efforts to overcome said reason.

15.3 Compliance with Laws . Each Party will comply with all Applicable Laws in the conduct of its responsibilities and activities under this Agreement. In addition, each Party shall comply with all anti-corruption and anti-bribery laws and regulations, including but not limited to, the U.S. Foreign Corrupt Practices Act (FCPA). Each Party, and its respective officers, directors, employees, agents and representatives, represents that it has not and will not pay, offer or promise to pay, or authorize the payment of, any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a third party, to any official or employee of any governmental authority, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of (a) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or such public international organization or such political party; (b) inducing such person to use his influence with such governmental agency or such public international organization or such political party to affect or influence any act or decision thereof; or (c) securing any improper advantage.

15.4 Governing Law . This Agreement shall be construed in accordance with the internal laws of England and Wales, without reference to the conflict of laws provisions thereof. Each of the Parties hereto consents and agrees to the exclusive jurisdiction and venue of the state and federal courts sitting within London, England, in connection with any legal proceedings brought by any other part relating to the subject matter of this Agreement and further agrees and consents that any resulting judgment rendered by any such court against a Party shall be valid and binding on such Party and may be entered in any jurisdiction in which such Party is located.

15.6 No Assignment . No Party shall assign its rights and/or obligations under this Agreement without the prior written consent of the other Parties hereto, except that (a) Zavante may assign this Agreement in connection with the transfer or sale of all or substantially all of its assets or business to which the subject matter of this Agreement relates or in connection with any merger, consolidation or reorganization, without Fisiopharma’s prior written consent; and (b) Fisiopharma may assign this Agreement in connection with the transfer or sale of all or substantially all of its assets or business to which the subject matter of this Agreement relates or in connection with any merger, consolidation or reorganization with Zavante’s prior written consent, which consent may not be unreasonably withheld.

15.11 Headings . The headings used in this Agreement are for convenience of reference only and are not a part of the text hereof.

15.12 Counterparts . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which shall together constitute a single agreement.

[Remainder of This Page Intentionally Left Blank]

IN WITNESS WHEREOF, the Parties hereby agree to the terms and conditions of this Agreement.

Zavante Therapeutics, Inc.		Fisiopharma, S.r.l.

By:	/s/ Theodore R. Schroeder	By:	/s/ Nicola Cadei
Name: Theodore R. Schroeder		Name: Nicola Cadei
Title: President & CEO		Title: General Manager
Date: April 25, 2017		Date: 20 April 2017
		By:	/s/ Marek Dziki
		Name: Marek Dziki
		Title: Board Member
		Date: 20 April 2017

[SIGNATURE PAGE TO MANUFACTURING AND SUPPLY AGREEMENT]

SCHEDULE A

TECHNOLOGY TRANSFER ACTIVITIES, TIMING AND COSTS

Responsibility

Estimated

Estimated Cost to be

Technology Transfer Deliverables

Zavante

Fisiopharma

Shared

Completion Date

paid by Zavante*

[**]

[**][**]

[**]

TOTAL COSTS

[**]

* Zavante shall not be responsible for any amounts in excess of the estimates shown in this table unless agreed to in advance in writing by Zavante.

Payment: [**]% of these costs will be paid within [**] of signing this Agreement and the remainder will be paid upon successful completion of the last of the [**] Registration Lots.

SCHEDULE B

BULK DRUG VIAL SPECIFICATIONS

The Bulk Drug Vials (fosfomycin sodium, injection for intravenous use) Specification is provided below. Note that impurity acceptance criteria (along with in-house release criteria) are DRAFT.

Parameter	Acceptance Criteria	Analytical Method
Appearance	[**]	[**]
Identification IR	[**]	[**]
Identification HPLC	[**]	[**]
Assay (fosfomycin disodium)(1)	[**]	[**]
Degradation Products (1)
Impurity A(2)	[**]	[**]
Impurity B	[**]
Impurity C	[**]
[**]	[**]	[**]
[**]	[**]
[**]	[**]
Any single unspecified degradant	[**]
Total degradants	[**]	[**]
Average weight	[**]	[**]
Content uniformity	[**]	[**]
Water content	[**]	[**]
Dissolution time	[**]	[**]
Appearance of solution	[**]	[**]
pH	[**]	[**]
Particulate matter	[**]	[**]
Sterility	[**]	[**]
Bacterial endotoxins	[**]	[**]

(1) Test performed by an external laboratory under contract.

(2) Also referred to as “glycol”: Disodium (1,2-dihydroxipropyl) phosphonate

NOTE: In-house release specifications for impurities will be set lower than the regulatory specification as shown below:

Degradation Products		In-House Acceptance Criteria (for drug product Release)
Impurity A		[**]
Impurity B		[**]
Impurity C		[**]
[**]		[**]
[**]		[**]
[**]		[**]
Any single unspecified degradant		[**]
Total degradants		[**]

Primary Container Closure System

Component	Material	Supplier
Container: 50mL vial	Type I clear glass, USP	[**]

Closure: Stopper	dark grey butyl rubber	[**]

Overseal: Crimp with flip-off cap	Crimp: aluminum, Flip-off cap: blue plastic	To be selected

Secondary Packaging

Bulk Drug Vials shall be filled, stoppered, capped and coded.

Bulk Drug Vials will be placed in trays (similar to those used by vial manufacturers) and the trays will be placed into a shipper carton. The trays and carton will also provide physical protection to the individual vials during transportation to Zavante’s USA-based packaging contractor. The number of Bulk Drug Vials per tray and carton will be agreed between the Parties prior to production of Registration Lots.

Each shipper carton will include a shipper label that will be placed on the sealed carton.

Sealed cartons will then be placed onto a USA standard, heat-treated wooden pallet and shrink-wrapped to the pallet. The number of cartons and the configuration on each pallet will be agreed between the Parties prior to production of Registration Lots.

Drug Product Batch size

The batch size of the Bulk Drug Vials will be based on one full API Mixture batch of approximately [**].

SCHEDULE C

PRICE

A. The Parties agree that the Price for Bulk Drug Vials shall be €[**] per vial for annual volumes up to [**] vials.

B. The Parties agree to establish a Price discount schedule once annual volumes forecasted by Zavante exceed [**] vials in any [**] period. The Price discount schedule will be the subject of an amendment to this Agreement.

Amendment to

AMENDED AND RESTATED

PHARMACEUTICAL MANUFACTURING

AND EXCLUSIVE SUPPLY AGREEMENT

This Amendment (this “ Amendment ”) to the Amended and Restated Pharmaceutical Manufacturing and Exclusive Supply Agreement, dated as of the 25 th day of April, 2017 (the “ Agreement ”), by and between Zavante Therapeutics, Inc. , a Delaware corporation with a principal place of business at 11750 Sorrento Valley Road, Suite 250, San Diego, CA 92121 (“ Zavante ”) and Fisiopharma, S.r.l., a corporation organized under the laws of Italy, with a place of business located at Via Andrea Appiani, 22, Milano, Italy, will be effective as of the [ ] day of May, 2017 (the “ Amendment Effective Date ”).

WHEREAS, the Parties have entered into and now desire to amend the Agreement to revise Schedule A to the Agreement;

NOW THEREFORE, in consideration of the mutual covenants and promises set forth herein, the Parties agree as follows:

1. Definitions . Capitalized terms used and not defined in this Amendment have the respective meanings assigned to them in the Agreement.

2. Amendment to the Agreement . As of the Amendment Effective Date (defined above), the Agreement is hereby amended or modified as follows:

(a) The attached copy of Schedule A, “ Technology Transfer Activities, Timing and Costs ” shall replace, in its entirety, the copy of Schedule A included in the Agreement.

3. Date of Effectiveness; Limited Effect . Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect.

IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized representatives as of the Amendment Effective Date.

Fisiopharma, S.r.l.		Zavante Therapeutics, Inc.

By:	/s/ Nicola Cadei	By:	/s/ Robert DiVasto

Name:	Nicola Cadei	Name:	Robert DiVasto
Title:	General Manager	Title:	SVP, Manufacturing

By:	/s/ Marek Dziki

Name:	Marek Dziki
Title:	Board Member

SCHEDULE A

TECHNOLOGY TRANSFER ACTIVITIES, TIMING AND COSTS

Estimated

Estimated Cost to

Responsibility

Completion

be paid by

Technology Transfer Deliverables

Zavante

Fisiopharma

Shared

Date*

Zavante**

[**]

[**][**]

[**]

TOTAL COSTS

[**]

* Completion date will be developed based on the completion date of [**] for Registration Lots

** Zavante shall not be responsible for any amounts in excess of the estimates shown in this table unless agreed to in advance in writing by Zavante.

Payment: [**]% of these costs will be paid within [**] of signing this Agreement and the remainder will be paid upon successful completion of the last of the [**] Registration Lots.

Exhibit 10.11

EXECUTION VERSION

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

COMMERCIAL PACKAGING AGREEMENT

This Commercial Packaging Agreement (“ Agreement ”) is made as of this 26 day of December, 2017 (“ Effective Date ”), by and among Zavante Therapeutics, Inc., a Delaware corporation, with a place of business at 11750 Sorrento Valley Blvd., Suite 250, San Diego CA 92121 (“ Zavante ”), and AndersonBrecon Inc., an Illinois corporation, doing business as PCI of Illinois , with a place of business at 4545 Assembly Drive, Rockford, IL 61109 (together, “ PCI ”).

RECITALS

A. Zavante is a pharmaceutical company that holds certain rights to, and possesses certain technical and commercial information and know-how relating to, the Bulk Product (as defined below);

B. PCI specializes in packaging for the pharmaceutical industry and has certain technical and commercial information and know-how relating to, among other things, performing packaging and labeling of pharmaceutical and other products, into various sized primary and secondary containers; and

C. Zavante desires to engage PCI to provide certain commercial packaging services to Zavante, and PCI desires to provide such services, all pursuant to the terms and conditions set forth in this Agreement.

THEREFORE, in consideration of the mutual covenants, terms and conditions set forth below, the parties agree as follows:

ARTICLE 1
DEFINITIONS

The following terms have the following meanings in this Agreement:

1.1 “ Affiliate(s) ” means, with respect to PCI, Zavante or any third party, any corporation, firm, partnership or other entity that controls, is controlled by or is under common control with such entity. For the purposes of this definition, “ control ” shall mean the ownership of at least 50% of the voting share capital of an entity or any other comparable equity or ownership interest.

1.2 “ Applicable Laws ” means (i) all laws, ordinances, rules and regulations, as amended from time to time, of the United States applicable to the Packaging or any aspect thereof and the obligations of PCI or Zavante, as the context requires, under this Agreement, including cGMP, and (ii) to the extent mutually agreed upon the parties in writing, any

applicable laws, rules and regulations of one or more foreign jurisdictions relating directly to PCI’s obligations under this Agreement.

1.3 “ Authorization to Package ” means a document, signed by a Zavante representative or designee and provided to PCI prior to the commencement of Packaging of such product, indicating the Bulk Product has been authorized to be Packaged.

1.4 “ Authorization to Transfer ” means a document, signed by a Zavante representative or designee and provided to PCI, authorizing PCI to transfer the Packaged Product from the Facility.

1.5 “ Batch ” means a defined quantity of Bulk Product that has been or is being Packaged in accordance with the Specifications.

1.6 “ Bulk Product ” means bulk and work in process product of Zavante to be Packaged that is specified in Attachment A .

1.7 “ Business Day ” means any day other than a Saturday, Sunday or a national holiday in the United States.

1.8 “ Certificate of Analysis ” means a certificate indicating the Bulk Product’s conformance to the applicable Specifications, signed by a Zavante representative or designee and provided to PCI prior to the commencement of Packaging of such Bulk Product.

1.9 “ Certificate of Conformance ” means, with respect to a Zavante-Supplied Material other than Bulk Product, a certificate indicating such Zavante-Supplied Material’s conformance with all required testing and other applicable Specifications, signed by a representative of the supplier of such material and provided to PCI prior to the commencement of Packaging using such material.

1.10 “ Certificate of Release ” means a certificate indicating that the Packaging conforms with the Specifications, signed by a PCI representative and provided to Zavante following the completion of Packaging in accordance with the Quality Agreement.

1.11 “ cGMP ” means all applicable laws, regulations and standards of the United States of America relating to the Packaging including but not limited to, the FDA current Good Manufacturing Practices, as set forth in the Title 21 of the United States Code of Federal Regulations as such regulations and guidelines may be revised from time to time and equivalent non-U.S. regulations solely to the extent such non-U.S. jurisdictions are otherwise included in the definition of “Applicable Laws.”

1.12 “ Confidential Information ” has the meaning set forth in Section 10.2.

1.13 “ Contract Year ” means each consecutive twelve (12) month period beginning on the Effective Date or anniversary thereof, as applicable.

1.14 “ Defective Packaging ” has the meaning set forth in Section 5.1.

1.15 “Delivery Date” has the meaning set forth in Section 4.3(b).

1.16 “ Effective Date ” has the meaning set forth in the introductory paragraph.

1.17 “ Exception Notice ” has the meaning set forth in Section 5.1.

1.18 “Excess Loss” has the meaning set forth in Section 3.1(i).

1.19 “ Facility ” means PCI’s facility located in Rockford, Illinois or such other facility as agreed by the parties.

1.20 “FDA” means the United States Food and Drug Administration or any successor Regulatory Authority having substantially the same function.

1.21 “FD&C Act” means the U.S. Federal Food, Drug and Cosmetic Act, as amended or supplemented from time to time.

1.22 “ Firm Commitment ” has the meaning set forth in Section 4.2.

1.23 “ Intellectual Property ” means all intellectual property (whether or not patented), including without limitation, brands, patents, patent applications, formulae, know-how, trade secrets, copyrights, trademarks, trademark applications, trade names, trade dress, trade secrets, industrial designs, designs, concepts, technical information, manuals, standard operating procedures, instructions, specifications, inventions, processes, data, improvements and developments.

1.24 “ Launch Plan ” has the meaning set forth in Section 4.1.

1.25 “ Loss Allowance ” has the meaning set forth in Section 3.1(g).

1.26 “ Losses ” has the meaning set forth in Section 13.1.

1.27 “ Package ” or “ Packaging ” or “ Packaged ” means the packaging of Bulk Product and labeling the packages which contain the Bulk Product in accordance with the Specifications.

1.28 “ Packaged Product ” means the finished Bulk Product produced by PCI under this Agreement.

1.29 “ PCI ” has the meaning set forth in the introductory paragraph, or any successor or permitted assign.

1.30 “ PCI Fault ” has the meaning set forth in Section 5.1.

1.31 “ PCI Indemnitees ” has the meaning set forth in Section 13.2.

1.32 “ PCI Intellectual Property ” means all Intellectual Property and embodiments thereof owned by or licensed to PCI as of the date hereof or after by PCI .

1.33 “ Pricing ” has the meaning set forth in Section 7.1(a).

1.34 “ Purchase Order ” has the meaning set forth in Section 4.3(a).

1.35 “ Quality Agreement ” has the meaning set forth in Section 9.8.

1.36 “ Raw Materials ” means all raw materials, supplies, components and packaging necessary to Package and ship Packaged Product in accordance with the Specifications, as provided in Attachment A , but not including Zavante-Supplied Materials.

1.37 “ Recall ” has the meaning set forth in Section 9.6.

1.38 “ Regulatory Approval ” means any approvals, permits, product and/or establishment licenses, registrations or authorizations, including approvals pursuant to U.S. Investigational New Drug applications, New Drug Applications and Abbreviated New Drug Applications (or equivalent non-U.S. filings, such as European marketing authorization applications), as applicable, of any Regulatory Authorities that are necessary or advisable in connection with the development, manufacture, testing, use, storage, exportation, importation, transport, promotion, marketing, distribution or sale of Packaged Product.

1.39 “ Regulatory Authority ” means any federal, state or local governmental or regulatory bodies, agencies, departments, bureaus, courts or other entities in the United States (including the FDA) responsible for (A) the regulation (including pricing) of any aspect of pharmaceutical or medicinal products intended for human use or (B) health, safety or environmental matters generally, and any equivalent non-U.S. governmental or regulatory bodies solely to the extent such non-U.S. jurisdictions are otherwise included in the definition of “Applicable Laws.”

1.40 “ Representative ” has the meaning set forth in Section 10.1.

1.41 “ Review Period ” has the meaning set forth in Section 5.1.

1.42 “ Rolling Forecast ” has the meaning set forth in Section 4.1.

1.43 “ SKU ” means each Packaged Product configuration designation.

1.44 Specifications ” means the procedures, requirements, standards, quality control testing and other data and the scope of services as set forth in Attachment A , along with any valid amendments or modifications thereto, in accordance with Article 8.

1.45 “ Supplier ” has the meaning set forth in Section 3.3(a).

1.46 “ Term ” has the meaning set forth in Section 16.1.

1.47 “ Zavante ” has the meaning set forth in the introductory paragraph, or any successor or permitted assign.

1.48 “ Zavante Indemnitees ” has the meaning set forth in Section 13.1.

1.49 “ Zavante Intellectual Property ” means all Intellectual Property and embodiments thereof (a) owned by or licensed to Zavante as of the date hereof or after by Zavante, or (b) except with respect to packaging processes, which is PCI Intellectual Property, developed by PCI, its Representatives or Affiliates as a result of any use or reference to

Zavante’s Confidential Information or in the course of providing Packaging or other Services under this Agreement.

1.50 “ Zavante Material Loss ” has the meaning set forth in Section 3.1(h).

1.51 “ Zavante-Supplied Materials ” means any materials to be supplied by or on behalf of Zavante to PCI for Packaging, as provided in Attachment A , including Bulk Product, artwork and labeling.

ARTICLE 2
PROCESSING & RELATED SERVICES

2.1 Supply and Purchase of Packaging . PCI shall Package Bulk Product in accordance with the Specifications, Applicable Laws and the terms and conditions of this Agreement for the consideration provided herein. Zavante shall be responsible for the manufacturing and testing of Bulk Products, testing of Packaged Products, and sale and distribution of the Packaged Product.

2.2 Other Related Services . PCI shall provide such related services (including tooling purchases and repair; analytical work; stability; auditing of Suppliers; and retain storage) other than Packaging, as agreed to in writing by the parties from time to time. Such writing shall include the scope and fees for any such services and be appended to this Agreement. The terms and conditions of this Agreement shall govern and apply to such services.

ARTICLE 3
MATERIALS

3.1 Zavante-Supplied Materials .

(a) Supply . Zavante or a Supplier on Zavante’s behalf shall supply to PCI for Packaging, at Zavante’s sole cost and risk, Zavante-Supplied Materials, including Bulk Product, in quantities sufficient to meet Zavante’s requirements for Packaging, as set forth in Article 4. Zavante shall deliver or cause to be delivered such items, together with associated Certificates of Analysis, Certificates of Conformance, lot numbers, expiration dates and Authorizations to Package to the Facility no later than [**] before, but not earlier than [**] before, the Delivery Date for the Packaged Product in which such items will be used by PCI. If PCI fails to receive the foregoing on a timely basis, PCI shall have the right to delay delivery of the related Packaged Product or return such items to Zavante or store such items, either at Zavante’s expense. The preceding supply schedule for Zavante-Supplied Materials may be adjusted upon mutual agreement of the parties if Zavante is launching a new product. PCI shall use such items solely and exclusively for Packaging hereunder. Prior to first delivery of any such items, Zavante shall provide to PCI a copy of all associated material safety data sheets, safe handling instructions and health and environmental information, and shall promptly provide any updates, or revisions thereto.

(b) Conformity . Within [**] of receipt of Zavante-Supplied Materials by PCI, PCI shall confirm that the labels on such items conform to their accompanying packing slip.

Unless otherwise expressly required by the Specifications, PCI shall have no obligation to test such items to confirm that they meet the associated Specifications, Certificate of Analysis or Certificate of Conformance or otherwise; but in the event that PCI detects a nonconformity with Specifications, PCI shall give Zavante prompt notice of such nonconformity. PCI shall not be liable for any defects in Zavante-Supplied Materials, or in Packaging or Packaged Product as a result of defective Zavante-Supplied Materials, unless PCI failed to properly perform any testing obligations with respect thereto under this Agreement or under the Quality Agreement. PCI shall follow Zavante’s reasonable written instructions in respect of return or disposal of defective Zavante-Supplied Materials, at Zavante’s sole cost and risk.

(c) Customs . Zavante shall be solely responsible for the proper release and clearance of Zavante-Supplied Materials to be provided by Zavante or a Supplier for U.S. and foreign customs purposes, including any return thereof required by any Regulatory Authority following improper or unauthorized release, and Zavante acknowledges that it is the owner of such items for customs purposes. Zavante shall reimburse PCI for any and all costs, charges and expenses incurred by PCI in connection with customs clearance and release of any such Zavante-Supplied Materials. Notwithstanding anything to the contrary herein, if any delay in customs clearance or release of any Zavante-Supplied Materials occurs such that PCI cannot supply the quantity of Packaged Product to Zavante by the Delivery Dates specified in accepted Purchase Orders, then PCI shall not be obligated to supply Packaged Product to Zavante hereunder until full and proper customs clearance or release is obtained by Zavante.

(d) Title and Risk of Loss for Zavante-Supplied Materials . Title and risk of loss to Zavante-Supplied Materials shall remain with Zavante while such items are in the possession of PCI and for the duration of the services for each relevant Product. PCI’s liability for any loss to such Zavante-Supplied Materials shall be solely as set forth in Section 3.1(h). Zavante shall obtain and maintain insurance for Zavante-Supplied Materials in accordance with Section 15.1.

(e) Artwork and Packaging . Zavante shall provide or approve, prior to the procurement of applicable components, all artwork, advertising and packaging information necessary for Packaging. Such artwork, advertising and packaging information is and shall remain the exclusive property of Zavante, and Zavante shall be solely responsible for the content thereof. Such artwork, advertising and packaging information or any reproduction thereof may not be used by PCI in any manner other than performing its obligations hereunder. PCI requires no less than [**] notice of changes in artwork, advertising and packaging information; provided, however, that PCI will work with Zavante in good faith to expedite copy changes on a quicker basis. If Zavante provides PCI with less notice of changes in artwork, advertising and packaging information, PCI shall not be responsible for any delay in the delivery of Packaged Products to which such changes apply.

(f) Expired Zavante-Supplied Materials . Zavante will be required to dispose of any Zavante-Supplied Materials that have expired within [**] of such expiration. PCI will manage destruction of such expired Zavante-Supplied Materials if requested by Zavante and will invoice Zavante for the costs thereof.

(g) Loss Allowance . For each type of Packaged Product, the parties will mutually determine an annual allowance for Bulk Product and other Zavante-Supplied Materials

that are not converted to Packaged Product (“ Loss Allowance ”). The Loss Allowance shall be adjusted in the event of any changes to the Specifications, including without limitation any changes to the Bulk Product.

(h) Liability for Loss . PCI’s liability for loss or damage to Zavante-Supplied Materials is limited to: (i) process scrap arising from the Packaging operations, (ii) Zavante-Supplied Materials that are not reasonably recoverable from Defective Packaging attributable to PCI Fault, and (iii) Zavante-Supplied Materials lost or damaged due to PCI’s negligence, gross negligence or willful misconduct in its handling or storing the Zavante-Supplied Materials in accordance with the Specifications (collectively, “ Zavante Material Loss ”), but only to the extent that such Zavante Material Loss exceeds the Loss Allowance. When calculating the amount of Zavante Material Loss, the following shall not be counted as issued to the line for Packaging: (i) Zavante-Supplied Materials used for samples and testing, (ii) Packaged Product that must be retained by PCI as samples, pursuant to this Agreement, the Quality Agreement or Applicable Laws, and (iii) Zavante-Supplied Materials that are non-conforming to Specifications.

(i) Annual Reconciliation of Excess Loss; Reimbursement . Within [**] following the end of each Contract Year, PCI will perform a reconciliation for each type of Packaged Product for the prior Contract Year and will calculate for applicable Zavante-Supplied Materials (i) the Zavante Material Loss and (ii) the amount, if any, by which the Zavante Material Loss exceeds the Loss Allowance (such excess referred to as the “ Excess Loss ”). PCI will reimburse Zavante for Excess Loss, if any, [**] subject to the limitation set forth in Section 14.1. For purposes of this Section 3.1(i), “cost” shall mean (i) for Zavante-Supplied Materials produced by Zavante or its Affiliate, material, labor and overhead costs to manufacture the Zavante-Supplied Materials and (ii) for Zavante-Supplied Materials purchased from unaffiliated third parties, the actual price paid to the third party for the Zavante-Supplied Materials.

(j) PCI and Zavante agree to [**].

3.2 Raw Materials .

(a) Procurement . PCI shall be responsible for procuring, inspecting and releasing adequate Raw Materials as necessary to meet the Firm Commitment, unless otherwise agreed to by the parties in writing. PCI shall rely on the Firm Commitment for purchasing Raw Materials for use in the Packaged Products forecasted. To the extent practicable, PCI will procure Raw Materials on a [**] basis based on projected [**] requirements in an effort to reduce costs of such components and materials. In the event that the quantity of Packaged Products in any Rolling Forecast provided by Zavante pursuant to Article 4 decreases or increases by more than [**]% from one Rolling Forecast to the next, PCI reserves the right (i) to

purchase the Raw Materials required for such Packaged Products on a periodic basis as needed to meet such fluctuating requirements and (ii) in accordance with Section 7.2, to adjust the Pricing for such Packaged Products to reflect the costs of such fluctuating purchases.

(b) Title and Risk of Loss for Raw Materials . Title and risk of loss with respect to the Raw Materials used for the Packaged Products will remain with PCI until PCI delivers Packaged Products to a common carrier for shipment to Zavante.

(c) Reimbursement for Raw Materials . In the event of (i) a Specification change for any reason, (ii) obsolescence of any Raw Material or (iii) further to Article 16, termination or expiration of this Agreement, Zavante shall bear the cost of any unused Raw Materials plus [**]%, so long as PCI purchased such Raw Materials in quantities consistent with Zavante’s most recent Firm Commitment, the Supplier’s minimum purchase obligations and Section 3.2(a). Payment will be due within [**] of Zavante’s receipt of PCI’s invoice.

(d) Storage . After [**], Raw Materials or Zavante-Supplied Materials, including Bulk Product, held in inventory will be subject to storage and carrying cost as reasonably determined by PCI.

3.3 Mandated Supplier .

(a) Use of Supplier . In certain instances, Zavante may require a specific supplier, manufacturer or vendor (“ Supplier ”) to be used for Raw Materials or to furnish Zavante-Supplied Materials. In such an event, (i) such Supplier will be identified in the Specifications or otherwise in writing, (ii) Zavante shall be responsible for the timeliness, quantity and quality of supply of Raw Materials or Zavante-Supplied Materials from such Supplier, (iii) PCI shall not be liable for any defects in Raw Materials or Zavante-Supplied Materials from such Supplier, or in Packaging or Packaged Product as a result of such defective Raw Materials or Zavante-Supplied Materials, unless PCI failed to properly perform any testing required by the Specifications, and (iv) Raw Materials from such Supplier shall be deemed, for all purposes hereunder including required supply schedule and liability, Zavante-Supplied Materials. If a Supplier fails to deliver the appropriate quantity and quality of Raw Materials or Zavante-Supplied Materials on the required supply schedule and PCI is unable to resolve the issue with Supplier, PCI shall so notify Zavante of such supply issue and Zavante shall, to the extent practicable, have a discussion with the Supplier in an effort to resolve such failure. Zavante shall have no obligation to continue such discussion with the Supplier following the initial discussion or after such offer of an initial discussion, if the Supplier refuses such discussion. If a Supplier refuses such discussion or fails to supply PCI with Raw Materials or Zavante-Supplied Materials such that PCI cannot supply Packaged Product to Zavante, then, to the extent of such failure, PCI shall not be obligated to supply Packaged Product to Zavante hereunder until such failure to supply is remedied, either with the Supplier or with an alternate supplier.

(b) Costs . If the cost of the Raw Material from any such Supplier is greater than PCI’s costs for the same raw material of equal quality from other suppliers, PCI shall add the difference between PCI’s cost of the Raw Material and the Supplier’s cost of the Raw Material to the Pricing. Zavante will be responsible for all costs associated with qualification of any such Supplier that has not been previously qualified (as described in Section 3.3(c)) by PCI.

(c) Qualification . Zavante acknowledges and agrees that any Supplier mandated by Zavante (i) must meet PCI’s requirements for credit approval and (ii) prior to the delivery of any Raw Materials or Zavante-Supplied Materials by such Supplier to the Facility, must pass either (A) the quality audit conducted by PCI or, (B) if Zavante acknowledges in writing to PCI no later than [**] after selection of the Supplier that Zavante shall be solely responsible for conducting all quality audits of such Supplier, the quality audit conducted by Zavante. Notwithstanding anything to the contrary herein, Zavante further acknowledges and agrees that PCI shall not be required to utilize or contract with any Supplier that fails to meet the foregoing credit and audit requirements.

ARTICLE 4
LAUNCH, PURCHASE ORDERS & FORECASTS

4.1 Launch . The intent of this plan is to ensure the parties work collectively to develop a coordinated launch agreement to minimize the time from Regulatory Approval until the Packaged Product is available for commercial sale by Zavante (“ Launch Plan ”). Therefore, prior to the Packaged Product receiving Regulatory Approval, Zavante shall provide PCI an initial quantity of Packaged Product within [**] of submitting the NDA for the Packaged Product. The parties will work in good faith to agree to a Launch Plan that will include the initial launch quantity of Packaged Product, the proposed launch date and any additional expenses related to launching the Package Product (for which PCI shall be reimbursed), or terminating the launch if Regulatory Approval is delayed or the Packaged Product does not receive Regulatory Approval. Notwithstanding anything to the contrary in this Agreement, if Regulatory Approval is delayed or the Packaged Product does not receive Regulatory Approval, then PCI’s only compensation will be that provided in the Launch Plan.

4.2 Commercial Forecast . Once the Packaged Product has received Regulatory Approval, Zavante shall use its commercially reasonable efforts to provide PCI on or before the [**] of each calendar month, beginning at least [**] prior to the earliest Delivery Date, a written [**]-month rolling forecast of the quantities of Packaged Product that Zavante intends to have PCI Package during such period (“ Rolling Forecast ”). The Rolling Forecast shall be submitted on a [**] basis in Excel spreadsheet format and shall include [**] quantity requirements by Zavante for each Packaged Product by SKU, and the proposed delivery date(s). To assist PCI in planning packaging operations, only the first [**] months of each Rolling Forecast shall constitute a binding order for the quantities of Product specified therein (“ Firm Commitment ”) and the following [**] months of the Rolling Forecast shall be non-binding, good faith estimates. Notwithstanding anything to the contrary herein, if the lead time necessary to schedule production is greater than [**], PCI shall schedule production based on the Rolling Forecast in a timely manner. In the event PCI believes it may not be able to meet the requirements of any Rolling Forecast, it shall notify Zavante within [**] of receipt of such Rolling Forecast, and the parties shall agree in good faith appropriate modifications to the Rolling Forecast.

4.3 Purchase Orders .

(a) From time to time as provided in this Section 4.3(a), Zavante shall submit to PCI a binding, non-cancelable purchase order for Packaging specifying the number of Batches, in whole Batch increments, to be Packaged, the Batch size (to the extent the Specifications permit Batches of different sizes), the proposed delivery date(s) for each Batch,

and the lot numbers to be applied to such Batches (“ Purchase Order ”). Concurrently with the submission of each Rolling Forecast, Zavante shall submit a Purchase Order for the portion of the Firm Commitment which is not already subject to Purchase Order. Purchase Orders for Packaging quantities of Bulk Product in excess of the Firm Commitment shall be submitted by Zavante at least [**] in advance of the delivery date(s) requested in the Purchase Order.

(b) Provided that a Purchase Order is consistent with the Firm Commitment and other terms and conditions of this Agreement, within [**] following receipt of a Purchase Order, PCI shall issue a written acknowledgement to Zavante that it accepts such Purchase Order with the proposed delivery date(s) or reasonable alternative delivery date(s), in which event the parties shall promptly reach mutual agreement on acceptable delivery date(s). The term “ Delivery Date(s) ” refers to the firm date(s), as agreed upon by the parties pursuant to this Section 4.3(b), upon which PCI must deliver to Zavante or authorized agent of Zavante the Packaged Products.

(c) PCI may reject Purchase Orders in excess of the Firm Commitment or otherwise not given in accordance with this Agreement.

(d) Notwithstanding Section 4.3(c), PCI shall use commercially reasonable efforts to Package Bulk Product in quantities which are up to [**]% in excess of the quantities specified in the Firm Commitment, subject to PCI’s other supply commitments and packaging and equipment capacity; provided , that PCI’s failure to Package Bulk Product quantities in excess of the quantities specified in the Firm Commitment shall not constitute a breach of this Agreement by PCI. Within [**] of receipt of a Purchase Order for quantities of Packaged Product in excess of the applicable Rolling Forecast, PCI will notify Zavante of PCI’s capacity to supply such excess quantity.

4.4 PCI’s Cancellation of Purchase Orders . Notwithstanding Section 4.5, PCI reserves the right to cancel all, or any part of, a Purchase Order upon written notice to Zavante, and PCI shall have no further obligations or liability with respect to such Purchase Order, if Zavante refuses or fails to timely supply conforming Zavante-Supplied Materials in accordance with Section 3.1, including artwork or related information. Any such cancellation of Purchase Orders shall not constitute a breach of this Agreement by PCI nor shall it absolve Zavante of its obligation in respect of the Firm Commitment.

4.5 Zavante’s Modification or Cancellation of Purchase Orders . Zavante may modify the Delivery Date or quantity of Bulk Product to be packaged in a Purchase Order only by submitting a written change order to PCI at least [**] in advance of the original Delivery Date covered by such change order. Such change order shall be effective and binding against PCI only upon the written approval of PCI, and notwithstanding the foregoing, Zavante shall remain responsible for the Firm Commitment. In no event shall PCI be required to incur any costs or suffer any losses in connection with such change order or its efforts to accommodate such a change. Any such costs or losses incurred by PCI shall be paid for by Zavante.

4.6 Unplanned Delay or Elimination of Packaging . PCI shall use commercially reasonable efforts to meet the Purchase Orders, subject to the terms and conditions of this Agreement. PCI shall provide Zavante with as much advance notice as possible (and will use

commercially reasonable efforts to provide at least [**] advance notice where possible) if PCI determines that any Packaging will be delayed or cancelled for any reason.

4.7 Observation of Packaging . In addition to Zavante’s audit right pursuant to Section 9.5, Zavante may send a reasonable number of representatives to the Facility to observe Packaging, upon reasonable advance written request to PCI. Such representatives shall abide by all PCI safety rules and other applicable employee policies and procedures, and Zavante shall be responsible for such compliance and must have the appropriate insurance in place to cover such responsibilities. Zavante shall indemnify and hold harmless PCI for any Losses resulting from an action, omission or other activity of such representatives while on PCI’s premises. PCI reserves the right to require such representatives to enter into separate confidentiality agreements directly with PCI in such persons’ individual capacities on terms substantially similar to those set forth in Article 10.

ARTICLE 5
TESTING; SAMPLES; RELEASE

5.1 Releasing; Rejection . PCI shall provide Zavante or its designee with a Certificate of Release for each Batch consistent with the requirements in the Quality Agreement. Zavante shall be responsible for final release of Packaged Product to the market. Unless within [**] after Zavante’s receipt of a Batch (“ Review Period ”), Zavante or its designee notifies PCI in writing (an “ Exception Notice ”) that the Packaging of such Batch does not meet the warranty set forth in Section 12.1 (“ Defective Packaging ”), and provides a sample of the alleged Defective Packaging, the Packaging shall be deemed accepted by Zavante and Zavante shall have no right to reject such Batch. Upon timely receipt of an Exception Notice from Zavante, PCI shall conduct an appropriate investigation in its discretion to determine whether or not it agrees with Zavante that the Packaging is Defective Packaging and to determine the cause of any nonconformity. If PCI agrees that Packaging is Defective Packaging and determines that the cause of nonconformity is attributable solely to PCI’s negligence or willful misconduct (“ PCI Fault ”), then Section 5.3 shall apply. For avoidance of doubt, where the cause of nonconformity cannot be determined or assigned as above, it shall not be deemed PCI Fault.

5.2 Discrepant Results . In the event of a disagreement between the parties regarding whether Packaging is Defective Packaging and/or whether the cause of the nonconformity is PCI Fault, which disagreement cannot be resolved by the parties within [**] of the date of the completion of PCI’s investigation, the parties shall cause a mutually agreeable independent third party to review records, test data and to perform comparative tests and/or analyses on samples of the alleged Defective Packaging and its components, including Zavante-Supplied Materials. The independent party’s determination as to whether or not Packaging is Defective Packaging and the cause of any nonconformity shall be final and binding. Unless otherwise agreed to by the parties in writing, the costs associated with such testing and review shall be borne by PCI if Packaging is Defective Packaging attributable to PCI Fault, and by Zavante in all other circumstances.

5.3 Defective Packaging . PCI will, at Zavante’s option, following good faith consultation with PCI, either re-Package at its cost (only if re-packaging is permitted under the Quality Agreement) any Batch of Defective Packaging attributable to PCI Fault (and Zavante shall be liable to pay for either the rejected Batch(es) or the replacement Batch(es), but not both), or reimburse Zavante for all payments made by Zavante for such Batch. In either case, PCI will

also reimburse Zavante for the costs incurred by Zavante to provide the unrecoverable Zavante-Supplied Materials for such Batch of Defective Packaging in accordance with Section 3.1(i). EXCEPT FOR PCI’S OBLIGATIONS UNDER SECTION 9.6 OR ARTICLE 13 WITH RESPECT TO DEFECTIVE PRODUCT NOT KNOWN TO CLIENT OR THAT REASONABLY SHOULD NOT HAVE BEEN KNOWN TO CLIENT, THE FOREGOING OBLIGATION OF PCI TO RE-PACKAGE OR REIMBURSE PAYMENTS MADE BY ZAVANTE AND REIMBURSE FOR ZAVANTE-SUPPLIED MATERIALS IN THE EVENT OF EXCESS LOSS UNDER SECTION 3.1(i) SHALL BE ZAVANTE’S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT FOR DEFECTIVE PACKAGING AND IS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED.

5.4 Supply of Material for Defective Packaging . In the event PCI re-Packages pursuant to Section 5.3, Zavante shall supply, at its cost, PCI with sufficient quantities of Zavante-Supplied Materials in order for PCI to complete such re-Packaging.

ARTICLE 6
DELIVERY

6.1 Delivery . PCI shall tender Packaged Product for delivery Ex Works (Incoterms 2010) the Facility promptly following PCI’s receipt of the Authorization to Transfer, which shall be provided by Zavante no more than [**] after PCI’s issuance of a Certificate of Release, provided , that there are no outstanding Packaging process deviations or open quality system investigations with respect to such Packaged Product. Zavante shall qualify at least one carrier to deliver Packaged Product; provided , that if Zavante does not provide such carrier, PCI may select one. If the Packaged Product is to be exported out of the United States, Zavante shall be solely responsible for obtaining all required export or import licenses available to the Packaged Product prior to such export or import and shall reimburse PCI for any and all costs, charges, expenses and import and export duties for delivery and transportation of Packaged Product from the Facility. PCI should not be listed as the exporter (U.S. Principle Party in Interest) on any documentation relating to the export.

6.2 Failure to Take Delivery; Storage . Upon written agreement of the parties, or if Zavante fails to take delivery of any Packaged Product on any scheduled Delivery Date; provided , that such failure to take delivery is not due to any outstanding PCI obligation, PCI shall store such Packaged Product under conditions in accordance with the Specifications as Zavante’s agent. If Zavante or its authorized agent fails to take delivery within [**] of the Delivery Date, Zavante shall be billed $[**] per pallet of unshipped Packaged Product at such time and thereafter on the [**] until Zavante or its authorized agent releases and takes delivery of such Packaged Product. For each such Batch of stored Packaged Product, Zavante agrees that: (A) Zavante has made a fixed commitment to purchase the Packaging of such Packaged Product, (B) Zavante has title and risk of loss for such Packaged Product, (C) such Packaging for Packaged Product shall be on a bill and hold basis for legitimate business purposes, and (D) if no rescheduled Delivery Date is determined at the time of billing, PCI shall have the right to ship such Packaged Product to Zavante within [**] after billing. Within [**] following a written request from PCI, Zavante shall provide PCI with a letter confirming items (A) through (D) of this Section 6.2 for each Batch of stored Packaged Product.

ARTICLE 7
PAYMENTS

7.1 Fees . In consideration for PCI performing services hereunder:

(a) Zavante shall pay PCI the pricing for Packaging set forth on Attachment B (“ Pricing ”). Such fees shall be paid within [**] following date of invoice, which invoice shall be submitted to Zavante by PCI upon tender of delivery of Packaged Product as provided in Section 6.1 or the entry of the Packaged Products into storage as provided in Section 6.2.

(b) Other Fees . Zavante shall pay PCI for all other fees and expenses of PCI owing in accordance with the terms of this Agreement, including pursuant to Sections 2.2, 6.2 and 16.3. Such fees and expenses shall be paid within [**] following date of invoice, which invoice shall be submitted to Zavante by PCI as and when appropriate.

7.2 Pricing Adjustment . The Pricing shall be adjusted following advance written notice from PCI to Zavante and shall be effective on January 1st of each year of the Term as follows: (i) labor costs shall be subject to annual increase to reflect any increase in the Producer Price Index, commodity code 06-38 for Pharmaceutical Preparations, issued by the Bureau of Labor Statistics, United States Department of Labor over the prior calendar year (based on the publication by the U.S. Department of Labor of the PPI on or about October 15th of the prior calendar year); (ii) cost in Raw Materials shall be subject to annual increase to reflect any increase in PCI’s costs over the prior calendar year, including any increases imposed by a Supplier; and (iii) production costs shall be subject to annual increase to reflect any reduction in purchase volume level below anticipated purchase volume over the prior calendar year. In addition, the parties acknowledge and agree that the Pricing is based on PCI performing order runs of consistent size and frequency and that the Pricing shall be subject to review and adjustment promptly following the occurrence of any unanticipated fluctuation in order run sizes or frequency or fluctuations in forecasted quantities as described in Sections 4.1 and 4.3. For example, such adjustment may include an increase in the Pricing due to reduced order run sizes or a decrease in the price due to increased order run size.

7.3 Payment Terms . Zavante shall make payment in U.S. dollars, and otherwise as directed in the applicable invoice. In the event payment is not received by PCI on or before the due date, then PCI may, in addition to any other remedies available at equity or in law, at its option, elect to do any one or more of the following: (A) charge interest on the outstanding sum from the due date (both before and after any judgment) at [**] percent ([**]%) per month until paid in full (or, if less, the maximum amount permitted by Applicable Laws); (B) suspend any further performance hereunder until such invoice is paid in full; and/or (C) terminate this Agreement pursuant to Section 16.2(b).

7.4 Taxes . PCI shall bear and pay all federal, state and local taxes based upon or measured by its net income, and all franchise taxes based upon its corporation existence, or its general corporate right to transact business. Any other tax, however denominated and measured, imposed upon the Products, the Packaged Products or Packaging or upon their storage, inventory, sales, transportation, delivery, use or consumption shall be paid directly by Zavante, or if prepaid by PCI, shall be invoiced to Zavante, at cost, as a separate item and paid by Zavante to PCI.

ARTICLE 8
CHANGES TO SPECIFICATIONS

All Specifications and any changes thereto agreed to by the parties from time to time shall be in writing, dated and signed by the parties. Any change to the Packaging process shall be deemed a Specification change. No change in the Specifications shall be implemented by PCI, whether requested by Zavante, requested by PCI or requested or required by any Regulatory Authority, until the parties have agreed in writing to such change, the implementation date of such change, and any increase or decrease in costs, expenses or fees associated with such change (including any change to Pricing). PCI shall respond promptly to any request made by Zavante for a change in the Specifications, and both parties shall use commercially reasonable, good faith efforts to agree to the terms of such change in a timely manner. As soon as possible after a request is made for any change in Specifications, PCI shall notify Zavante of the costs associated with such change and shall provide such supporting documentation as Zavante may reasonably require. Zavante shall pay all costs associated with such agreed upon changes. If there is a conflict between the terms of this Agreement and the terms of the Specifications, this Agreement shall control. PCI reserves the right to postpone effecting changes to the Specifications, or in the case of changes requested or required by any Regulatory Authority postpone Packaging under this Agreement, until such time as the parties agree to and execute the required written amendment.

ARTICLE 9
RECORDS; REGULATORY MATTERS

9.1 Batch Records and Data . Within [**] following the completion of Packaging of each Batch, PCI shall provide Zavante with properly completed copies of Batch records prepared in accordance with the Specifications; provided , that if an unplanned deviation in the Packaging process occurs, PCI shall provide such Batch records within [**] following resolution of the unplanned deviation.

9.2 Recordkeeping . PCI shall maintain materially complete and accurate books, records, reports and all other information relating to Packaging, including all information required to be maintained by Applicable Laws, in accordance with PCI standard operating procedures. Such information shall be maintained for a period of at least [**] from the relevant Packaged Product expiration date or longer if required under Applicable Laws.

9.3 Regulatory Compliance . Zavante shall be solely responsible for and will obtain all Regulatory Approvals associated specifically with the Packaged Products, including any applications and amendments in connection therewith. Zavante shall use its best efforts to expedite and obtain all Regulatory Approvals necessary for PCI to commence Packaging at the Facility. PCI will be responsible to maintain all permits and licenses required by any Regulatory Authority with respect to the Facility generally.

9.4 Governmental Inspections and Requests . PCI shall promptly advise Zavante if an authorized agent of any Regulatory Authority visits the Facility concerning the Packaging. PCI shall furnish to Zavante a copy of the relevant portions of any report by such Regulatory Authority within [**] of PCI’s receipt of such report. Further, upon receipt of a Regulatory Authority request to inspect the Facility or audit PCI’s books and records with respect to

Packaging, PCI shall promptly notify Zavante, and shall provide Zavante with a copy of the relevant portions of any written document received from such Regulatory Authority.

9.5 Zavante Inspections and Audits .

(a) During the Term, up to [**] duly-authorized employees, agents and representatives of Zavante shall be granted access for a maximum of up to [**] days (unless otherwise agreed to by PCI in writing) upon reasonable prior written notice and at reasonable times during regular business hours to (i) the portion of the Facility where PCI performs Packaging, (ii) relevant personnel involved in Packaging and (iii) Packaging records described in Section 9.2, in each case solely for the purpose of inspecting and verifying that PCI is Packaging in accordance with cGMPs and the Specifications.

(b) Zavante will arrange audit visits with PCI Quality Management at least [**] in advance of such visit. Inspections shall be designed to minimize disruption of operations at the Facility. Zavante may not conduct an inspection under this Section 9.5 more than [**] period; provided , that additional inspections may be conducted upon reasonable advance written notice in the event there is a material quality or compliance issue concerning Packaging.

(c) Employees, agents and representatives of Zavante performing an audit or inspection shall abide by all PCI safety rules and other applicable employee policies and procedures, and Zavante shall be responsible for such compliance and must have the appropriate insurance in place to cover such responsibilities. Zavante shall indemnify and hold harmless PCI for Losses resulting from any action, omission or other activity of such representatives while on PCI’s premises. PCI reserves the right to require such representatives to enter into separate confidentiality agreements directly with PCI in such persons’ individual capacities on terms substantially similar to those set forth in Article 10.

9.6 Recall . If a Regulatory Authority orders or requires the recall of any Packaged Product supplied hereunder or if Zavante or PCI believes a recall, field alert, Packaged Product withdrawal or field correction (“ Recall ”) may be necessary with respect to any Packaged Product supplied under this Agreement, the party receiving the notice from the Regulatory Authority or that holds such belief shall promptly notify the other party in writing. With respect to any Recall, PCI shall provide all necessary cooperation and assistance to Zavante. Zavante shall provide PCI with an advance copy of any proposed submission to a Regulatory Authority in respect of any Recall, and shall consider in good faith any comments from PCI. The cost of any Recall shall be borne by Zavante, and Zavante shall reimburse PCI for expenses incurred in connection with any Recall, in each case unless such Recall is caused solely by PCI’s gross negligence or willful misconduct in which case PCI’s liability for such Recall costs and expenses is limited to a maximum of the lesser of (i) $500,000 or (ii) the Pricing charged for the recalled Packaged Product, plus reimbursement for any Product that cannot be recovered from such recalled Packaged Product in accordance with the limitation set forth in Section 3.1(i). For purposes of clarification, Recall costs and expenses shall include, without limitation, notification to customers, Product retrieval, Product destruction, shipping and taxes. In the event that a Product is Recalled or Zavante is required to disseminate information relating to Packaged Product covered by this Agreement, Zavante shall so notify PCI within a reasonable time so as to enable PCI to provide Zavante with such assistance in connection with such Recall as may reasonably be requested by Zavante. PCI will comply with all such reasonable requests from

Zavante. Zavante shall handle exclusively the organization and implementation of all Recalls of Products and Packaged Products. Any such Recall shall be implemented and administered in a manner which is appropriate and reasonable under the circumstances and in conformity with any requests or orders of the applicable Regulatory Authority, as well as to the extent not inconsistent with requests or orders of the applicable Regulatory Authority, accepted trade practices.

9.7 Duty to Inform . Zavante shall inform PCI immediately of any important information relating to the activity, side effects, toxicity and/or safety of the Products or Packaged Products that becomes known to Zavante during the term of this Agreement and that is relevant to the performance of the services by PCI.

9.8 Quality Agreement . Prior to the first Packaging hereunder, the parties shall negotiate in good faith and enter into a Quality Agreement substantially in the form attached hereto as Attachment C (the “ Quality Agreement ”). The Quality Agreement shall in no way determine liability or financial responsibility of the parties for the responsibilities set forth therein. In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to quality-related activities, including compliance with cGMP, the provisions of the Quality Agreement shall govern. In the event of a conflict between any of the provisions of this Agreement and the Quality Agreement with respect to any commercial matters, including allocation of risk, liability and financial responsibility, the provisions of this Agreement shall govern.

ARTICLE 10
CONFIDENTIALITY AND NON-USE

10.1 Mutual Obligation . PCI and Zavante each agrees that it will not use the other party’s Confidential Information except in connection with the performance of its obligations hereunder and will not disclose the other party’s Confidential Information to any third party without the prior written consent of the other party, except as required by law, regulation or court or administrative order; provided , that prior to making any such legally required disclosure, the party making such disclosure shall give the other party as much prior notice of the requirement for and contents of such disclosure as is practicable under the circumstances. Notwithstanding the foregoing, each party may disclose the other party’s Confidential Information to any of its employees, officers, directors, contractors (collectively, “ Representatives ”) and Affiliates that (A) need to know such Confidential Information for the purpose of performing under this Agreement, (B) are advised of the contents of this Article 10 and (C) agree to be bound by the terms of this Article 10. Each party shall be responsible for any breach of this agreement by its Representatives or Affiliates. Without prejudice to the rights and remedies otherwise available to a party at law or in equity, the parties agree that a non-breaching party shall be entitled to seek equitable relief by way of specific performance and injunction or otherwise if the other party breaches or threatens to breach any of the provisions of this Article 10.

10.2 Definition . As used in this Agreement, the term “ Confidential Information ” includes all such information furnished by PCI or Zavante, or any of their respective Representatives or Affiliates, to the other party or its Representatives or Affiliates, whether furnished before, on or after the Effective Date and furnished in any form, including written, verbal, visual, electronic or in any other media or manner. Confidential Information includes all proprietary technologies, data, information, know-how, trade secrets, discoveries, inventions and

any other Intellectual Property (whether or not patented), analyses, compilations, business or technical information and other materials prepared by either party, or any of their respective representatives or Affiliates, containing or based in whole or in part on any such information furnished by the other party or its representatives or Affiliates. Confidential Information also includes the terms of this Agreement. For the avoidance of doubt, with the exception of packaging processes which are PCI Confidential Information, all proprietary technologies, data, information, know-how, trade secrets, discoveries, inventions and any other Intellectual Property (whether or not patented), analyses, compilations, business or technical information and other materials developed by PCI or its Representatives or Affiliates in the course of providing the Packaging or other services under this Agreement shall be Zavante’s Confidential Information.

10.3 Exclusions . Notwithstanding Section 10.2, Confidential Information does not include information that (A) is or becomes generally available to the public or within the industry to which such information relates other than as a result of a breach of this Agreement, (B) is already known by the receiving party at the time of disclosure as evidenced by the receiving party’s written records, (C) becomes available to the receiving party on a non-confidential basis from a source that the receiving party reasonably believes is entitled to disclose it on a non-confidential basis or (D) was or is independently developed by or for the receiving party without any reference to or use of the Confidential Information of the other party as evidenced by the receiving party’s written records.

10.4 No Implied License . Except as expressly set forth in Section 11.1, the receiving party will obtain no right of any kind or license under any Confidential Information of the disclosing party, including any patent application or patent, by reason of this Agreement. All Confidential Information will remain the sole property of the party disclosing such information or data, subject to Article 11.

10.5 Return of Confidential Information . Upon expiration or termination of this Agreement, the party receiving Confidential Information will cease its use and, upon request, within [**] either return or destroy (and certify as to such destruction) all Confidential Information of the other party, including any copies thereof, except for a single copy thereof which may be retained for the sole purpose of determining the scope of the obligations incurred under this Agreement. Notwithstanding the generality of the foregoing, nothing contained herein shall be construed as requiring the destruction of system wide back-up materials which may incidentally contain or have reference to Confidential Information.

10.6 Survival . The obligations of this Article will terminate [**] years from the expiration or termination of this Agreement, except with respect to trade secrets, for which the obligations of this Article will continue for so long as such information remains a trade secret under applicable law.

ARTICLE 11
INTELLECTUAL PROPERTY

11.1 Ownership of Zavante Intellectual Property; License . All Zavante Intellectual Property, including any improvements thereto (except as such improvement may relate to packaging which shall be deemed PCI Intellectual Property), shall be the sole and exclusive property of Zavante. Zavante grants to PCI a non-exclusive, non-transferable, royalty-free

license to use Zavante Intellectual Property solely to the extent necessary for PCI to perform its obligations under this Agreement. No other license to Zavante Intellectual Property is hereby granted.

11.2 Ownership of PCI Intellectual Property . All PCI Intellectual Property, including but not limited to any improvements to packaging processes, shall be the sole and exclusive property of PCI. No license or other right to PCI Intellectual Property is granted to Zavante.

11.3 Ownership of Deliverables . Except as set forth in Section 11.2, all data and information resulting from the conduct of Packaging and required to be delivered to Zavante hereunder shall be the sole property of Zavante and shall be subject to Zavante’s exclusive use, commercial or otherwise.

ARTICLE 12
REPRESENTATIONS AND WARRANTIES

12.1 PCI. PCI represents, warrants and undertakes to Zavante that Packaging shall have been performed in accordance with Applicable Laws and in conformance with the Specifications; provided , that PCI shall not be liable for defects attributable to Zavante-Supplied Materials (including artwork and labeling).

12.2 Zavante . Zavante represents, warrants and undertakes to PCI that:

(a) the Zavante-Supplied Materials (including artwork and labeling) shall have been produced in accordance with and not violate Applicable Laws and shall comply with all applicable specifications;

(b) no Zavante-Supplied Materials shall, at the time of delivery, be (i) adulterated or misbranded within the meaning of the FD&C Act, or any similar law of any other jurisdiction, or (ii) an article which may not, under the provisions of the FD&C Act, or any similar law of any other jurisdiction, be introduced into interstate commerce;

(c) no specific safe handling instructions, health and environmental information or material safety data sheets are applicable to any other Zavante-Supplied Materials, except as provided to PCI in writing by Zavante in sufficient time for review and training by PCI;

(d) all Packaged Product delivered to Zavante by PCI will be held, used and disposed of by or on behalf of the Zavante in accordance with all Applicable Laws, and Zavante will otherwise comply with all laws, rules, regulations and guidelines applicable to Zavante’s performance under this Agreement and its use of Packaged Product provided by PCI under this Agreement;

(e) Zavante will not release any Batch of Packaged Product if Zavante knows or can reasonably determine that Packaging does not comply with the Specifications;

(f) Zavante has all necessary authority to use and to permit PCI to use pursuant to this Agreement all Intellectual Property related to Zavante-Supplied Materials

(including artwork and labeling), and the Packaging, including any copyrights, trademarks, trade dress, trade secrets, patents, inventions and developments; and

(g) the work to be performed by PCI under this Agreement and in accordance with the Specifications will not, to the best of Zavante’s knowledge, violate or infringe upon any trademark, trade name, copyright, patent, trade secret, trade dress or other Intellectual Property or other right held by any person or entity.

12.3 Limitations . THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 12 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY TO THE OTHER PARTY, AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE 13
INDEMNIFICATION

13.1 Indemnification by PCI . PCI shall indemnify, defend and hold harmless Zavante, its Affiliates, and their respective directors, officers, employees, representatives, and agents (“ Zavante Indemnitees ”) from and against any and all suits, claims, losses, demands, liabilities, damages, costs and expenses (including reasonable attorneys’ fees and reasonable investigative costs) in connection with any suit, demand or action by any third party (“ Losses ”) arising out of or resulting from (A) any breach of this Agreement or (B) any negligence or willful misconduct by PCI; in each case except to the extent that any of the foregoing arises out of or results from any Zavante Indemnitee’s negligence, willful misconduct or breach of this Agreement.

13.2 Indemnification by Zavante . Zavante shall indemnify, defend and hold harmless PCI, its Affiliates, and their respective directors, officers, employees, representatives, and agents (“ PCI Indemnitees ”) from and against any and all Losses arising out of or resulting from (A) any breach of this Agreement, (B) any manufacture, labeling, packaging, sale, promotion, distribution or use of or exposure to Zavante-Supplied Materials or Packaged Product, including product liability or strict liability, (C) Zavante’s exercise of control over the Packaging, to the extent that Zavante’s instructions or directions violate Applicable Laws, (D) use of a Supplier, (E) any actual or alleged infringement or violation of any third party Intellectual Property by Zavante’s Intellectual Property, products or components of Zavante, including Zavante-Supplied Materials, information provided by Zavante or otherwise caused by Zavante, or (F) any negligence or willful misconduct by Zavante; in each case except to the extent that any of the foregoing arises out of or results from any PCI Indemnitee’s negligence, willful misconduct or breach of this Agreement.

13.3 Indemnification Procedures . All indemnification obligations in this Agreement are conditioned upon the party seeking indemnification promptly notifying the indemnifying party of any claim or liability of which the party seeking indemnification becomes aware (including a copy of any related complaint, summons, notice or other instrument); provided , that failure to provide such notice within a reasonable period of time shall not relieve the indemnifying party of any of its obligations hereunder except to the extent the indemnifying

party is materially prejudiced by such failure. The indemnifying party will assume and conduct the legal defense of the indemnified party in any suit that could result in claims under this Article 13. The indemnifying party will not settle any case without with prior written consent of the indemnified party and such consent shall not be unreasonably withheld or delayed. The indemnified party shall cooperate with the indemnifying party in the defense of any such claim or liability and any related settlement negotiations at the indemnifying party’s expense.

ARTICLE 14
LIMITATIONS OF LIABILITY

14.1 EXCEPT FOR ANY LIABILITY ARISING UNDER ARTICLE 10 (CONFIDENTIALITY AND NON-USE), ARTICLE 11 (INTELLECTUAL PROPERTY) AND PCI’S OBLIGATIONS UNDER SECTION 13.1. OF THIS AGREEMENT, PCI’S LIABILITY UNDER THIS AGREEMENT FOR ANY PACKAGING LOT GIVING RISE TO A PARTICULAR CLAIM SHALL IN NO EVENT EXCEED THE NET FEES (EXCLUDING PASS-THROUGH COSTS) PAID BY ZAVANTE TO PCI UNDER THIS AGREEMENT FOR THE BATCH OR SERVICES GIVING RISE TO THE CLAIM.

14.2 EXCEPT FOR ANY LIABILITY ARISING UNDER ARTICLE 10 (CONFIDENTIALITY AND NON-USE), ARTICLE 11 (INTELLECTUAL PROPERTY) AND PCI’S OBLIGATIONS UNDER SECTION 13.1. OF THIS AGREEMENT, WITH RESPECT TO EACH TYPE OF PRODUCT PACKAGED UNDER THIS AGREEMENT, IN NO EVENT SHALL PCI’S TOTAL LIABILITY UNDER THIS AGREEMENT WITH RESPECT TO ANY 12 MONTH PERIOD EXCEED THE NET FEES (EXCLUDING PASS-THROUGH COSTS) PAID DURING SUCH 12-MONTH PERIOD BY ZAVANTE TO PCI UNDER THIS AGREEMENT FOR SUCH SPECIFIC TYPE OF PRODUCT PACKAGED GIVING RISE TO THE CLAIM, AND IN NO 12 MONTH PERIOD SHALL PCI’S LIABILITY UNDER THIS AGREEMENT EXCEED $5,000,000.

14.3 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OR LOSS OF REVENUES, PROFITS OR DATA ARISING OUT OF PERFORMANCE UNDER THIS AGREEMENT, WHETHER IN CONTRACT OR IN TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

ARTICLE 15
INSURANCE

15.1 By Zavante . Zavante shall maintain (i) property insurance against the perils of physical loss, including those generally associated with “all risk” property insurance, flood, earth movement and theft, in amounts sufficient to protect all Zavante-Supplied Materials at PCI’s facility or while in transit, and (ii) following Regulatory Approval of the Packaged Product, a commercial general liability insurance policy covering product liability and personal injury damages with limits of $[**] dollars) per occurrence. Zavante agrees to designate PCI as an “additional insured” under such general liability insurance policy. Zavante shall also carry and maintain in force at all times relevant hereto all other insurance required by law or statute.

15.2 By PCI . PCI shall maintain (i) employer’s liability insurance with a limit of not less than [**] dollars ($[**]), (ii) commercial general liability insurance with limits of [**] dollars ($[**]) per occurrence and a general aggregate limit of [**] dollars ($[**]), (iii) umbrella liability insurance, in excess of the above coverage, with a limit per occurrence of [**] dollars ($[**]) and an aggregate limit of [**]dollars ($[**]), and (iv) products liability insurance exclusive of the above coverage for general liability, with a per claim limit of [**] dollars ($[**]) and an aggregate limit of [**] dollars ($[**]).

15.3 General . The policies required in this Article 15 shall remain in effect throughout the term of this Agreement and shall not be canceled or subject to reduction or any other material modification without [**] prior written notice to the other party. Each party may self-insure all or any portion of the required insurance as long as, together with its Affiliates, its US GAAP net worth is greater than $[**] or its annual EBITDA (earnings before interest, taxes, depreciation and amortization) is greater than $[**]. Each required insurance policy, other than self-insurance, shall be obtained from an insurance carrier with an A.M. Best rating of at least A- VII. If any of the required policies of insurance are written on a claims made basis, such policies shall be maintained throughout the Term and for a period of at least three years thereafter. Upon the other party’s written request from time to time, each party shall promptly furnish to the other party a certificate of insurance or other evidence of the required insurance.

ARTICLE 16
TERM AND TERMINATION

16.1 Term . This Agreement shall commence on the Effective Date and shall continue until the end of the third Contract Year, unless earlier terminated in accordance with Section 16.2 (as may be extended in accordance with this Section, the “ Term ”). The Term shall automatically be extended for successive one -year periods unless and until one party gives the other party at least 120 days’ prior written notice of its desire to terminate as of the end of the then-current Term.

16.2 Termination . This Agreement may be terminated immediately without further action:

(a) by either party if the other party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver, administrative receiver, trustee or administrator, or makes an assignment for the benefit of creditors, or suffers or permits the entry of any order adjudicating it to be bankrupt or insolvent and such order is not discharged within 30 days, or takes any equivalent or similar action in consequence of debt in any jurisdiction;

(b) by either party if the other party materially breaches any of the provisions of this Agreement and such breach is not cured within [**] after the giving of written notice requiring the breach to be remedied; provided , that in the case of a failure of Zavante to make payments in accordance with the terms of this Agreement, PCI may terminate this Agreement if such payment breach is not cured within [**] of receipt of notice of non-payment from PCI; or

(d) any required license, permit or certificate required of the other party to perform its obligations under this Agreement is not approved and/or issued, or is revoked, by any applicable Regulatory Authority.

16.3 Effect of Termination . Expiration or termination of this Agreement shall be without prejudice to any rights or obligations that accrued to the benefit of either party prior to such expiration or termination. In the event of a termination of this Agreement:

(a) PCI shall promptly return to Zavante, at Zavante’s expense and at Zavante’s direction, any remaining inventory of Zavante-Supplied Materials; provided , that PCI shall have no obligation to so return such items until all outstanding invoices sent by PCI to Zavante have been paid in full.

(b) In accordance with the provisions regarding payment under this Agreement, Zavante shall pay PCI all invoiced amounts outstanding hereunder, plus, upon receipt of invoice therefore, for any (i) Packaging of Packaged Product that has been shipped pursuant to Purchase Orders but not yet invoiced, (ii) Packaging performed pursuant to Purchase Orders that has been completed but Packaged Product has not yet shipped, (iii) in-process Packaging pursuant to Purchase Orders (or, alternatively, Zavante may instruct PCI to complete such Packaging in process, and the resulting completed Packaged Product shall be governed by clause (ii)) and (iv) in addition to Zavante’s obligations under Section 3.2(c), all costs and expenses incurred, and all noncancellable commitments (including all Product specific tooling that has been, or remains to be, amortized) made, in connection with PCI’s performance of this Agreement, so long as such costs, expenses or commitments were made by PCI consistent with Zavante’s most recent Firm Commitment and the supplier’s minimum purchase obligations.

16.4 Survival . The rights and obligations of the parties shall continue under Article 11 (Intellectual Property), Article 13 (Indemnification), Article 14 (Limitations of Liability), Article 17 (Notice), Article 18 (Miscellaneous); under Article 10 (Confidentiality and Non-Use) and Article 15 (Insurance), in each case to the extent expressly stated therein; and under Sections 3.1(h) (Liability for Loss), 3.1(i) (Annual Reconciliation of Excess Loss; Reimbursement), 5.3 (Defective Packaging), 7.3 (Payment Terms), 7.4 (Taxes), 9.2 (Recordkeeping), 9.6 (Recall), 12.3 (Limitations on Warranties), 16.3 (Effect of Termination) and 16.4 (Survival), in each case in accordance with their respective terms if applicable, notwithstanding expiration or termination of this Agreement.

ARTICLE 17
NOTICE

All notices and other communications hereunder shall be in writing and shall be deemed given: (A) when delivered personally; (B) when delivered by facsimile transmission (receipt verified); (C) when received or refused, if mailed by registered or certified mail (return receipt requested), postage prepaid; or (D) when delivered if sent by express courier service, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice; provided , that notices of a change of address shall be effective only upon receipt thereof):

To Zavante: Zavante Therapeutics, Inc.

11750 Sorrento Valley Blvd., Suite 250

San Diego CA 92121

Attn: Chief Executive Officer
Facsimile: [**]

To PCI: AndersonBrecon Inc.

4545 Assembly Drive

Rockford, IL 61109

Attn: Chief Executive Officer
Facsimile: [**]

ARTICLE 18
MISCELLANEOUS

18.1 Entire Agreement; Amendments . This Agreement, together with all Attachments and the Quality Agreement, constitutes the entire understanding between the parties, and supersedes any contracts, agreements or understandings (oral or written) of the parties (except for confidentiality agreements), with respect to the subject matter hereof, including for avoidance of doubt, any quotation letters referenced in Attachment B. No modification or amendment to this Agreement shall be effected by or result from the receipt, acceptance, signing or acknowledgment of any party’s purchase orders, order acknowledgements, quotations, invoices, shipping documents or other business forms containing terms or conditions in addition to or different from the terms and conditions set forth in this Agreement, and the terms of this Agreement shall supersede any provision in any purchase order or other document that is in addition to or inconsistent with the terms of this Agreement. No term of this Agreement may be amended except upon written agreement of the parties, unless otherwise expressly provided in this Agreement.

18.2 Captions; Certain Conventions . The captions in this Agreement are for convenience only and are not to be interpreted or construed as a substantive part of this Agreement. Unless otherwise expressly provided herein or the context of this Agreement otherwise requires, (A) words of any gender include each other gender, (B) words such as “herein”, “hereof”, and “hereunder” refer to this Agreement as a whole and not merely to the particular provision in which such words appear, (C) words using the singular shall include the plural, and vice versa, (D) the words “include(s)” and “including” shall be deemed to be followed by the phrase “but not limited to”, “without limitation” or words of similar import, (E) the word “or” shall be deemed to include the word “and” (e.g., “and/or”) and (F) references to “Article,” “Section,” “subsection,” “clause” or other subdivision, or to an Attachment or other appendix, without reference to a document are to the specified provision or Attachment of this Agreement. This Agreement shall be construed as if it were drafted jointly by the parties.

18.3 Further Assurances . The parties agree to execute, acknowledge and deliver such further instruments and to take all such other incidental acts as may be reasonably necessary or appropriate to carry out the purpose and intent of this Agreement.

18.4 No Waiver . Failure by either party to insist upon strict compliance with any term of this Agreement in any one or more instances will not be deemed to be a waiver of its rights to insist upon such strict compliance with respect to any subsequent failure.

18.5 Severability . If any term of this Agreement is declared invalid or unenforceable by a court or other body of competent jurisdiction, the remaining terms of this Agreement will continue in full force and effect.

18.6 Independent Contractors . The relationship of PCI and Zavante is that of independent contractors, and neither will incur any debts or make any commitments for the other except to the extent expressly provided in this Agreement. Nothing in this Agreement is intended to create or will be construed as creating between the parties the relationship of joint ventures, co-partners, employer/employee or principal and agent. Neither PCI nor Zavante shall have any responsibility for the hiring, termination or compensation of the other’s employees or contractors or for any employee benefits of any such employee or contractor.

18.7 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the parties, their successors and permitted assigns. Neither party may assign this Agreement, in whole or in part, without the prior written consent of the other party, except that either party may, without the other party’s consent, assign this Agreement in its entirety to an Affiliate or to a successor to substantially all of the business or assets of the assigning party or the assigning party’s business unit responsible for performance under this Agreement.

18.8 No Third Party Beneficiaries . This Agreement shall not confer any rights or remedies upon any person or entity other than the parties named herein and their respective successors and permitted assigns.

18.9 Governing Law . This Agreement shall be governed by and construed under the laws of the Commonwealth of Pennsylvania, excluding its conflicts of law provisions. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.

18.10 Alternative Dispute Resolution . If any dispute arises between the parties in connection with this Agreement, such dispute shall be presented to the respective presidents or senior executives of PCI and Zavante for their consideration and resolution. If such parties cannot reach a resolution of the dispute, then such dispute shall be resolved by binding alternative dispute resolution in accordance with the then existing commercial arbitration rules of CPR Institute for Dispute Resolution, 366 Madison Avenue, New York, NY 10017. Arbitration shall be conducted in the jurisdiction of the defendant party, in the English language.

18.11 Prevailing Party . In any dispute resolution proceeding between the parties in connection with this Agreement, the prevailing party will be entitled to recover its reasonable attorney’s fees and costs in such proceeding from the other party.

18.12 Publicity . Neither party will make any press release or other public disclosure regarding this Agreement or the transactions contemplated hereby without the other party’s express prior written consent, except as required under Applicable Laws, by any governmental agency or by the rules of any stock exchange on which the securities of the disclosing party are listed, in which case the party required to make the press release or public disclosure shall use commercially reasonable efforts to obtain the approval of the other party as to the form, nature and extent of the press release or public disclosure prior to issuing the press release or making the public disclosure.

18.13 Setoff . Without limiting PCI’s rights under law or in equity, PCI and its Affiliates, parent or related entities, collectively or individually, may exercise a right of set-off against any and all amounts due to PCI from Zavante. For purposes of this Section, PCI, its Affiliates, parent or related entities shall be deemed to be a single creditor.

18.14 Force Majeure . Except as to payments required under this Agreement, a party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in such party’s performance hereunder if such default or delay is caused by events beyond such party’s reasonable control, including acts of God, law or regulation or other action or failure to act of any government or agency thereof, strikes, lockouts, slowdowns, delay of subcontractors or vendors, war (declared or undeclared) or insurrection, civil commotion, terrorism, destruction of production facilities or materials by earthquake, fire, flood or weather, labor disturbances, epidemic or failure of suppliers, public utilities or common carriers; provided , that the party seeking relief under this Section shall immediately notify the other party of such cause(s) beyond such party’s reasonable control. The party that may invoke this Section 18.14 shall use commercially reasonable efforts to reinstate its ongoing obligations to the other party as soon as practicable. If the cause(s) shall continue unabated for 180 days, then both parties shall meet to discuss and negotiate in good faith what modifications to this Agreement should result from such cause(s).

18.15 Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Any photocopy, facsimile or electronic reproduction of the executed Agreement shall constitute an original.

[Signature page follows]

IN WITNESS WHEREOF , the parties have caused their respective duly authorized representatives to execute this Agreement effective as of the Effective Date.

ANDERSONBRECON INC.		ZAVANTE THERAPEUTICS, INC.


By:	/s/ Philip DiGiacomo	By:	/s/ Theodore R. Schroeder
Name:	Philip DiGiacomo	Name:	Theodore R. Schroeder
Its:	SVP Business Development	Its:	President and CEO

Signature Page to Commercial Packaging Agreement

ATTACHMENT A

SPECIFICATIONS

I. Zavante-Supplied Materials (and associated specifications)

[**]

II. Raw Materials (and associated specifications)

[**]

III. Packaging Specifications (including Batch size)

Apply (1) label to each vial containing the lot number and expiry date. Load (12) vials per carton with dividers. Code carton with lot number, expiration date, & serialization information. Load (1) carton & (1) insert per shipper and apply serialized label to shipper. Aggregate shippers to pallet level. Apply serialized pallet labels to pallet.

ATTACHMENT B

UNIT PRICING AND FEES

Pricing:

Product Description	Lot Size/Run Size	Estimated Annual Volume (Cartons)	Price/M Cartons
Fosfomycin Sodium	[**]	[**]	[]**
	[**]		[]**

Unit of Measure: Carton

Note: Pricing includes serialization

Pricing is subject to change if volumes forecasted are significantly different than assumed.

Serialization Integration

Flex Line Serialization Integration:

[**]

Project Management	[**	]
Design	[**	]
Development	[**	]
Unit Testing	[**	]
Integrated Testing	[**	]
Deployment	[**	]
QC Validation	[**	]
Total Price:	[**	]

Discount for Existing Interface
(Design, Development & Unit Testing)	[**	]
Estimated Total with Axway or TraceLink:	[**	]

Lead Time:	[]**

Additional Cost Items:

Lot Charge		[**]
Setup Charge		[**]
Label Plates & Dies		[**]

Insert Prep & Plates		[**]
Carton Prep & Plates		[**]
Validation(s)		[**]

[**]

Overtime Costs - Will be quoted separately, when requested

Notes and Assumptions

[**]

ATTACHMENT C

FORM OF QUALITY AGREEMENT

Contract Services
Quality Agreement

by and between

Customer Name:		*Zavante Therapeutics, Inc.*
Address:		11750 Sorrento Valley Road, Ste. 250 San Diego, CA 92121
		( “Customer” ) and
Supplier Name:		AndersonBrecon Inc., an Illinois corporation dba “PCI of Illinois”
Address:		*4545 Assembly Drive Rockford, IL 61109*
		(“ PCI ”) for *All Product identified in Appendix 1* (“ Product ”)

Contents

1. Effective Date

2. Scope

3. Other Agreements

4. Amendments to Quality Agreement

5. Term of Quality Agreement

6. Sub Contracting

7. Survival Clause

8. Resolution of Quality Issues

9. Debarment

10. Contacts and Responsibilities

A. Quality Responsibilities

B. Right to Audit

C. Regulatory Inspections and Exchanges

D. Regulatory Documentation

E. Animal Derived Materials

F. Buildings and Facilities

G. Personnel and Training

H. Sub-Contracting and Testing

I. Change Control

J. Validation/Qualification

K. Preventative Maintenance and Calibration

L. Investigations

M. Documentation and Records

N. Annual Product Reviews

O. Annual Product Report (if applicable)

P. Production and In-Process Controls, Packaging and Labeling

Q. Process Equipment

R. Reprocess

S. Rework

T. Laboratory Controls

U. Retest

V. Stability (if applicable to service being provided)

W. Storage and Distribution

X. Control, Disposal and Destruction of Production Materials

Y. Complaints

Z. Field Alerts, Biological Product Deviation Reports and Recalls

AA. Clinical Trials

11. Contacts and Responsibilities

Appendices :

Appendix 1: (Definition of Product)
Appendix 2: (Temperature Requirements of Product)

This Contract Services Quality Agreement (this “Quality Agreement”) is entered into between AndersonBrecon and Customer.

A. Customer has engaged PCI to provide certain services to Customer relating to Customer’s Product.

B. PCI and Customer wish to define the individual responsibilities of the quality aspects of packaging and release of Product to ensure compliance with the approved Product application and/or Customer requirements, along with appropriate regulatory requirements.

In consideration of the mutual promises made by the parties hereto and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:

1. Effective Date

The Effective Date of this Quality Agreement shall be the date of last signature (the “Effective Date”).

2. Scope

This Quality Agreement (written in accordance with the principles defined in the US Food and Drug Administration regulations 21 CFR parts 210 and 211), specifies the relationship and outlines the responsibilities of PCI and Customer with respect to the quality assurance of the Product packaged and/or supplied by PCI for Customer, as defined in Appendix 1 (the “Product”).

3. Other Agreements

This Quality Agreement is required pursuant to the Commercial Packaging Agreement between the parties, dated as of the 26 day of December, 2017 (the “Services Agreement”) regarding the subject matter hereof. If there are any direct conflicts between the terms of this Quality Agreement and the Services Agreement, the provisions in the Services Agreement shall govern and control in all matters, other than those related to quality. In matters of quality and regulatory matters, this Quality Agreement shall prevail.

Any breach of this Quality Agreement shall be deemed a breach of the Manufacturing & Supply Agreement. The terms contained in the Manufacturing & Supply Agreement are intended to complement the terms of this Quality Agreement, and they shall be interpreted as complementary to the extent possible. In the event of a conflict between the terms of the Manufacturing & Supply Agreement and the terms of this Quality Agreement, the terms of the Quality Agreement shall control with respect to quality control and quality assurance matters related to the Manufacturing & Supply Agreement (including, without limitation, manufacturing, testing, storage, release, change management and validation activities), and the Manufacturing & Supply Agreement shall control with respect to all other matters. No terms contained in any purchase order, binding forecast or similar mechanism will supersede the terms of this Quality Agreement.

4. Amendments to Quality Agreement

This Quality Agreement may be amended by the written consent of both parties.

The parties agree to amend terms of this Quality Agreement that must be amended in order that the Product continue to meet regulatory requirements of applicable regulatory agencies, as may exist from time to time.

If an amendment to this Quality Agreement is proposed, the proposing party shall use proper change control and will circulate the proposed amendment to the appropriate contact person at PCI and Customer for review and internal approval. The appropriate contact person at each of PCI and Customer is identified in Section 13 herein (each a “Contact Person”).

5. Term of Quality Agreement

This Quality Agreement shall commence on the Effective Date and shall remain in effect for as long as PCI packages and/or supplies Product to Customer unless the Quality Agreement is terminated earlier in accordance with the terms of this Quality Agreement.

Either party may terminate this Quality Agreement upon ninety (90) days written notice to the other party.

6. Sub Contracting

Any restrictions on PCI’s use of Sub Contractors shall be set forth in the service agreement.

7. Survival Clause

The obligations of confidentiality contained in the Non-Disclosure Agreement or Services Agreement, as applicable, shall apply with respect to all confidential or proprietary information exchanged by the parties pursuant to this Quality Agreement and shall survive termination of this Quality Agreement as provided in the Non- Disclosure Agreement or Services Agreement, as applicable.

8. Resolution of Quality Issues

Quality related disagreements between PCI and Customer that are not resolved in the normal course of business shall be brought to the attention of the Contact Person at PCI and Customer, in writing. If both parties agree that a resolution of the disagreement is reasonably possible, then both PCI and Customer shall agree to work jointly to develop a strategy for such resolution. PCI and Customer further agree to record such resolution in writing.

9. Debarment

PCI warrants and represents that neither PCI nor its representatives or employees involved with the services provided hereunder have been debarred pursuant to the U.S. Federal Food, Drug and Cosmetic Act (the “FD&C Act”). PCI further warrants and represents, in that it shall not use in any capacity the services of any person debarred under the FD&C Act.

10. Quality Responsibilities Table

Unless otherwise indicated, responsibility for each activity is assigned to either PCI, or Customer, or is assigned to both PCI and Customer.

Table Key: N = Not Applicable C= Customer S = PCI (Supplier)

§	Responsibilities	N	C	S
A.	Compliance Requirements
1.01	Follow applicable regulations and current Good Manufacturing Practices, as well as locally imposed requirements.		X	X
1.02	Package, ship, store and test the Product and materials in an environment meeting the applicable GMP regulations, which is designed, constructed and maintained in a manner that a) permits the operation therein to be performed under clean, sanitary and orderly conditions; b) permits the effective cleaning of all surfaces; and c) prevents the contamination of the Product and the addition of extraneous material to the Product.			X
1.03	Maintain a valid facility registration covering the packaging of the Product.			X
1.04	Operate in compliance with applicable environmental, occupational health and safety laws and regulations.			X
1.05	Notify Customer of requests for information, notices of violations or other communication from a government agency relating to environmental, occupational health and safety compliance that impact the Product.			X
1.06	Have management controls in place to track and trend investigations and commitments.			X
1.07	Maintain a quality unit that is independent of production that fulfills both quality assurance and quality control responsibilities.			X
1.08	Disposition of Product by quality unit or Qualified Person (QP).		X	X
1.09	Involve the quality unit in all Good Manufacturing Practices related matters.			X
1.10	Maintain internal Good Manufacturing Practices audit program.			X
B.	Right to Audit
2.01	Have the right to audit PCI’s facilities and systems, as they relate to the packaging of the Product, at mutually agreed upon times. Customer retains the right to conduct “for cause” audits as necessary. Audit to be conducted with no more than [] auditors for [], unless otherwise agreed upon.		X
2.02	Schedule visits and/or requests for Product specific documents for review to assure continued adherence to the agreed upon manufacturing process, applicable current Good Manufacturing Practices and other applicable requirements.		X
2.03	Issue PCI a confidential audit report summarizing audit observations within [**] for the audit.		X

§	Responsibilities	N	C	S
2.04	Issue responses to all observations in writing to Customer within [**] of receipt. Responses are to include timelines and plans for closure of all commitments.			X
C	Regulatory Inspections and Exchanges
3.01	Coordinate the activities necessary to ensure readiness prior to regulatory agency pre-approval inspections and maintain inspection readiness for all inspections.		X	X
3.02	Notify Customer within [**] of any pending or ongoing regulatory authority inspection or communication related to the Product. In the event that the inspection is specific only to Product, PCI shall permit a representative of Customer to be onsite during any such inspection.			X
3.03	Provide copies to Customer by facsimile copy or electronically within [**] of correspondences to and received from regulatory authorities (Boards of Health) related to Product.			X
3.04	Provide a copy of the regulatory inspection report, deficiency letter, or regulatory compliance observations, response and related correspondence relevant to Product edited to exclude PCI proprietary information within [**] of receipt. Allow Customer to review and comment on the response, relevant to Product, prior to submission of the response to the regulatory authority. Comment must not prevent PCI from responding as required.		X	X
3.05	Notify PCI of any regulatory compliance observation received by Customer that pertains to operations performed by the PCI.		X
3.06	Provide requested information to Customer within [**] of notification or as required to meet regulatory obligations.			X
3.07	Provide PCI with advance written notification of new or supplemental regulatory submission/application that impact the operations performed by the PCI.		X
D.	Regulatory Documentation
4.01	Provide all necessary Letters of Authorization to Customer to permit reference to the PCI’s FDA Facility Establishment Identification Number in the registration of the Product.			X
4.02	Maintain the FDA Facility Establishment Identification Number, as applicable, in accordance with the regulations of the applicable regulatory authority.			X
4.03	Notify Customer of any FDA Registration change as applicable.			X
4.04	Upon request provide assistance in the preparation and review pertinent sections of new or supplemental regulatory applications where Customer owns the Product registration and submit comments to the proposed application to Customer.			X
4.05	Provide sections of Product registration relevant to the packaging of the Product.		X
4.06	In case of any regulatory requirements outside of the United States, the parties shall in good faith, meet, discuss and agree upon the specific rules and regulations to which PCI must comply.		X	X

§	Responsibilities	N	C	S
E.	Animal Derived Materials
5.01	Complete Materials Sourcing Questionnaire for components.			X
5.02	Have a program to evaluate and control the risk of Transmissible Spongiform Encephalopathy (TSE) and Bovine Spongiform Encephalopathy (BSE) for components both internally and from PCI specified vendors.			X
5.03	Have a program to evaluate and control the risk of Transmissible Spongiform Encephalopathy (TSE) and Bovine Spongiform Encephalopathy (BSE) for components and material from customer and customer specified vendors.		X
5.04	PCI shall not use any animal derived materials without the prior notification of and approval by Customer. The foregoing restriction includes any animal derived materials used in the Product manufacturing process including: (i) those used as machine lubricants and/or oils, and; (ii) any animal derived materials that have contact with Product.		X	X
5.05	Maintain appropriate records for each lot of animal derived material to ensure traceability. Where required by local regulations, the location where animals lived or were slaughtered (if applicable) must be documented.			X
F.	Buildings and Facilities
6.01	Buildings and facilities used in the packaging of the Product shall be designed, constructed and maintained to facilitate cleaning, maintenance and operations and to assure orderly placement of equipment and materials to prevent mix-up and contamination as appropriate to the type and stage of manufacture.			X
6.02	Ventilation systems will be designed and maintained to minimize the risk of contamination.			X
6.03	Dispose of sewage, refuse and other waste in a safe and timely manner following applicable environmental health and safety regulations.			X
6.04	Maintain a set of current drawings for critical utilities including water, electricity, compressed gasses and air handling.			X
6.05	Maintain and document an adequate pest control program.			X
G.	Personnel and Training
7.01	Provide sufficient training to meet obligations of this Quality Agreement.			X
7.02	Provide adequate number of personnel qualified by appropriate training and experience to perform and supervise the packaging, testing, and disposition of the Product.			X
7.03	Assure training is regularly conducted, assessed and documented by qualified individuals.			X
7.04	Have written job descriptions for positions responsible for performing Good Manufacturing Practices related activities.			X

§	Responsibilities	N	C	S
7.05	Assure that non-employees, including consultants, advising on the packaging and control of the Product have sufficient education, training, and experience to advise on the subject for which they are retained. Non-employees will be supervised as required and trained in Good Manufacturing Practices.			X
H.	Sub-Contracting and Testing
8.01	If PCI sub-contracts any laboratory testing or packaging work (or like) to a third-party contract laboratory or third-party packager (or the like) (a “Sub-Contractor”), PCI shall require that such Sub-Contractor shall operate in compliance with current Good Manufacturing Practices, compendia requirements and any other applicable regulations.			X
8.02	Upon Customer request, provide written notice of the engagement of any Sub-Contractor.			X
8.03	Maintain Sub-Contactor as qualified following approved procedures according to a schedule.			X
8.04	If PCI engages a Sub-Contractor, PCI shall cause Sub-Contractor to grant access to Customer and/or any applicable regulatory authority for purposes of any Customer and/or regulatory authority audits on the same terms and conditions as such access is granted to Customer and/or any applicable regulatory authority by PCI under the terms of this Quality Agreement (including Section 2, Right to Audit and Section 3 Regulatory Inspections and Exchanges as provided herein above) and/or the terms and conditions of any other applicable agreement between PCI and Customer.			X
I.	Change Control
9.01	Have approved written procedures for control of changes impacting the Product including but not limited to the packaging process, packaging materials, labeling, computer hardware/software, Product specifications, and test methods. Include in written procedures the process and criteria for Customer notification and approval, follow up and closure of changes.			X
9.02	Notify Customer of all changes to facility, process, test methods, quality systems and specifications that impact Product identity, strength, safety, potency, purity, stability, regulatory status or validation/qualification. Allow time for Customer to comment and approve or reject changes prior to implementation. Customer must respond to the change request within [**] of receipt or Customer will be deemed to have consented thereto. In the case of emergency changes, PCI shall follow the procedures defined in Section 12 (Investigations). Customer approval is not required for relocation of “portable” packaging equipment to different areas/rooms/plants and minor changes.		X	X

§	Responsibilities	N	C	S
9.03	Provide copies of change control documentation such as supporting data, validation/qualification reports and change control forms for changes impacting Product as requested by Customer.			X
9.04	Have changes reviewed and approved by PCI’s quality unit.			X
9.05	PCI and Customer shall establish a strategy to secure regulatory approvals as necessary, and shall mutually agree on an implementation timeline. PCI may make minor changes that do not have regulatory impact, such as, amending typographical errors without obtaining Customer approval.		X	X
9.06	PCI may make “like for like” changes with no regulatory impact without obtaining Customer approval. “Like for like” is described as an identical replacement of a part or piece of equipment; e.g. the same part no. or model no.			X
9.07	The customer may approve exception reports (deviations to batch records, specifications, etc.) regarding material structure, labeling, bill of material, tooling, construction instructions, classification of defects, testing, sampling plans, and acceptable quality levels (AQLs). All other batch record changes may be implemented by PCI without customer approval.		X	X
9.08	The customer may approve specification changes to the material structure, labeling (if applicable), classification of defects, testing, sampling plans, and acceptable quality levels (AQLs). All other specification changes may be implemented by PCI without customer approval.		X	X
9.09	The customer may approve batch records changes to the bill of material, tooling, construction instructions, classification of defects, testing, sampling plans, and acceptable quality levels (AQLs). All other batch record changes may be implemented by PCI without customer approval.		X	X
J.	Validation/Qualification
10.01	Have an appropriate written validation/qualification plan for the facilities, equipment/instruments, packaging process, cleaning procedures, analytical procedures, in process control tests and computerized systems approved by the quality unit.			X
10.02	Prepare and maintain validation/qualification documentation approved by the quality unit, including protocols, reports and associated documentation. Provide such documents to Customer upon request.			X
10.03	Validate/qualify as necessary all critical systems, utilities and equipment/instruments used for the packaging and control of Product (Installation Qualification (IQ), Operational Qualification (OQ), and/or Performance Qualification (PQ), Package Validation (PV)).			X
10.04	Validate/qualify computer systems and associated software used in Good Manufacturing Practices related activities associated with the Product. Procedures must be in place to assure the integrity, archival,			X

§	Responsibilities		N	C	S
	retrieval and destruction of the electronic data that comply with applicable regulations.
10.05	Validate/qualify methods and procedures for cleaning of equipment with acceptance criteria for residues defined and justified.				X
10.06	Develop and execute a plan for process and method validation/qualification including definition of roles and responsibilities between PCI and Customer for performing technology transfers.			X	X
10.07	Where method validation is performed by PCI :
	·	PCI shall write method validation protocol,			X
	·	PCI and Customer shall review and approve method validation protocol,		X	X
	·	PCI shall execute method validation protocol,			X
	·	PCI shall write method validation report, and			X
	·	PCI and Customer shall review and approve method validation report.		X	X
10.08	For process validation :
	·	PCI shall write process validation protocol,			X
	·	PCI and Customer shall review and approve process validation protocol,		X	X
	·	PCI shall execute process validation protocol,			X
	·	PCI shall write process validation report, and			X
	·	PCI and Customer shall review and approve validation reports.		X	X
10.09	Validate/qualify primary packaging processes unless otherwise agreed by Customer.				X
10.10	Evaluate protocol deviations encountered during validation/qualification to determine impact on validation/qualification studies, including need to conduct repeat studies.				X
10.11	Evaluate validated/qualified systems and processes periodically to verify they are still operating in a valid manner.				X
K.	Preventative Maintenance and Calibration
11.01	Maintain calibration and preventive maintenance procedures and schedules for equipment/instruments using in the packaging, testing and validation/qualification of the Product.				X
11.02	Document and review (including calibration performed by Sub-Contractor) packaging and laboratory equipment/instrumentation calibration data and provide to Customer upon request.				X
L.	Investigations
12.01	Have appropriate procedures for the identification, investigation, reporting, tracking, trending and closure of deviations. Deviations include but are not limited to known lab errors, atypical results and Out-of-Specification results that occur during the packaging and testing of the Product, including stability testing (as applicable) This				X

§	Responsibilities		N	C	S
	applies to Critical Defects or any deviation that results in the failure of a lot.
12.02	Document and notify Customer of any critical deviation affecting the quality of the Product within [**] of identification. Non-critical deviation notification shall be sent with the batch record documentation.				X
12.03	Notify Customer within [**] of first knowledge of all Out-of-Specification results generated during stability testing of Product.		X
12.04	Provide investigation documentation to Customer upon request.				X
12.05	Assist PCI in investigations when Customer deems appropriate.			X
12.06	Complete investigations within [**] of commencement.				X
12.07	Complete corrective action commitments resulting from investigation closure within the planned timeframe.				X
M.	Documentation and Records
13.01	Document all required process and testing steps at the time such process or testing step is executed.				X
13.02	Have a controlled system to initiate, review, revise, approve, obsolete and archive all Good Manufacturing Practices documentation. System should address revising documents based on requested document changes provided by Customer (such as test methods and specifications).			X	X
13.03	PCI’s quality unit must review and approve all Good Manufacturing Practices records.				X
13.04	Retain, archive and destroy all Good Manufacturing Practices documents and data pertaining to services performed for Customer in accordance with regulatory requirements as defined below:				X
	·	Keep all manufacturing history records, including batch documentation, validation protocols, validation summaries, charts, computer reports and graphs for a period of [**], or one year past expiration date, whichever is longer.
	·	Keep original investigation and out of specification report documentation for [**].
	·	Keep original complaint investigation documentation for [**].
	·	Keep records of adverse experiences and complaints for [**].
	·	Keep calibration records for [], or [] past the expiration date, whichever is longer.
	·	Keep electronic documentation for [**].
	·	Notify Customer prior to destruction of records and ensure that original records are protected from fire and water damage in a limited access area.
13.05	Review and approve Master Batch Records. PCI may make minor changes that do not have regulatory impact, such as, amending typographical errors without obtaining Customer approval.			X	X
13.06	Have all executed batch related records reviewed and approved by PCI’s quality unit prior to batch release.				X

§	Responsibilities			N	C	S
13.07	Determine/approve the package Lot Number and Expiration Date and forward to PCI. PCI is not responsible for approving lot and expiration dates.				X
13.08	Assure packaging records have a unique identification number.					X
13.09	For laboratory control records, include complete data derived from all tests conducted to ensure compliance with specifications. These records will contain the date and the signature of a second qualified person showing review and verification of the records.					X
13.10	Provide copies of documents or records to Customer upon request.					X
13.11	Maintain a document control system for specifications, including: Product labeling, packaging materials and other materials that would likely affect Product quality.					X
13.12	Maintain a document control system for Standard Operating Procedures.					X
13.13	Maintain a document control system for specifications of reagents, solutions and laboratory standards, as appropriate.					X
13.14	Provide a complete Certificate of Compliance for the Product, containing at minimum the following information:					X
	·	Product number
	·	Customer Product number (if applicable)
	·	Lot number
	·	Name of Product
	·	Expiration date (if applicable)
	·	Disposition
	·	Quality Assurance approval and date
13.15	Provide a document certifying Product was packaged in a current Good Manufacturing Practices compliant facility and was tested in accordance with and meets specifications.					X
N.	Annual Product Reviews
14.01	Have procedures to conduct and document annual product reviews on a scheduled basis as agreed to by Customer.				X	X
14.02	Prepare Annual Product Review that includes at a minimum;					X
	·		Date of review
	·		Signatures/title of the reviewers
	·		Product identification
	·		Review period
	·		Batch records (including reworks, rejected, etc)
	·		Applicable change control records
	·		Recalls, Returned or salvage Product records
	·		Product investigation records
	·		Batch record deviations (holds, exception reports, etc.)
	·		Complaints
	·		Results of Stability monitoring (if applicable)
	·		Retain samples (if applicable)
	·		Validation summary


§	Responsibilities		N	C	S
	·	Starting materials
	·	Qualification status of Equipment and Facilities
	·	Quality Agreement
	·	Executive Summary
	·	Document evaluations or assessments of the information presented
	·	Packaged Product review will be conducted by Customer
14.03	Provide copies of Annual Product Review to Customer.				X
O.	Annual Product Report (if applicable)
15.01	If additional data is needed beyond the Annual Product Review, provide data to Customer necessary for the submission of Annual Product Reports by mutually agreed upon date.				X
15.02	Submit data in a mutually agreed to format to customer.				X
15.03	Submit Annual Product Report to regulatory authority.			X
P.	Production and In Process Controls, Packaging and Labeling
16.01	Have approved written procedures in place for qualification (including audits) of suppliers that provide GMP-materials and services.				X
16.02	Make no changes in the sourcing of primary production materials (packaging materials, processing aids) from the approved supplier list without prior written consent from Customer.				X
16.03	PCI may select and / change vendors of unprinted secondary and tertiary packaging components without Customer approval.				X
16.04	Implement and document specifications for packaging materials, and Product labeling and processing aids that would likely affect Product quality pursuant to specification documentation provided by Customer.				X
16.05	Maintain a Vendor Qualification Program in order to establish ongoing inspection and testing requirements for packaging materials received at PCI, including reduced testing for certified vendors.				X
16.06	Customer is responsible for management and audit of Customer mandated / selected vendors that are not on PCI’s current approved vendor list.			X
16.07	If I.D. testing is required, ID by IR testing will be completed on primary closure components annually to verify identity and confirm the vendor’s certification.			X	X
16.08	If samples are required by Customer for component release, the samples will be sent directly to Customer or Customer’s designated location from the vendor. Customer will use the vendor lot number / purchase order to release components.			X
16.09	Have approved written procedures for all required in-process sampling and testing.				X
16.10	Procure, test (as required), and disposition components, packaging and labeling used in packaging of Product.				X

§	Responsibilities		N	C	S
16.11	Document actual yields for the Product, and evaluate actual yields versus theoretical or in-process yield control limits as agreed to in the master batch record.				X
16.12	No penicillin or cephalosporin products are allowed to be packaged in the same facility as Products covered by this Quality Agreement.				X
16.13	Provide Product expiration date for each packaged batch to PCI for assigning Product expiry dates.			X
16.14	Include on shipper label:			X	X
	·	name and address of the manufacturer/Customer (if applicable),
	·	batch number,
	·	quantity,
	·	storage and special transport conditions as specified by Customer (if applicable),
	·	expiry date (if applicable), and
	·	any special requirements (if applicable).
16.15	Develop all labeling in accordance with applicable regulation (including for the country intended for distribution) and Product license.			X	X
16.16	Have all Product labeling approved by Customer prior to use.			X	X
16.17	Include a representative label in the batch record.				X
16.18	Establish and maintain a program for environmental monitoring including tracking and trending processes.				X
16.19	Retain reserve samples of packaging materials and Product label, intermediates (if applicable) and final Product in accordance with PCI’s written procedures. These are for PCI to use during complaint investigations/internal investigations.				X
16.20	Retain legal/retention samples of packaging materials and Product label, intermediates (if applicable) and final Product.			X
Q.	Process Equipment
17.01	Process equipment must be uniquely identified, and managed with an equipment history log or equivalent system. Process lines will be appropriately identified.				X
17.02	Use appropriate food grade machine lubricants and oils that contain no animal derived materials for items that are in direct contact with product or primary packaging components.				X
17.03	Maintain a current set of “as-built” drawings for equipment and facilities.				X
R.	Reprocess
18.01	Approve or disapprove all reprocessing steps. Document approval in specific reprocessing protocols or special batch record instructions. Reprocessing is defined as a repetition of a step (for example, redrying, remilling) using the same equipment and techniques as specified in the original procedure. In addition, an extension of an approved process step is also regarded as reprocessing.			X	X

§	Responsibilities	N	C	S
18.02	Perform reprocessing only where specified in protocol or specific batch record instructions approved by Customer.			X
S.	Rework
19.01	Have a protocol or procedure that has been approved by both Customer and PCI for Product requiring rework describing the rationale and justification for the rework processes. Rework is a manufacturing step involving a technique or technology that is not part of the approved process sequence.		X	X
19.02	Approve or disapprove Product requiring rework.		X
T.	Laboratory Controls
20.01	Have written procedures for sample management, identification, testing, disposition and recording, approval, tracking, storage, retention and disposal of laboratory data.			X
20.02	Hold samples and dispose of as required by specifications and procedures.			X
20.03	Destroy samples and sample packaging in a secure and legal manner that prevents unauthorized use or diversion in accordance with PCI’s procedures. Maintain destruction records.			X
20.04	Have approved written procedures and document the preparation and use of reference standards, reference materials, reagents, and solutions including qualification/requalification of use period.			X
20.05	Mutually agree on source, grade and characterization of reference standards/materials.		X	X
20.06	Have appropriate specifications and test procedures for the Product, which are consistent with the applicable, approved filing and/or compendia monograph.		X	X
20.07	Test Product in accordance with qualified or validated methods as appropriate and with specifications using calibrated, qualified equipment.			X
20.08	Verify compendia test methods (i.e. USP, EP, BP, JP). Supply a certificate of equivalency or verification report to Customer, if applicable. Follow approved change to test procedures for changing test methods.			X
20.09	Transfer all test methods validated by Customer according to protocols approved by PCI and Customer.		X	X
20.10	Ensure method transfers have been completed and approved prior to the generation of any GMP test data.			X
U.	Retest
21.01	Have prior written consent from Customer Quality Assurance Unit for retesting the Product (excluding routine stability testing).			X
21.02	Perform retesting in accordance with approved protocols or procedures.			X
V.	Stability (if applicable to service being provided)
22.01	Maintain a documented, ongoing stability program to monitor the stability of the Product using stability indicating procedures.		X	X

§	Responsibilities	N	C	S
22.02	Store stability samples in market containers under International Conference on Harmonization storage conditions.			X
22.03	Write and review stability protocol and reports.		X	X
22.04	Approve stability protocols prior to executing stability studies.		X	X
22.05	Execute stability studies.			X
22.06	Approve stability reports.		X	X
22.07	Provide approved stability protocols and stability reports to Customer.			X
22.08	Assign and approve appropriateness of storage conditions and retest or expiry date base on stability data.		X	X
22.09	Place the first three commercial production batches and at least one batch per year on stability or as required by applicable regulatory agencies.		X	X
22.10	Perform stability testing of reworked/reprocessed batches or those associated with investigations or revalidations/requalifications as required by Customer.			X
W.	Storage and Distribution
23.01	Validate/qualify and maintain storage facilities appropriate for conditions specified on the Product label. Maintain records of any critical parameters.			X
23.02	Establish and maintain an environmental monitoring program including trending activities to assure adherence to specified Product, packaging material and component storage conditions (such as temperature and humidity).			X
23.03	Have validated/qualified systems for controlling quarantined, rejected or recalled materials and segregate rejected or recalled materials.			X
23.04	Provide Product Material Safety Data Sheet or equivalent.		X
23.05	Ship Product in accordance with qualified transportation requirements. Customer to communicate special transportation and temperature/humidity requirements to PCI.		X	X
23.06	Identify the shipping configuration and the type of packaging in the Quality Agreement addendum or approved Batch Record or Shipping/Distribution Specification.		X	X
23.07	In the event of an environmental excursion-affecting Product, notify Customer within [**] and make subsequent investigation available to Customer upon request.			X
23.08	Have a system in place for assuring unreleased Product is not shipped unless authorized by Customer quality unit.		X	X
23.10	Have a system to ensure that only heat treated pallets which are not chemically treated and are compliant with International Plant Protection Convention requirements are used.		X	X
X.	Control, Disposal and Destruction of Production Materials
24.01	Have a procedure for the access, control, reconciliation, disposition, disposal, and destruction of production materials proprietary to			X

§	Responsibilities		N	C	S
	Customer or bearing Customer proprietary information used in the Product packaging and labeling that include but is not limited to:
	·	Tooling, dies, printing rolls, plates and associated drawings used in the packaging of Product.
	·	Printed components and materials used to print such component, including but not limited to: printed components, containers, closures, tools, dies, plates, drawings and artwork including all electronic files.
24.02	Dispose and destroy scrap production materials in a secure and legal manner that prevents unauthorized use or diversion in compliance with environment regulations. Maintain destruction records.				X
	·	PCI shall have automatic approval to proceed with destruction once the lot has been approved for shipment.
24.03	Customer shall work with PCI to resolve any nonconforming customer material disposition within []. After [], PCI shall have automatic approval to dispose or return nonconforming material to Customer			X	X
Y.	Complaints
25.01	Have written procedures in place to document, investigate, and manage all product quality related complaints.			X	X
25.02	Customer shall notify PCI of Product complaints received by Customer that impact quality, purity, safety and effectiveness of distributed Product that are likely to result in a field alert and/or recall.			X
25.03	PCI shall conduct and complete complaint investigation.				X
25.04	PCI shall provide final investigation report to Customer within []. Complaints related to death, injury, or safety hazard are reviewed within []. Medical adverse complaints must be reviewed with [**].				X
25.05	PCI shall retain complaint investigation records and evaluate trends and severity.			X	X
25.06	PCI shall implement corrective actions associated with the packaging of Product, as applicable.				X
Z.	Field Alerts and Recalls
26.01	Have written procedures in place to document, investigate, and manage field alerts and recalls.			X	X
26.02	Customer shall advise PCI in writing of any defect for which Customer would likely implement either a field alert or recall in the event that a single defective unit was found in the field.			X
26.03	PCI shall implement an investigation to assess if proper controls are in place to prevent such a single occurrence from reaching the field.				X
26.04	Customer shall have approved procedures for issuing field alerts and recall that address the decision making process, correspondence with regulatory agencies, management of recalls, and reconciliation of returned Product.			X

§	Responsibilities	N	C	S
26.05	Customer shall facilitate the process for determining the need to issue field alerts or recalls.		X
26.06	PCI shall participate in the investigation to make the decision to issue field alerts or recalls.			X
26.07	PCI shall review correspondence for submission to regulatory agency.			X
26.08	Customer shall issue correspondence to regulatory agencies.		X
26.09	Customer shall manage recall and reconciliation of returned Product.		X

11. Contacts and Responsibilities

	PCI	Customer
	Quality	Quality
Name	[**]	[**]
Title	[**]	[**]
Phone/Fax	[**]	[**]
Address (mail/delivery)	[**]	[**]
Electronic	[**]	[**]
	Quality	Quality
Name	[**]	N
Title	[**]
Phone/Fax	[**]
Address (mail/delivery)	[**]
Electronic	[**]	A

	PCI	Customer
	Quality Assurance	Quality
Name	[**]	N
Title	[**]
Phone/Fax	[**]
Address (mail/delivery)	[**]
Electronic	[**]	A
	Regulatory Affairs	Regulatory Affairs
Name	[**]	[**]
Title	[**]	[**]
Phone/Fax	[**]	[**]
Address (mail/delivery)	[][]	[**]
Electronic	[**]	[**]

IN WITNESS WHEREOF, Customer and PCI have executed this Agreement on the date last set forth below.

CUSTOMER NAME INSERTED HERE		ANDERSONBRECON INC., AN ILLINOIS
		CORPORATION DBA “PCI OF ILLINOIS”

/s/ Kristina Ouimet Haeckl		/s/ Brad Disch
(Signature)		(Signature)

Kristina Ouimet Haeckl		Brad Disch
(Print Name)		(Print Name)

VP Regulatory Affairs & Quality Systems		Director of Quality Assurance
(Title)		(Title)

Signed the day of in the year .		Signed the 18th day of June in the year 2018.

APPENDIX 1: (Definition of Product)

“Product” shall mean the following:

Fosfomycin for Injection

CUSTOMER NAME INSERTED HERE		ANDERSONBRECON INC., AN ILLINOIS
		CORPORATION DBA “PCI OF ILLINOIS”

/s/ Kristina Ouimet Haeckl		/s/ Brad Disch
(Signature)		(Signature)

Kristina Ouimet Haeckl		Brad Disch
(Print Name)		(Print Name)

VP Regulatory Affairs & Quality Systems		Director of Quality Assurance
(Title)		(Title)

Signed the day of in the year .		Signed the 18th day of June in the year 2018.

APPENDIX 2: (Temperature & Humidity Requirements of the product)

Product	Area	Temperature Control Range	Humidity	Excursions
	Primary Production	[**]	N/A	N/A
	Secondary Production	[**]	N/A	N/A
	Storage (Warehouse)	[**]	[**]	[]**
	Storage (Cooler)	[**]		[**]

Excursions are allowed per PCI procedure 00SOP303 - Packaging Room, Warehouse, Coolers, Freezers, an Finished Goods Area Temperature and Relative Humidity

Exhibit 10.12

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

PACKAGING AND SUPPLY AGREEMENT

This Packaging and Supply Agreement (the “Agreement”) effective as of 30 August 2018 (the “Effective Date”), is entered into by and between Sharp Corporation, a corporation organized and existing under the laws of Pennsylvania having its principal office at 7451 Keebler Way, Allentown, Pennsylvania 18106 (“Sharp”) and Nabriva Therapeutics US, Inc., a Delaware corporation, having its principal office at 1000 Continental Drive, Suite 600, King of Prussia, Pennsylvania 19406 (“Manufacturer”).

WITNESSETH:

WHEREAS, Manufacturer desires to engage Sharp, to package the Product(s) (as defined below) and supply to Manufacturer the Packaged Products (as defined below); and

WHEREAS, Sharp desires to accept such engagement under the terms and conditions set forth in this Agreement

NOW, THEREFORE, in consideration of these premises and the covenants, agreements and stipulations hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

1. Definitions .

1.1 “Affiliates” shall mean, any entities or persons directly or indirectly controlling, controlled by, or under common control with a party, where “controlled,” “controlled by,” and “under common control with” means the direct or indirect ability or power to direct or cause the direction of management policies of such entity or otherwise direct the affairs of such entity or person, whether through ownership of voting securities, by contract or otherwise.

1.2 “Applicable Law” shall mean the FDCA (as defined below) and all other laws, regulations, rules and guidelines promulgated by a Regulatory Authority, relating to the packaging of the Products and the storage of the Products, including, but not limited to, current Good Manufacturing Practices (“cGMP”) as specified in the United States Code of Federal Regulations, as amended from time to time. For purposes of this Agreement, the parties acknowledge and agree that notwithstanding anything to the contrary herein contained, Sharp shall only be obligated to comply with the Applicable Laws of the United States and the Commonwealth of Pennsylvania that relate to the storage and packaging of the Product or Packaged Product and shall have no obligations to comply with any other Applicable Laws.

1.3 “Brand Image” shall have the meaning set forth in Section 8.1.

1.4 “Facilities” shall mean Sharp’s manufacturing facilities located at 23 Carland Road, Conshohocken, Pennsylvania 19428, and 7451 Keebler Way, Allentown, Pennsylvania

18106 and/or any other facility as may be designated by Sharp from time to time during the Term (as defined below) and approved by the Manufacturer for use.

1.5 “FDA” shall mean the United States Food and Drug Administration, and any successor agency having substantially the same functions.

1.6 “FDCA” shall mean the United States Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 321 et seq., as amended from time to time.

1.7 “Firm Order” shall mean a firm order as described in Section 4.2(b).

1.8 “Forecast” shall have the meaning set forth in Section 4.2(a).

1.9 “Manufacturer Carrier” shall mean a carrier engaged by Manufacturer to ship Packaged Products upon receipt of them from Sharp in accordance with Section 5.2.

1.10 “Packaging Materials” shall mean the components and other materials utilized by Sharp in connection with the packaging of the Products, which shall either be supplied by Manufacturer or purchased by Sharp on Manufacturer’s behalf.

1.11 “Packaged Product(s)” shall mean the Products in packaged form.

1.12 “Price” shall mean the price to be paid by Manufacturer to Sharp for the Packaged Products and related services as set forth on Exhibit A, as may be adjusted in accordance with Section 5.1.

1.13 “Products” shall mean the products described on Exhibit A to be manufactured by or on behalf of Manufacturer and shipped in bulk to Sharp for packaging. Upon the parties’ mutual written consent, the parties may from time to time during the Term amend Exhibit A to remove, add or substitute Products.

1.14 “Purchase Order” shall have the meaning set forth in Section 4.2(b).

1.15 “Quality Agreement” shall have the meaning set forth in Section 6.1.

1.16 “Regulatory Authority” shall mean any federal, state or local governmental regulatory authority in the United States involved in regulating any aspect of the development, market approval, sale, distribution or use of the Product, the Packaging Materials or the Packaged Product. For purposes of this Agreement, the parties acknowledge and agree that notwithstanding anything to the contrary herein contained, Sharp shall only be subject to the authority of Regulatory Authorities of the United States and the Commonwealth of Pennsylvania that have proper jurisdiction over the storage and packaging of the Product or Packaged Product and shall have no obligations with respect to any other Regulatory Authorities.

1.17 “Revised Purchase Order” shall have the meaning set forth in Section 4.2(b).

1.18 “Specifications” shall mean the specifications, provided by Manufacturer to Sharp, to be followed by Sharp in connection with obtaining and using the Packaging Materials

and the storage, labeling and packaging of the Products and the storage and supply of the Packaged Products. The Specifications are attached hereto as Exhibit B.

1.19 “Start-Up Activities” shall have the meaning set forth in Section 3.1.

1.20 “Term,” “Initial Term” and “Subsequent Term” shall have the meanings set forth in Section 11.1.

1.21 “Tooling” shall mean the tooling made for the packaging and labeling of the Products.

The definitions in this Article 1 shall apply equally to both the singular and plural forms of the terms defined. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Sections and Exhibits shall be deemed references to Sections of this Agreement and Exhibits to this Agreement unless the context shall otherwise require.

2. Nature of Engagement

2.1 Engagement . Manufacturer hereby engages Sharp, and Sharp hereby accepts Manufacturer’s engagement, as Manufacturer’s service provider to store, package and label the Products and store and supply the Packaged Products in accordance with the Specifications and the terms and conditions of this Agreement.

2.2 Independent Contractor . Sharp shall be deemed an independent contractor with respect to the terms and provisions of this Agreement and shall not in any respect be deemed an agent or employee of Manufacturer. All persons employed by Sharp in connection with the storage, labeling, packaging and supply of the Products and/or the Packaged Products, as applicable, to Manufacturer shall be employees or agents of Sharp. Under no circumstances shall Sharp or any of its employees or agents be deemed to be employees or agents of Manufacturer.

3. Start-Up Activities .

3.1 Start-Up Activities . As used in this Agreement, “Start-Up Activities” shall mean those activities that Manufacturer and Sharp agree are necessary to commence packaging of the Products. Sharp shall complete the Start-Up Activities in accordance with the time schedule provided for in Exhibit A unless otherwise agreed to in writing by the parties. Any protocols and reports prepared by Sharp in connection with the Start-Up Activities shall be subject to Manufacturer’s prior review and approval, which approval shall not be unreasonably withheld, conditioned or delayed. Sharp shall permit a representative of Manufacturer to observe and review the Start-Up Activities at the relevant Facilities during normal business hours and upon reasonable notice. The validation reports produced in connection with the Start-Up Activities shall be deemed Confidential Information of Manufacturer subject to Article 12 of this Agreement. The costs associated with the Start-Up Activities shall be as agreed upon by the parties and shall be borne by Manufacturer.

3.2 Purchase and Installation of Equipment, Molds and Tooling . Sharp shall be responsible for installing at its Facilities any and all new equipment, molds and/or modifications to existing equipment and molds deemed necessary by Sharp for the packaging and labeling of the Products and for preparing the Packaged Products for shipment, and all costs and expenses associated therewith; provided, however, that Manufacturer shall be responsible for the costs and expenses associated with the development and manufacturing of the Tooling. Sharp shall maintain and store the Tooling at the Facilities and Manufacturer shall retain all right, title and interest in and to the Tooling during and after the Term; provided, however that during the Term, Sharp shall use the Tooling only in connection with the packaging of Products for Manufacturer and shall not modify the Tooling without the consent of Manufacturer, such consent not to be unreasonably withheld, conditioned or delayed.

4. Agreement to Supply; Forecasts; Purchase Orders .

4.1 Generally . During the Term, Sharp shall store, package and label the Products and store and supply to Manufacturer the Packaged Products, all in accordance with the Specifications and the terms of this Agreement, and Manufacturer shall pay for the Packaged Products in accordance with Article 5 of this Agreement.

4.2 Forecasts and Purchase Orders .

(a) Beginning on the Effective Date and thereafter on or prior to the [**] day preceding each calendar month of the Term, Manufacturer shall provide Sharp with a [**] month rolling forecast (each, a “Forecast”) of Manufacturer’s quantity and delivery date requirements for the Packaged Products.

(b) The first [**] months of each Forecast shall constitute a firm order (“Firm Order”) and shall be binding upon Manufacturer (whether or not Sharp receives a Purchase Order in connection with such [**]month period). For the purposes of ordering packaging materials and scheduling capacity, Manufacturer shall provide Sharp with purchase orders (each, a “Purchase Order”) in connection with each such [**] month Firm Order period for the Packaged Products to be supplied during that period. Every Purchase Order shall specify the quantities and delivery dates for the Packaged Products for the applicable Firm Order period. So long as the quantity and delivery date requirements set forth in the Purchase Orders during any [**] month Firm Order period are consistent with the applicable Firm Order, Sharp shall respond with an order acknowledgment within [**]. If the quantity and delivery date requirements set forth in the Purchase Orders are not consistent with the applicable Firm Order, or in the event that Manufacturer desires to subsequently amend a Purchase Order, then the parties shall cooperate in good faith to issue and substitute a mutually agreeable revised Purchase Order (a “Revised Purchase Order”) at least [**] prior to the scheduled start of the relevant production; provided, however that in the event a Revised Purchase Order is not agreed upon by the parties, Manufacturer shall be obligated to purchase all Packaged Products arising from the applicable Firm Order.

(c) Nothing printed or written on any Purchase Order, Sharp order acknowledgement or on any other similar form or document shall modify or expand either party’s

obligations under this Agreement, and any pre-printed terms and conditions contained in any such Purchase Order, order acknowledgement or other such form or document shall not apply.

4.3 Production Requirements . Subject to the terms of this Agreement, Sharp shall (a) devote the necessary production capacity to fulfill the quantity and delivery date requirements set forth in each confirmed Purchase Order, and (b) use commercially reasonable efforts to make available sufficient additional production capacity, subject to overtime charges set forth in Exhibit A, to support all Forecasts; provided, that the parties shall cooperate in good faith to reach a mutually agreeable accommodation with respect to Sharp’s available production capacity in the event that a Forecast is exceeded.

4.4 Manufacturer’s Supply Obligations . Sharp’s obligations to fulfill any Purchase Order are subject to Manufacturer’s obligation to provide Sharp with the following items within the following time periods:

(a) At least [**] prior to Sharp’s commencement of the production of the Packaged Products, any text, graphics or other artwork to be printed by Sharp on the Packaging Materials, all of which shall be in conformity with all Applicable Laws;

(b) At least [**] prior to Sharp’s commencement of the production of the Packaged Products, any Packaging Materials that are to be supplied by Manufacturer;

(c) At least [**] prior to Sharp’s commencement of the production of the Packaged Products, the lot and expiry information for the Products; and

(d) At least [**] prior to Sharp’s commencement of the production of the Packaged Products, the Products.

4.5 Storage Facilities; Inventory . Sharp agrees to provide adequate storage space for the Products and the Packaged Products. Sharp will maintain adequate inventories of materials on hand or with suppliers to accommodate reasonable variations in packaging that may be required by Manufacturer hereunder. Sharp shall store and deliver Packaged Product to Manufacturer Carriers in accordance with the Specifications, and pursuant to the terms and conditions set forth in this Agreement, including, but not limited to, Sections 5.2 and 5.4 hereof. Sharp shall charge Manufacturer for storage in accordance with its storage rates in effect from time to time, unless specifically provided for in Exhibit A.

4.6 Packaged Product Samples . Sharp shall provide Manufacturer with representative lot samples of Packaged Products promptly upon request. Such Packaged Product samples shall be shipped to Manufacturer in accordance with the provisions set forth in Section 5.2.

5. Price; Payment; Shipping Instructions .

5.1 Determination of Prices .

(a) The Price to be paid to Sharp by Manufacturer for the supply of the Packaged Products shall be as set forth on Exhibit A. The Price will not be increased during the first calendar year of the Term. Thereafter, the Parties will review the Price on an annual basis.

Sharp shall submit to Manufacturer revised pricing, reflecting increases or decreases in labor or Packaging Material costs for the upcoming year at least [**] prior to the date on which such increase or decrease shall become effective. Manufacturer and Sharp shall execute an amended Exhibit A to this Agreement to reflect the adjustment to the Price. The foregoing notwithstanding, Sharp may adjust the Prices set forth on Exhibit A at any time during the Term, in accordance with the following:

(i) Sharp shall be entitled to increase the Price for labor charges and any other costs incurred by Sharp as a result of any Revised Purchase Order, whether it relates to quantities expressed or delivery date requirements; and

(ii) In the event that a Forecast projects a material decrease from the anticipated volumes set forth in the initial Forecast attached hereto as Exhibit C or any other Forecast preceding a material decrease from anticipated volumes, the parties shall renegotiate in good faith the Price that shall apply to the new volume levels; and

(iii) In the event that the Packaging Materials cost increases, Sharp shall be entitled to increase the Price for the actual documented increase in such costs.

(b) Prior to the commencement of any Subsequent Term, the parties shall negotiate in good faith the Price that shall apply to such Subsequent Term. The parties shall take into account in any such negotiations Sharp’s production rates and costs of production as of the end of the then current Term.

(c) The Prices set forth on Exhibit A do not include sales, use, consumption, ad valorem, VAT or excise taxes of any taxing authority. The amount of such taxes, if any, will be added to the Price of the Packaged Products in effect at the time of shipment thereof and shall be reflected in the invoices submitted to Manufacturer by Sharp pursuant to Section 5.3. Manufacturer shall pay the amount of such taxes to Sharp in accordance with the payment provisions relating to shipments of Packaged Products set forth in Section 5.3.

5.2 Shipping . Manufacturer shall arrange for the shipment of any Manufacturer supplied product and components to Sharp with Manufacturer approved carriers. Manufacturer shall arrange for the shipment of the Packaged Products with Manufacturer Carriers, all of which shipments shall be made ExWorks, Sharp’s loading docks at the Facilities (Incoterms 2010). Manufacturer shall provide Sharp with a list of the Manufacturer Carriers and Sharp shall schedule freight pick up by a Manufacturer Carrier, load the Manufacturer Carrier’s trailer and complete any reasonably necessary documentation relating thereto. Manufacturer shall pay outbound freight delivery costs. Manufacturer shall be responsible for investigating any incoming and outgoing in-transit product losses. Sharp shall reasonably assist in the investigation upon request and where applicable, at Manufacturer’s expense. Manufacturer is responsible for reporting unexplained in-transit losses to the appropriate federal, state, local and foreign authorities, including but not limited to all applicable Regulatory Authorities, the FDA and the Drug Enforcement Administration, as required by law, within [**] of the completion of any such investigation. Manufacturer shall periodically audit its approved carriers and Manufacturer Carriers in accordance with Manufacturer’s policies. As part of such audit(s), Manufacturer agrees to inquire whether its approved carriers and Manufacturer Carriers continually require

their employees whose responsibilities include the known handling of prescription drugs to undergo criminal background checks, initial and random toxicology screening, and security training and that such approved carriers and Manufacturer Carriers ensure security via a verifiable security system. In addition, Manufacturer shall use only those approved carriers and Manufacturer Carriers who have agreed to comply with all Applicable Laws and any other applicable federal, state and local laws and regulations.

5.3 Invoices . Sharp shall submit invoices to Manufacturer for all shipments of Packaged Products hereunder upon delivery of such Packaged Products to the Manufacturer Carrier at the Facilities (which invoices shall be directed by Sharp personnel to Manufacturer’s Accounts Payable Department, or to such other persons, departments or locations as Manufacturer may instruct in writing from time to time), and each invoice shall be payable within [**] of the date of such invoice.

5.4 Risk of Loss . Title to all Products, Packaged Products, all work in process to produce Packaged Products and/or any other property of Manufacturer (“Manufacturer’s Property”) shall at all times remain with Manufacturer. Sharp shall not be liable for risk of loss to any Manufacturer’s Property, except in the case of negligence or willful misconduct by Sharp. The foregoing notwithstanding, Sharp’s aggregate liability under this Agreement as it relates to Manufacturer’s Property shall not exceed Five Hundred Thousand Dollars ($500,000).

5.5 Non-Conforming Packaged Products and Quantitative Defects . Manufacturer shall have the right, within [**] following Sharp’s delivery of Packaged Products to the Manufacturer Carrier, to give Sharp written notice of rejection of the portion of such shipment of Packaged Products that fails to meet the Specifications, or which otherwise breaches Sharp’s covenants and obligations under this Agreement. Sharp, at its sole cost and expense, shall provide Manufacturer with any missing quantities and/or replace as soon as commercially reasonable any packaging services for any non-conforming Packaged Products and Manufacturer, at its sole cost and expense, shall replace applicable Products, Packaging Materials and components for such non-conforming Packaged Products. Any claim of a non-conforming shipment must be made in writing to Sharp within the [**] period set forth above or it shall be deemed to have been waived by Manufacturer.

6. Quality Control; Access; Inspection; Samples .

6.1 Quality Agreement . The parties will enter into a quality agreement with respect to the quality assurance and packaging of Product by Sharp hereunder, which shall be attached hereto as Exhibit D (“Quality Agreement”). In the event there is any conflict relating to quality control procedures or cGMP-related activities between the terms and provisions of this Agreement and the Quality Agreement, the applicable terms and provisions of the Quality Agreement shall control and prevail; provided that, with respect to all other matters, the terms, provisions and conditions of this Agreement shall control and prevail.

6.2 Modification of Specifications . The Specifications may not be modified or changed without the mutual written agreement of the parties.

6.3 Storage Requirements . Sharp shall use the Products and the Packaging Material on a first in, first out basis, unless otherwise instructed by Manufacturer in writing, and shall not use either the Products or the Packaging Material beyond the shelf life required under any Applicable Law.

6.4 Notices Regarding Packaging Materials . Sharp shall promptly contact Manufacturer, care of Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct), in the event that Sharp anticipates making changes to any Packaging Material or in the event Sharp considers any current Packaging Material to be nonconforming with the Specifications or Applicable Law.

6.5 Quality Inspections . Sharp shall perform certain in-coming, in-process and finished product inspections necessary to assure the quality of the Packaging Material and Packaged Products as provided for in Sharp’s standard procedures and any inspections required by Applicable Law of the United States or as otherwise required by the Specifications. For purposes of this Agreement, inspections performed pursuant to Sharp’s standard procedures shall be considered routine and shall be performed at Sharp’s expense. Requests outside of the Sharp standard will be completed at cost and at Manufacturer’s expense. All inspections and related results shall be performed, documented and summarized by Sharp in accordance with Sharp’s standard procedures, the Specifications and Applicable Law of the United States. The parties hereto will negotiate in good faith any unanticipated burdens resulting from changes made to any Applicable Law after the Effective Date.

6.6 Records . For the period set forth in Section 6.10, Sharp shall maintain detailed records on Packaging Material usage and Packaged Product production, including lot numbers and shipping information relating to the Packaged Products, so that the Packaged Products can be traced in case of a recall. Sharp’s Packaged Product records shall be sufficient such that Sharp shall be capable of responding to Packaged Product inquiries by Manufacturer within [**] hours following notification, including providing the lot numbers and the location within the Facilities of the Packaged Products in question.

6.7 Recalls . Manufacturer shall have sole responsibility for initiating and managing any recall or withdrawal of the Packaged Products, and shall bear all costs and expenses relating thereto. Upon receiving from any Regulatory Authority having jurisdiction any direction to withdraw or recall any Packaged Product from the market, the receiving party shall promptly notify the other party. At Manufacturer’s sole cost and expense, Sharp shall provide such assistance as Manufacturer may reasonably request in connection with any such withdrawal or recall. Manufacturer shall provide copies of Field Alerts (initial and final), Recalls, Medical Assessments and/or follow-up reports to Sharp within [**]. Sharp shall have no liability with respect to any recall or withdrawal of Packaged Products except to the extent arising directly from Sharp’s negligence or willful misconduct, in which case Sharp’s liability shall be limited to One Million Dollars ($1,000,000) in the aggregate.

6.8 Maintenance of Facilities . In the event Sharp fails or anticipates it will fail to maintain the Facilities in accordance with the Specifications and all Applicable Laws of the United States, or in the event Sharp receives any notice from any Regulatory Authority of the United States with respect to its maintenance of the Facilities, and only if such maintenance or

notice affects the Products, Sharp shall promptly notify Manufacturer, care of Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct), provide copies of such notice to Manufacturer and, if such Regulatory Authority notice relates specifically to the Packaged Products, provide a copy of Sharp’s response to such Regulatory Authority.

6.9 Inspections and Audits . Manufacturer shall have access at reasonable times and with reasonable frequency to Sharp’s Facilities where Products are located for the purpose of conducting inspections of, performing quality control audits with respect to, or witnessing, the processing, storage or transportation of Products, Packaged Products or Packaging Materials, and Manufacturer shall have access at reasonable times and with reasonable frequency to the results of any inspections relating to the Products that are performed by Sharp or at Sharp’s direction. Sharp shall use its reasonable efforts to cause Sharp’s suppliers or agents to permit Manufacturer similar access to their respective facilities, data and records. Such inspections, audits and visits shall be conducted by Manufacturer’s personnel upon reasonable notice and during normal business hours.

6.10 Retention of Samples and Records . Sharp shall retain and, upon request by Manufacturer at reasonable times and with reasonable frequency, make available to Manufacturer, (a) copies of the quality control records maintained in accordance with Section 6.6 and otherwise in relation to the Packaged Products, (b) copies of inspection results of all the inspections performed in relation to the Packaged Products, (c) records of each batch of Packaged Product and (d) samples of the Packaging Materials and Packaged Product, upon reasonable request. All quality control and assurance records and samples will be maintained by Sharp for [**] following the Packaged Product expiration date or such longer time period as may be required by Applicable Law of the United States.

6.11 Government Inspections, Seizures and Recalls . If any Regulatory Authority makes an inspection at Sharp’s Facilities, seizes Products or Packaged Products or requests a recall of Packaged Products, Sharp shall promptly notify Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct), and Sharp shall take such actions as may be required under the Specifications or as may be reasonably requested in writing by Manufacturer; provided; however, that Sharp shall not be required to take any actions in contravention of any Applicable Law, to be determined in Sharp’s sole discretion. Sharp shall promptly send duplicate reports relating to such inspections to Manufacturer care of Manufacturer’s Quality Assurance Department (or such other persons or departments as Manufacturer may instruct).

6.12 Legal and Regulatory Filings and Requests . Sharp and Manufacturer shall cooperate and be diligent in responding to all requests for information from, and in making all required filings, at Manufacturer’s expense, with any Regulatory Authority having jurisdiction to make such requests or require such filings. Sharp shall, at Manufacturer’s expense, obtain and comply with all licenses, consents, permits and regulations which may from time to time be required by an appropriate Regulatory Authority of the United States with respect to the performance of its obligations hereunder.

6.13 Complaints . In connection with any Packaged Product complaints reasonably relating to packaging services that are forwarded by Manufacturer to Sharp, Sharp shall conduct a commercially reasonable investigation of such complaint, at no additional cost to Manufacturer.

7. Warranties; Limitation of Liability .

7.1 General Warranties . Sharp warrants that: (a) the Products shall be stored, processed, packaged and labeled in accordance with the Specifications and all Applicable Laws of the United States; (b) the Packaged Products furnished by Sharp to Manufacturer under this Agreement (i) shall be at the time of delivery to a Manufacturer Carrier of the quality specified in, and shall conform with, the Specifications for packaging and any Applicable Law of the United States, (ii) shall be stored and supplied in conformity with the Specifications and any Applicable Law of the United States and (iii) shall not contain any material provided by or on behalf of Sharp, which material has not been used or stored in accordance with the Specifications and any Applicable Law of the United States; (c) it will not introduce any materials not provided for in the Specifications that would cause the Packaged Products to be adulterated within the meaning of Section 501 of the FDCA; and (d) the Packaged Products shall not be misbranded by Sharp within the meaning of the FDCA (except with respect to misbranding resulting from the Specifications or from Packaging Materials supplied by Manufacturer, for which Manufacturer shall bear responsibility). Any claim by Manufacturer for breach of warranty that is not brought one year of delivery date of the applicable Packaged Product shall be deemed to have been waived by Manufacturer.

7.2 Disclaimer; Limitation of Liability . NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT TO THE CONTRARY THE WARRANTIES WITH RESPECT TO THE STORING, PACKAGING, LABELING AND DELIVERY OF THE PRODUCTS AND THE PACKAGED PRODUCTS STATED IN THIS ARTICLE 7 ARE IN LIEU OF ALL OTHER WARRANTIES OF SHARP, ORAL OR WRITTEN, EXPRESSED OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED FOR HEREIN, IN NO EVENT SHALL (I) SHARP’S LIABILITY HEREUNDER EXCEED THE FEES PAYABLE TO SHARP BY MANUFACTURER FOR SUCH SERVICES, EXCEPT WITH RESPECT TO SHARP’S INDEMNIFICATION OBLIGATIONS HEREUNDER AND DAMAGES RELATING TO SHARP’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR BREACH OF ITS CONFIDENTIALY OBLIGATIONS HEREUNDER: AND (II) SHARP HAVE ANY LIABILITY FOR ANY EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY OR ANY OTHER THEORY OR FORM OF ACTION IN CONNECTION WITH THE STORING, PROCESSING, PACKAGING, LABELING AND DELIVERY OF THE PRODUCTS OR THE PACKAGED PRODUCTS. UNLESS BREACHED BY SHARP, THE COVENANTS OF SHARP SET FORTH IN SECTION 5.5 TO REPLACE NONCONFORMING PACKAGED PRODUCTS AND, IN SECTION 6.7 WITH RESPECT TO RECALLS, SHALL BE, AS APPLICABLE, MANUFACTURER’S EXCLUSIVE REMEDIES FOR NONCONFORMING PACKAGED PRODUCTS.

8. Intellectual Property Rights .

8.1 Intellectual Property Rights of Manufacturer; Grant of License . Except as specifically set forth in Section 8.2, all right, title and interest in and to any trademarks, trade names, slogans, logos, copyrights, trade dress, know-how and goodwill associated with the Products and the Packaged Products (“Brand Image”) and all rights to any improvements or modifications to the Brand Image (including any developed or suggested by Sharp) are and shall remain owned solely by Manufacturer. Manufacturer hereby grants to Sharp a non-exclusive, worldwide, royalty-free and paid-up license to use the Brand Image as may be necessary for Sharp’s fulfillment of its services in accordance with this Agreement (including in accordance with the Specifications) during the Term. Except as set forth in the immediately preceding sentence, Sharp shall have no other rights to use the Brand Image.

8.2 Ownership of Other Property . All right, title and interest in and to (a) the Tooling (subject to the usage limitations set forth in Section 3.2), (b) any and all dies, molds, printing plates and other equipment or supplies, and any and all intellectual property, know-how, methods or processes, in each case, including without limitation any and all related to serialization, used by Sharp in connection with processing, labeling and packaging of the Products, and (c) any and all modifications or improvements to any of the foregoing (including any developed or suggested by Manufacturer), are and shall remain owned solely by Sharp. Nothing in this Agreement shall be construed to grant to Manufacturer any right to any trademark, trade name, copyright, patent or other proprietary technology or know-how owned by Sharp.

9. Indemnification .

9.1 Sharp’s Indemnification of Manufacturer . Sharp shall defend, indemnify and hold Manufacturer and its officers, directors and employees (each, a “Manufacturer Indemnified Party”) harmless from and against any and all losses, liabilities, damages, claims for damages, suits, recoveries, judgments or executions resulting from a third party claim (including reasonable attorneys’ fees and expenses) (collectively, “Damages”) that may be incurred by any Manufacturer Indemnified Party arising out of or on account of: (a) any grossly negligent or reckless act or omission on the part of Sharp or its officers, directors, employees or agents in connection with the storage, labeling or packaging of the Products or the Packaged Products pursuant to this Agreement; or (b) any breach by Sharp of any of its covenants, agreements, representations and/or warranties set forth herein.

9.2 Manufacturer’s Indemnification of Sharp . Manufacturer shall defend, indemnify and hold Sharp and its Affiliates and the officers, directors and employees thereof (each, a “Sharp Indemnified Party”) harmless from and against any and all Damages that may be incurred by any Sharp Indemnified Party arising out of or on account of: (a) the possession, sale, use or consumption of the Products or Packaged Products or any other product of Manufacturer; (b) Manufacturer’s supply of Products to Sharp under this Agreement; (c) any breach by Manufacturer of any of its covenants, agreements, representations and/or warranties set forth herein; (d) any grossly negligent or reckless act or omission on the part of Manufacturer in connection with its performance pursuant to this Agreement; or (e) any claim that the Brand Image, the Products, the Packaged Products or any other product of Manufacturer infringes the proprietary rights of another person or entity.

9.3 Indemnification Procedure . Any party seeking indemnification in accordance with this Article 9 (the “Indemnified Party”) shall notify in writing the other party from whom such indemnification is sought (the “Indemnifying Party”) of any third party claim made against the Indemnified Party, specifying the basis given by such third party of such claim. The Indemnified Party shall thereupon give the Indemnifying Party reasonable access to the books, records and assets of the Indemnified Party which evidence, support or directly relate to such claim. The Indemnifying Party shall have the right, upon giving written notice to the Indemnified Party within [**] after the receipt of any such notice of claim, to undertake the defense of or, with the consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), to settle or compromise such claim. The failure of the Indemnifying Party to give such notice and to undertake the defense of or to settle or compromise such a claim shall constitute a waiver of the Indemnifying Party’s rights under this Section 9.3 and shall preclude the Indemnifying Party from disputing the manner in which the Indemnified Party may conduct the defense of such claim; provided however, that the Indemnified Party shall not settle or compromise such claim without the prior written approval of the Indemnifying Party (which approval shall not be unreasonably withheld, conditioned or delayed). The election by the Indemnifying Party, pursuant to this Section 9.3 to undertake the defense of a third-party claim shall not preclude the party against which such claim has been made also from participating or continuing to participate in such defense, so long as such party bears its own legal fees and expenses for so doing.

9.4 Survival . The indemnification obligations set forth in this Article 9 shall survive the expiration or termination of this Agreement.

10. Insurance .

Sharp shall acquire and maintain at its sole cost and expense: (a) Statutory Worker’s Compensation Insurance and Employer’s Liability Insurance; (b) coverage of not less than [**] dollars ($[**]) for physical loss or damage to materials including Products and Packaged Products while at the Facilities or under its control; and (c) products liability, bodily injury and property damage insurance with a combined single limit of not less than [**] dollars ($[**]).

11. Term; Termination .

11.1 Initial Term; Term . The initial term of this Agreement shall begin on the Effective Date and shall terminate on December 31, 2023 (the “Initial Term”). This Agreement will be automatically extended for additional one-year periods (such additional periods are each a “Subsequent Term,” and collectively with the Initial Term, the “Term”) provided that the parties have by mutual written agreement amended Exhibit A to reflect the new Price for the applicable Subsequent Term not later than ninety (90) days prior to the end of the Initial Term or any Subsequent Term. The Term shall end upon the expiration of this Agreement or its earlier termination as set forth in Section 11.2.

11.2 Termination . This Agreement may be terminated upon the occurrence of any of the following:

(a) The parties may terminate this Agreement by mutual written consent at any time;

(b) Either party may terminate this Agreement by giving [**] written notice to the other party in the event the other party has breached any representation, warranty or obligation contained in this Agreement and/or has defaulted in the performance of any of its duties or obligations hereunder in any material respect and such breach or default has not been remedied within [**] after written notice of the breach or default has been received;

(c) Either party may terminate this Agreement if a voluntary petition in bankruptcy should be filed by the other party under the United States Bankruptcy Code, if an involuntary petition under the United States Bankruptcy Code should be filed against the other party, or if a receiver should be appointed for the other party or its property;

(d) Either party may terminate this Agreement pursuant to Section 13.2.

11.3 Effect of Expiration or Termination .

(a) The expiration or termination of this Agreement shall not release either party from any of its obligations accrued prior to the effective date of termination, and each party shall remain responsible for the performance of its respective obligations and agreements which are expressly stated to be obligations which survive the termination of this Agreement. Furthermore, the rights to terminate provided for hereinabove are in addition to any other right, remedy, or election either party may have hereunder or at law or in equity.

(b) Within [**] of the effective date of the expiration or termination of this Agreement for any reason, Manufacturer shall purchase any Packaging Materials that Sharp has purchased exclusively for Manufacturer for Firm Orders in accordance with this Agreement for the production of the Packaged Products.

(c) Upon the effective date of expiration or termination of this Agreement, Sharp shall immediately deliver to Manufacturer or its designee all Products, and all text, graphics and other artwork and Packaging Materials purchased or provided by Manufacturer. Sharp shall also deliver to Manufacturer or its designee all Packaged Products produced hereunder, and shall invoice Manufacturer therefor in accordance with the terms of Section 5.3.

12. Confidentiality .

(a) Confidentiality . Sharp and Manufacturer agree to keep secret and confidential any and all proprietary and non-public information of the other party (“Confidential Information”) disclosed by the other party hereunder or through any prior disclosure and not to disclose such Confidential Information to any person or entity, except: (i) to Affiliates; provided that such Affiliates are made aware of the confidential nature of the Confidential Information and agree to comply with the terms of this Agreement; (ii) to employees and authorized representatives of each party having a need to know the information in order to fulfill such party’s obligations hereunder; or (iii) as required by an applicable Regulatory Authority. The parties shall use the Confidential Information solely for the purpose of carrying out the obligations

contained in the Agreement. The obligations imposed by this Section shall not apply to any Confidential Information:

(i) that, at the time of disclosure, is in the public domain;

(ii) that, after disclosure, becomes part of the public domain by publication or otherwise, through no fault of the recipient;

(iii) that, at the time of disclosure, is already in the recipient’s possession, except through prior disclosure by the disclosing party, and such possession can be properly documented by the recipient in its written records, and was not made available to the recipient by any person or party owing an obligation of confidentiality to the disclosing party;

(iv) that is rightfully made available to the recipient from sources independent of the disclosing party;

(v) that is required to be disclosed in the course of litigation or other legal or administrative proceedings; provided that in all such cases the party receiving the Confidential Information shall, to the extent permitted, give the other party prompt notice of the pending disclosure and shall cooperate in such other party’s attempts, at such other party’s sole expense, to seek an order maintaining the confidentiality of the Confidential Information; or

(vi) that is required to be disclosed by Applicable Laws; provided that in all[**]such cases the party receiving the Confidential Information shall, to the extent permitted, give the other party prompt notice of the pending disclosure and shall cooperate in such other party’s attempts, at such other party’s sole expense, to seek an order maintaining the confidentiality of the Confidential Information.

(b) Survival . The obligation of confidentiality and nonuse set forth in this Article 12 shall survive for a period of [**] beyond the termination or expiration of this Agreement.

(c) Ownership of Confidential Information . Confidential Information shall remain the exclusive property of the disclosing party. In no event shall any of either party’s Confidential Information, technology, know-how, intellectual property (or rights thereto) become the property of the other party.

(d) Sharp Consent . Manufacturer shall not release to any third party any non-public information with respect to the terms of this Agreement without the prior written consent of Sharp.

13. Miscellaneous .

13.1 Authority to Enter Into Agreement . Each party represents and warrants that it is authorized to enter into this Agreement and that in so doing it is not in violation of the terms and conditions of any contract or other agreement to which it may be a party.

13.2 Force Majeure . Performance under this Agreement (other than performance of payment obligations) shall be excused to the extent prevented or delayed by any event or circumstance, which is beyond the reasonable control of the party whose performance is to be excused hereunder, including but not limited to fire, flood, explosion, unavoidable breakdown of machinery, widespread product tampering by third parties, governmental acts or regulations, war, labor difficulties, shortages or unavailability of materials, or any act of God. The party affected shall promptly notify in writing the non-affected party of the event of force majeure and the probable duration of the delay. Any delay caused by an event of force majeure shall toll the Term, which shall be extended by the length thereof. In the event a force majeure prevents performance by one party for more than six (6) months, either party may terminate this Agreement.

13.3 Public Announcements . The parties agree to determine jointly the contents of any public announcement informing the public about the existence of this Agreement between the parties and, except as may be required by law or the rules of any national securities exchange, neither party shall issue or cause the issuance of any such public announcement without the express prior approval of an executive officer of each party.

13.4 Amendments . Except to the extent otherwise provided in Section 5.1 of this Agreement with respect to amendments to Exhibit A, this Agreement may not be modified, amended or altered except pursuant to a written instrument signed by both parties.

13.5 Governing Law . This Agreement is made subject to the laws of the Commonwealth of Pennsylvania, without reference to principles of conflicts of laws. Each party agrees that suit may be instituted at any federal court in the Eastern District of Pennsylvania or in state court in Lehigh County in the Commonwealth of Pennsylvania and each waives any objection which such party may now or hereafter have to the laying of the venue of any such action, suit or proceeding, and irrevocably submits to the jurisdiction of any such court. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against a party if given as provided in Section 13.7. Nothing contained herein shall prevent or delay either party from seeking, in any court of competent jurisdiction in Pennsylvania, specific performance or other equitable remedies in the event of any breach or intended breach by the other party of any of its obligations hereunder.

13.6 Assignment . Neither party may, without the prior written consent of the other party, delegate, transfer, convey, assign or pledge any of its rights or obligations under this Agreement to any other person, firm or corporation; provided however, that such consent shall not be unreasonably withheld and provided further that either party need not obtain any consent in the event such party assigns this Agreement to an entity that succeeds to all or substantially all of such party’s business or assets.

13.7 Notice . Any and all notices permitted or required to be given hereunder will be deemed duly given: (a) upon actual delivery, if delivery is by hand; (b) three (3) business days

after delivery into the United States Postal Service mail, if delivery is by postage paid registered or certified return receipt request mail; (c) one (1) business day after delivery to a nationally recognized overnight carrier, if delivery is made by overnight carrier guaranteeing next business day delivery; or (d) upon receipt of evidence of successful transmission, if delivery is by facsimile or e-mail. Each such notice shall be sent to the respective party at the address or facsimile number indicated below or at any other address as the respective party may designate by notice delivered pursuant hereto.

If to Manufacturer:

Nabriva Therapeutics US, Inc.

1000 Continental Drive, Suite 600

King of Prussia, Pennsylvania 19406

Attention: General Counsel

E-mail: [**]

Telecopier Number: [**]

If to Sharp:

SHARP CORPORATION

7451 Keebler Way

Allentown, Pennsylvania 18106

Attention: CFO

Telecopier Number: [**]

With a copy to: Legal Department (at the same address)

13.8 Compliance with Laws . In the performance of this Agreement, both parties agree to comply with all applicable federal, state or local laws, statutes, rules, regulations and ordinances, including any Applicable Laws, subject to any specific limitations set forth herein.

13.9 Entire Agreement . This Agreement, including all Exhibits attached hereto and made a part hereof, contains the entire understanding of the parties, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof, and except as otherwise specifically provided for herein, shall be amended or modified only by written agreement executed by the parties hereto. Delivery by reliable electronic means, including facsimile or email, shall be an effective method of delivering the executed Agreement. This Agreement may be stored by electronic means and either an original or an electronically stored copy of this Agreement can be used for all purposes, including in any proceeding to enforce the rights and/or obligations of the parties to this Agreement.

13.10 Severability . If and to the extent that any court of competent jurisdiction holds any provision or part of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement.

13.11 Waiver . A waiver by either party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future.

13.12 Headings . Headings in this Agreement are included for ease of reference only and have no legal effect.

13.13 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

13.14 Drafting . This Agreement was negotiated at arm’s-length and entered into freely by the parties and upon the advice of their respective counsel. All parties hereto are to be deemed the drafters of this Agreement. No provision hereof shall be construed in favor of or against any party hereto based upon principles of contra proferentem or any other presumption as to inequality of bargaining power or otherwise.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in their respective names and on their behalf, as of the date first above written.

NABRIVA THERAPEUTICS US, INC.		SHARP CORPORATION

By:	/s/ Steven Gelone	By:	/s/ Jeffrey Benedict

Title:	President & COO	Title:	SVP Global Business Development

Date:	30 August 2018	Date:	Aug. 31, 2018

EXHIBIT A

PRODUCTS / PRICES

All purchases by Manufacturer shall be made ExWorks, Sharp’s dock (Incoterms 2010). Subject to the adjustments described in Section 5.1, and as offered on the attached quotations, the Prices are as follows:

Product	Price Per Unit		Lot Size		Yearly Volume
Citrate IV Solution 250 ml (6 ct)	$	[**] per unit	[**	]	[**	]
Citrate IV Solution 250 ml (6 ct)	$	[**] per unit	[**	]	[**	]
Citrate IV Solution 250 ml (6 ct)	$	[**] per unit	[**	]	[**	]

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 10 count Blister	$	[**] per unit	[**	]	[**	]
Lefamulin 10 count Blister	$	[**] per unit	[**	]	[**	]

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]

ATTACHED QUOTATIONS

Product	Sharp Design	Price Per 1000

Bottle Project	Project #30136R1, 1/12/18	Refer to Quote

10 Count Blister	Project #30184R0, 1/17/18	Refer to Quote

Vial Labeling	Project #30545R0, 6/28/18	Refer to Quote

Citrate IV Solution	Project #30140R0, Rev. 2, 8/6/18	Refer to Quote

Sample Development	Version 3, 7/13/2018	Refer to Quote

Start-up Activities

Non-Product Quote Clarification	Revision 2, 7/12/18	Refer to Quote

Non-Product Costs	Amount		Qty		Total
[]**
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**
[]**
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]
[]**	[**	]	[**	]	[**		]

GRAND TOTAL					$	[**	]

Storage Fees

Storage fees are only applicable if Sharp stores bulk or finished goods for an extended period of time ([**] prior to packaging or [**] after packaging). If storage extends beyond this timing, the storage fee is $[**] per pallet/month or $[**] per pallet/month for Cold Chain.

Overtime Labor Charges

Overtime will be handled as a “one off” cost if needed and will be charged at Sharp’s standard rates and approved in advance by Manufacturer.

EXHIBIT B

SPECIFICATIONS

[To be provided by Manufacturer.]

Storage requirements and requirements for delivery of Packaged Products to Manufacturer Carriers: [TBD]

EXHIBIT C

INITIAL FORECAST

[To be provided by Manufacturer.]

EXHIBIT D

QUALITY AGREEMENT

[To be finalized within 60 days of Supply Agreement approval.]

Nabriva Bottle Project
Project #30136R1

To	Nabriva Therapeutics

Attn:	Bob Urban
From:	Jan LaPorta

Subject:	Lefamulin 30 ct Bottles
Quotation Ref.	Sharp Estimate Design Number - 30136R1

Date	1/12/18
Expiry date	90 Days from Sent Date

Site	Allentown, PA

Dear Bob,

Thank you for this opportunity to present our packaging proposal for your bottling needs. This quotation has been prepared to meet all of your requirements, with full cGMP compliance, supported by Sharp’s professional commitment to service.

PROJECT DESCRIPTION SUMMARY

Customer to supply bright stock bottles and Sharp will label, apply insert, place in shipper and palletize the product. Aggregate serialization from bottle to pallet will also be provided.

PRICELIST

Pricing is based the unit of sale (bottle). See section below identifying what components are included in the price and supplied by Sharp. A quotation for Design Work has been prepared and submitted for review/approval.

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]
Lefamulin 30 ct Bottle	$	[**] per unit	[**	]	[**	]

PRICING ASSUMPTIONS:

In the case that bulk specifications, primary/secondary packaging specifications or supplier prices differ from the costs included in our calculations, these prices may require re-calculations for that specific SKU. In the event this occurs, a new pricelist will be provided for that SKU.

PACKAGING MATERIALS

Component	Specifications	Supplied By
Lefamulin 30 ct Bottles	Lefamulin 600mg	Customer
Bottle		Customer
Cap		Customer
Bottle Label	Quote Sharp Design Team	Sharp
Desiccant	NA
Cotton/Rayon	NA

Component	Specifications	Supplied By
Insert/ Literature	Quote Sharp Design Team	Sharp
Carton	NA
Tertiary	Shipper, Shipper Label, Heat Treated Pallet, Shrink Wrap	Sharp

OBSOLESCENCE TERMS

Purchase of Sharp supplied components will be done with a minimum of [**] months volume based upon the rolling [**] months forecast. Destruction costs of remaining packaging materials and bulk products will be invoiced as soon as defined as obsolete items.

DETAILED PACKAGING PROCESS DESCRIPTION:

Load bright stock bottles to the line; label and place topsert on bottle; aggregate and load twelve bottles into a shipper; aggregate shippers onto a pallet.

Non Product Charges:

Item	$ Amount	Comment
Bottle Machine Tooling	$[**]	Labeler feed screw and Topserter change parts
Carton Die
Carton Prep & Plates for Printing
Literature Prep & Plates
Bottle label die / prep. plates
Lot Charge
Project Management	$[**] per month	Fee includes developing & maintaining project charter, project time line management, vendor(s) management, successful implementation of project, adhering to PMO governance, meeting management (Sharp, customer, vendor).
Packaging Design Services	See Separate Quote
Process Validation	$[**] Per executable document	Validation of batches billed for each executable document, based on discussions between Sharp and Customer’s QA teams.
Engineering Services
Weekend Overtime (If Needed)		$[] per shift on Saturdays, $[] per shift on Sundays
Bulk and Finished Goods Storage		Monthly charges to be applied for more than [**] before or after the packaging date.
Sample Reserve Program		[**] annual fee
Other QA Specific Fees

Item		$ Amount		Comment
(Retain Sample, Expedite Batch Record Review, etc.)

Serialization Implementation Fee (One Time)	$ Amount	Comment
Serialization Requirements Document (SRD) Approval	[**]	These charges apply only to the first item requiring serialization. All subsequent items will be charged a reduced fee and lumped together if similar process.
Serialization Master Data (SMO) Approval	[**]
Successful Completion of Unit Testing or Execution of 10Q Addendum	[**]
Process Validation (PV) Summary Report Approval	[**]
Total	[**]

Note: Upon receipt of executed SRD document and a complete scope of work, Sharp will commence planning of line availability and resources to support this activity.

Additional services in conjunction with serialized product(s). Applies to all products and sites serialized by Sharp.

Serialization Implementation Fee (One Time)	$ Amount	Comment
Establishment of Shipment Release Message	[**]	This service is an automated notification of LOT metadata and serial numbers upon shipment of finished goods from Sharp. This alleviates delays in receiving SNs and aids the downstream transmission of SN data.
Establishment of Decommissioned Serial Number Reporting	[**]	This service provides notification of decommissioned serial numbers along with commissioned serial number reporting, for each of reconciliation.
Establishment of Real Time Aggregation Timestamp	[**]	This service arranges parent container commissioning time as distinct from aggregation time of children items to the parent container. Facilitates absorption of data into certain ERP/EPCIS system.

If this project were awarded to Sharp, Sharp would require a Purchase Order (PO) for the Non-Product items to commence activities. If the project is cancelled after award and activities already commenced, any remaining balance for work activities will be invoiced.

For Non-Product items and Serialization Fees, Sharp requires [**]% down and [**]% after completion of each Non-Product task / service.

PRICE INCLUDES

Labor, Sharp supplied components, pallet handling, line clearance including cleaning and batch change avers.

PRICE EXCLUDES

Bulk product, retain sample storage, analytical testing costs, and transportation.

SUPPLIED BY CUSTOMER

Safety Data Sheet, Melamine and TSE/BSE statement on the bulk product.

Bulk products to Packaging Site, accompanied with Certificate of Analysis and shipment list stating exact amount of bulk per container.

CLAUSE

Sharp Packaging Solutions reserves the right to adapt the pricing per unit, should the batch size change from the batch size as it will be agreed upon. Should the actual unit volume differ significantly from the agreed forecast, a price adaptation needs to be agreed. Details are to be discussed and agreed between both parties.

Sharp Packaging Solutions will evaluate pricing on an annual basis and reserves the right to adapt the pricing per unit, due to inflation correction based on CPI -U.

FINISHED PRODUCT DELIVERY TERMS

EX-WORKS Sharp Facility

PAYMENT TERMS

Net [**]

LEAD TIMES

Tooling [**] in advance of production (to be confirmed at project kick off)
Receipt of commercial purchase order [**] in advance

VERSION CONTROL TRACKING

Version		Summary of Change		Issue Date		Account Executive
1		1st issue		1/12/18		Jan LaPorta

Our successful growth is due to servicing our customers with multiple products and clinical studies, and being part of their growth in providing effective patient healthcare. We sincerely hope to be seriously considered for this opportunity, and for future partnership opportunities.

If any additional information is required, please do not hesitate to contact me.

With kind regards,

Janice LaPorta
Account Executive
Sharp Packaging Solutions

THE FOLLOWING TERMS AND CONDITIONS WILL NOT BE APPLICABLE IF A MASTER SERVICE AGREEMENT (MSA) IS IN PLACE.

SHARP SUPPLY TERMS AND CONDITIONS

THE FOLLOWING TERMS AND CONDITIONS APPLY TO THE SALE BY SHARP CORPORATION (“SELLER”) OF GOODS AND SERVICES TO BUYER. ANY ORDER PLACED BY BUYER IS SUBJECT TO WRITTEN ACCEPTANCE BY SELLER. THESE TERMS AND CONDITIONS CONSTITUTE THE SOLE TERMS AND CONDITIONS OF ANY ORDER BETWEEN THE PARTIES AND BUYER’S AGREEMENT WILL BE CONCLUSIVELY ESTABLISHED (I) WHEN BUYER HAS RECEIVED THESE TERMS AND CONDITIONS FOR TEN (10) DAYS WITHOUT OBJECTION, OR (II) BY BUYER’S ACCEPTANCE OF, OR PAYMENT FOR, ALL OR ANY PART OF THE GOODS OR SERVICES. SELLER’S ACCEPTANCE OF ANY ORDER IS EXPRESSLY MADE CONDITIONAL UPON BUYER’S ACCEPTANCE OF THE TERMS AND CONDITIONS CONTAINED HEREIN, AND SELLER OBJECTS TO ANY ADDITIONAL OR DIFFERENT TERMS AND CONDITIONS, INCLUDING, BUT NOT LIMITED TO THOSE CONTAINED IN BUYER’S PREPRINTED FORMS. SELLER WILL NOT BE DEEMED TO HAVE WAIVED THESE TERMS AND CONDITIONS OF SALE IF IT FAILS TO OBJECT TO PROVISIONS CONTAINED IN BUYER’S FORMS OR OTHERWISE. BUYER’S SILENCE OR ITS ACCEPTANCE OF SELLER’S GOODS CONSTITUTES ITS ACCEPTANCE OF THESE TERMS AND CONDITIONS OF SALE AND SELLER HEREBY NOTIFIES CUSTOMER THAT THE TERMS AND CONDITIONS INCLUDED HEREIN ARE THE ONLY TERMS AND CONDITIONS UNDER WHICH SELLER AGREES TO BE BOUND.

1. All packaging materials, packaging, labeling and/or supplying of the packaged products as provided for herein are subject to these terms and conditions (the “Agreement”) and Buyer agrees that all orders from Buyer to label and package Buyer’s products and supply Buyer with the packaged products are placed under this Agreement.

2. Seller warrants that (a) Buyer’s products shall be stored, processed, packaged and labeled in accordance with the specifications agreed to by the parties in writing (the “Specifications”); (b) the packaged products furnished by Sharp to Buyer under this Agreement (i) shall be of the quality specified in, and shall confirm with, the Specifications for packaging, (ii) shall be stored and supplied in conformity with the Specifications and (iii) shall not contain any material provided by or on behalf of Sharp, which material has not been used or stored in accordance with the Specifications; (c) it will not introduce any materials not provided for in the Specifications that would cause the packaged products to be adulterated within the meaning of Section 501 of the FDCA; and (d) the packaged products shall not be misbranded within the meaning of the FDCA (except with respect to any misbranding resulting from the Specifications, for which Buyer shall bear responsibility). Except as otherwise provided in this Agreement, any claim for breach of warranty that is not brought within one (1) year from the date of

delivery shall be deemed to have been waived by Manufacturer. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT TO THE CONTRARY, (A) THE WARRANTIES WITH RESPECT TO THE STORING, PROCESSING, PACKAGING, LABELING AND DELIVERY OF THE PRODUCTS AND THE PACKAGED PRODUCTS STATED IN THIS SECTION 2 ARE IN LIEU OF ALL OTHER WARRANTIES OF SHARP, ORAL OR WRITTEN, EXPRESSED OR IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FORA PARTICULAR PURPOSE, (B) IN NO EVENT SHALL SHARP HAVE ANY LIABILITY FOR ANY EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY OR ANY OTHER THEORY OR FORM OF ACTION IN CONNECTION WITH THE STORING, PROCESSING, PACKAGING, LABELING AND DELIVERY OF THE PRODUCTS OR THE PACKAGED

Nabriva 10 Count Blister Project
Project #30184R0

To	Nabriva Therapeutics

Attn:	Bob Urban
From:	Jan LaPorta

Subject:	Lefamulin 10 count Blisters
Quotation Ref.	Sharp Estimate Design Number- 30184R0

Date	1/17/18
Expiry date	90 Days from Sent Date

Site	Allentown, PA

Dear Bob,

Thank you for this opportunity to present our packaging proposal for your blistering needs. This quotation has been prepared to meet all of your requirements, with full cGMP compliance, supported by Sharp’s professional commitment to service.

PROJECT DESCRIPTION SUMMARY

Customer to supply filled pre-printed blisters and Sharp will place in carton with insert; place 24 cartons in shipper and palletize the product. Aggregate serialization from carton to pallet will also be provided.

PRICELIST

Pricing is based the unit of sale (carton). See section below identifying what components are included in the price and supplied by Sharp. A quotation for Design Work has been prepared and submitted for review/approval.

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 10 count Blister	$	[**] per unit	[**	]	[**	]
Lefamulin 10 count Blister	$	[**] per unit	[**	]	[**	]

PRICING ASSUMPTIONS:

PACKAGING MATERIALS

Component	Specifications	Supplied By
Lefamulin 10 ct Pre -Printed Blisters	Lefamulin 600mg	Customer
Insert		Sharp
Carton		Sharp
Tertiary	Shipper, Shipper Label, Heat Treated Pallet, Shrink Wrap	Sharp

OBSOLESCENCE TERMS

DETAILED PACKAGING PROCESS DESCRIPTION:

Load (1) blister and (1) insert into carton; check weigh and serialize carton; aggregate 24 cartons into shipper; serialize shipper and place on pallet.

Non Product Charges:

Item	$ Amount	Comment
Carton Die & Prep for Printing	$[**]
Literature Prep & Plates
Project Management	$[**] per month	Fee includes developing & maintaining project charter, project time line management, vendor(s) management, successful implementation of project, adhering to PMO governance, meeting management (Sharp, customer, vendor).
Packaging Design Services	See Separate Quote
Process Validation	$[**] Per executable document	Validation of batches billed for each executable document, based on discussions between Sharp and Customer’s QA teams.
Engineering Services
Weekend Overtime (If Needed)		$[] per shift on Saturdays, $[] per shift on Sundays
Bulk and Finished Goods Storage		Monthly charges to be applied for more than [**] before or after the packaging date.
Sample Reserve Program		[**]
Other QA Specific Fees (Retain Sample, Expedite Batch Record Review, etc.)

Serialization Implementation Fee (One Time)	$ Amount	Comment
Serialization Requirements Document (SRD) Approval	[**]	These charges apply only to the first item requiring serialization. A/I subsequent items will be charged a reduced fee and lumped together if
Serialization Master Data (SMD) Approval	[**]

Serialization Implementation Fee (One Time)	$ Amount	Comment
Successful Completion of Unit Testing or Execution of 10Q Addendum	[**]	similar process.
Process Validation (PV) Summary Report Approval	[**]
Total	[**]

Note: Upon receipt of executed SRD document and a complete scope of work, Sharp will commence planning of line availability and resources to support this activity.

Additional services in conjunction with serialized product(s). Applies to all products and sites serialized by Sharp.

Serialization Implementation Fee (One Time)	$ Amount	Comment
Establishment of Shipment Release Message	[**]	This service is an automated notification of LOT metadata and serial numbers upon shipment of finished goods from Sharp. This alleviates delays in receiving SNs and aids the downstream transmission of SN data.
Establishment of Decommissioned Serial Number Reporting	[**]	This service provides notification of decommissioned serial numbers along with commissioned serial number reporting, for ease of reconciliation.
Establishment of Real Time Aggregation Timestamp	[**]	This service arranges parent container commissioning time as distinct from aggregation time of children items to the parent container. Facilitates absorption of data into certain ERP/EPCIS system.

For Non-Product items and Serialization Fees, Sharp requires [**]% down and [**]% after completion of each Non-Product task / service.

PRICE INCLUDES

Labor, Sharp supplied components, pallet handling, line clearance including cleaning and batch change overs.

PRICE EXCLUDES

Bulk product, retain sample storage, analytical testing costs, and transportation.

SUPPLIED BY CUSTOMER

Safety Data Sheet, Melamine and TSE/BSE statement on the bulk product.

Bulk products to Packaging Site, accompanied with Certificate of Analysis and shipment list stating exact amount of bulk per container.

CLAUSE

Sharp Packaging Solutions will evaluate pricing on an annual basis and reserves the right to adapt the pricing per unit, due to inflation correction based on CPI-U

FINISHED PRODUCT DELIVERY TERMS

EX-WORKS Sharp Facility

PAYMENT TERMS

Net [**]

LEAD TIMES

Tooling [**] in advance of production (to be confirmed at project kick off) Receipt of commercial purchase order [**] in advance

VERSION CONTROL TRACKING

Version		Summary of Change		Issue Date		Account Executive
1		1 st issue		1/17/18		Jan LaPorta

If any additional information is required, please do not hesitate to contact me.

With kind regards,

Janice La Porta
Account Executive
Sharp Packaging Solutions

[**]

Nabriva Vial Labelling
Project #30545R0

To:	Nabriva Therapeutics

Attn:	Bob Unger

From:	Janice LaPorta

Subject:	Lefamulin Vial Labeling
Quotation Ref.	Sharp Estimate #30545R0 - Change in carton size and amount of inserts

Date	1/12/18; Updated 6/28/18
Expiry date	90 Days from Sent Date

Site	Allentown, PA

Dear Bob,

Thank you again for the opportunity to quote your vial labelling project. This quotation has been prepared to meet all of your requirements, with full cGMP compliance, supported by Sharp’s professional commitment to service.

PROJECT DESCRIPTION SUMMARY

1. Customer to supply bulk prefilled vials for specialty packaging

2. Sharp Packaging Solutions to provide full service packaging & serialization

3. Sharp Packaging Solutions to prepare finished packed goods ready for shipment

PRICELIST

Pricing is based on “unit of sale”, 6 vials per carton. See section below regarding what components are included in the price and supplied by Sharp.

Product	Price Per Unit		Lot Size		Yearly Volume
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]
Lefamulin 15ml Vials in carton (6 ct)	$	[**] per unit	[**	]	[**	]

PRICING ASSUMPTIONS:

In case other bulk specifications, primary/secondary packaging specifications, or supplier prices, differ as opposed to the costs included in our calculations, prices will be re-calculated for that specific SKU. In this case, a new pricelist will be provided for that SKU.

PACKAGING MATERIALS

Component	Specifications	Supplied By
15ml Vial prefilled with product	10mg Lefamulin	Customer
Insert	TBD	Sharp
Vial Label	Quote Sharp Design Group	Sharp
Divided Carton	Quote Sharp Design Group (Updated Drawings SD1856R1 and SD1857R1	Sharp

Component	Specifications	Supplied By
	attached)
Tertiary	Shipper, Shipper Label, Heat Treated Pallet, Shrink Wrap	Sharp

OBSOLESCENCE TERMS

DETAILED PACKAGING PROCESS DESCRIPTION:

Unlabelled vials will be loaded on the production line; label will be applied; carton to be set up; dividers inserted, 6 vials, 1 insert into carton; check weigh; print lot/exp and serialize carton; aggregate 4 cartons per shipper; aggregate shipper to pallet.

Non-Product Charges:

Item	$ Amount	Comment
Machine Tooling	[**]	Feed Screw for Labeler
Carton Die	[**]
Divider Die	[**]
Carton Prep & Plates for Printing	TBD
Literature Prep & Plates	TBD
Label die / prep. plates	TBD
Lot Charge, if required	TBD
Project Management	$[**] per month	Fee includes developing & maintaining project charter, project time line management, vendor(s) management, successful implementation of project, adhering to PMO governance, meeting management (Sharp, customer, vendor).
Packaging Design Services	See Separate Quote
Process Validation	$[**] Per executable document	Validation of batches billed for each executable document, based on discussions between Sharp and Customer’s QA teams.
Engineering Services
Weekend Overtime (If Needed)		$[] per shift on Saturdays, $[] per shift on Sundays
Bulk and Finished Goods Storage		Monthly charges to be applied for more than [**] before or after the packaging date.
Sample Reserve Program		[**]
Other QA Specific Fees (Retain Sample, Expedite Batch Record Review, etc.)

Serialization Implementation Fee (One Time)	$Amount	Comment
Serialization Requirements Document (SRD) Approval	[**]	This total fee is for the first SKU set up; additional SKU’s are as follows: - Same package format/PACS Line $[] - Same package format/New PACS Line $[] - New package format/New PACS Line $[**]
Serialization Master Data (SMD) Approval	[**]
Successful Completion of Unit Testing or Execution of 10Q Addendum	[**]
Total	[**]

Note: Upon receipt of executed SRD document and a complete scope of work, Sharp will commence planning of line availability and resources to support this activity.

Additional services in conjunction with serialized product(s). Applies to all products and sites serialized by Sharp.

Serialization Implementation Fee (One Time)	$ Amount	Comment
Establishment of Shipment Release Message	[**]	This service is an automated notification of LOT metadata and serial numbers upon shipment of finished goods from Sharp. This alleviates delays in receiving SNs and aids the downstream transmission of SN data.
Establishment of Decommissioned Serial Number Reporting	[**]	This service provides notification of decommissioned serial numbers along with commissioned serial number reporting, for ease of reconciliation.
Establishment of Real Time Aggregation Timestamp	[**]	This service arranges parent container commissioning time as distinct from aggregation time of children items to the parent container. Facilitates absorption of data into certain ERP/EPCIS system.

If project were awarded to Sharp, Sharp would require a Purchase Order (PO) for the Non-Product items to commence activities. If the project is cancelled after the project was awarded and activities already commenced, any remaining balance for work activities will be invoiced.

For Non-Product items and Serialization Fees, Sharp requires [**]% down and [**]% after completion of each Non-Product task / service.

PRICE INCLUDES

Labor, Sharp supplied components, pallet handling, line clearance including cleaning and batch change overs.

PRICE EXCLUDES

Bulk product, retain sample storage, analytical testing costs, and transport at ion.

SUPPLIED BY CUSTOMER

Safety Data Sheet, Melamine and TSE/BSE statement on the bulk product.

Bulk products to Packaging Site, accompanied with Certificate of Analysis and shipment list stating exact amount of bulk per container.

CLAUSE

Sharp Packaging Solutions will evaluate pricing on an annual basis and reserves the right to adapt the pricing per unit, due to inflation correction based on CPI-U.

FINISHED PRODUCT DELIVERY TERMS

EX-WORKS Sharp Facility

PAYMENT TERMS

Net [**]

LEAD TIMES

Tooling [**] in advance of production (to be confirmed at project kick off) Receipt of commercial purchase order [**] in advance

VERSION CONTROL TRACKING

Version		Summary of Change		Issue Date		Account Executive
1		1 st issue		6/28/18		Jan LaPorta

Our successful growth is due to servicing our customers with multiple products and clinical studies, and being part of their growth in providing effective patient healthcare. We sincerely hope to be seriously considered by you for this opportunity, and for future partnership opportunities.

If any additional information is required, please do not hesitate to contact us.

With kind regards,

Janice LaPorta
Account Executive
Sharp Packaging Solutions

Nabriva Citrate IV Solution
Project #30140R0-Revision 2

To:	Nabriva Therapeutics

Attn:	Bob Unger

From:	Account Executive

Subject:	Project Description
Quotation Ref.	*Sharp Estimate Design Number- Revision 2: 30140R1 8/6/18*

Date	1/12/18; Updated 8/6/18
Expiry date	90 Days from Sent Date

Site	Allentown, PA

Dear Bob,

Thank you again for the opportunity to quote your IV Bag labelling and cartoning. This quotation has been updated to reflect the following:

· IV Bag labelling not required

· (1) Package Insert to be placed in Carton

· Lot size revised from [**] to [**] cartons

PROJECT DESCRIPTION SUMMARY

1. Customer to supply unlabelled IV Bags for specialty packaging

2. Sharp Packaging Solutions to provide full service packaging

3. Sharp Packaging Solutions to prepare finished packed goods ready for shipment

PRICELIST

Pricing is based on “unit of sale”, 6 IV bags per carton. See section below regarding what components are included in the price and supplied by Sharp.

Product	Price Per Unit		Lot Size		Yearly Volume
Citrate IV Solution 250ml (6 ct)	$	[**] per unit	[**	]	[**	]
Citrate IV Solution 250ml (6 ct)	$	[**] per unit	[**	]	[**	]
Citrate IV Solution 250ml (6 ct)	$	[**] per unit	[**	]	[**	]

PRICING ASSUMPTIONS:

PACKAGING MATERIALS

Component	Specifications	Supplied By
IV Bag	250ml Diluent IV Bag	Customer
Secondary Bag Label	Quote Sharp Design Group	Sharp
Package Insert	TBD	Sharp

Component	Specifications	Supplied By
Carton for Six IV Bags	Quote Sharp Design Group (Drawing Attached)	Sharp
Tertiary	Shipper, Shipper Label, Heat Treated Pallet, Shrink Wrap	Sharp

OBSOLESCENCE TERMS

DETAILED PACKAGING PROCESS DESCRIPTION:

Load unlabelled secondary IV bag to line; Set Up carton; Place six labelled bags and one inserts into carton; check weigh; print lot/exp and 20 barcode on carton; load four cartons in shipper; label shipper; Palletize.

Non-Product Charges:

Item	$ Amount	Comment
Carton Die, Prep & Plates	$[**]
PI Prep & Plates	$[**]
Project Management	$[**] per month	Fee includes developing & maintaining project charter, project time line management, vendor(s) management, successful implementation of project, adhering to PMO governance, meeting management (Sharp, customer, vendor).
Packaging Design Services	See Separate Quote
Process Validation	$[**] Per executable document	Validation of batches billed for each executable document, based on discussions between Sharp and Customer’s QA teams.
Engineering Services
Weekend Overtime (If Needed)		$[] per shift on Saturdays, $[] per shift on Sundays
Bulk and Finished Goods Storage		Monthly charges to be applied for more than [**] before or after the packaging date.
Sample Reserve Program		[**]
Other QA Specific Fees (Retain Sample, Expedite Batch Record Review, etc.)

Serialization Implementation Fee (One Time)	$ Amount	Comment
Serialization Requirements Document (SRD) Approval	[**]	These charges apply only to the first item requiring serialization. Ali subsequent items will be charged a reduced fee and lumped together if similar process.
Serialization Master Data (SMO) Approval	[**]
Successful Completion of Unit Testing or Execution of 10Q Addendum	[**]
Process Validation (PV) Summary Report Approval	[**]
Total	[**]

Note: Upon receipt of executed SRD document and a complete scope of work, Sharp will commence planning of line availability and resources to support this activity.

Additional services in conjunction with serialized product(s). Applies to all products and sites serialized by Sharp.

Serialization Implementation Fee (One Time)	$ Amount	Comment
Establishment of Shipment Release Message	[**]	This service is an automated notification of LOT metadata and serial numbers upon shipment of finished goods from Sharp. This alleviates delays in receiving SNs and aids the downstream transmission of SN data.
Establishment of Decommissioned Serial Number Reporting	[**]	This service provides notification of decommissioned serial numbers along with commissioned serial number reporting, for ease of reconciliation.
Establishment of Real Time Aggregation Timestamp	[**]	This service arranges parent container commissioning time as distinct from aggregation time of children items to the parent container. Facilitates absorption of data into certain ERP/EPCIS system.

For Non-Product items and Serialization Fees, Sharp requires [**]% down and [**]% after completion of each Non-Product task / service.

PRICE INCLUDES

Labor, Sharp supplied components, pallet handling, line clearance including cleaning and batch change avers.

PRICE EXCLUDES

Bulk product, retain sample storage, analytical testing costs, and transportation.

SUPPLIED BY CUSTOMER

Safety Data Sheet, Melamine and TSE/BSE statement on the bulk product.

Bulk products to Packaging Site, accompanied with Certificate of Analysis and shipment list stating exact amount of bulk per container.

CLAUSE

Sharp Packaging Solutions will evaluate pricing on an annual basis and reserves the right to adapt the pricing per unit, due to inflation correction based on CPI-U.

FINISHED PRODUCT DELIVERY TERMS

EX-WORKS Sharp Facility

PAYMENT TERMS

Net [**]

LEAD TIMES

Tooling [**] in advance of production (to be confirmed at project kick off)
Receipt of commercial purchase order [**] in advance

VERSION CONTROL TRACKING

Version	Summary of Change	Issue Date	Account Executive
1	1st issue	1/12/18	J. LaPorta
2	Lot Size to [**] cartons, no labelling & (1) PI added to the Carton	8/6/18	J. LaPorta

Our successful growth is due to servicing our customers with multiple products and clinical studies, and being part of their growth in providing effective patient healthcare. We sincerely hope to be seriously considered by you for this opportunity, and for future partnership opportunities.

If any additional information is required, please do not hesitate to contact us.

With kind regards,

Janice LaPorta
Account Executive
Sharp Packaging Solutions

[**]

Nabriva Same Development - Version 3

To	Nabriva

Attn:	Bob Urban

From:	Jan LaPorta

Subject:	Nabriva Sample Development - *Version 3*

Quotation Ref.

Date	1/11/18; 7/12/18; Updated 7/13/2018

Expiry date	90 Days from Sent Date

Site	Sharp Global Design Center

Dear Bob,

In response to your request, it is our pleasure to send you our packaging design and development proposal. Changes to this proposal are noted in the Version Tracking located on page 3.

This quotation has been prepared to meet all of your requirements, supported by Sharp’s professional commitment to service.

PROJECT DESCRIPTION SUMMARY

Sharp will draw on the experience of our graphic, structural and packaging design services expertise to translate your conceptual needs into a practical design presented via samples that will meet pharmaceutical industry standards and be appropriate for commercial packaging.

Sharp Design Services will deliver the fallowing services:

· Mechanical artwork applied to structures of label, carton and multi-carton; PDF

· [**] Samples of each component as outlined below.

· Material Specifications: label, cartons

· Structural Drawings

· Serialization placement (for 2D barcode)

· Recommended Pallet Configurations and Shipper Label dimensions

Outlined Deliverables:

Oral Tablets: 30-count bottle

· Bottle label artwork - color, actual size, serialization placement, printed on vinyl adhesive - [**] samples

· Shipper to hold 12 bottles - [**] samples

Oral Tablets: 2-count blister for free samples

· Blister back artwork - black and white, actual size, printed on vinyl adhesive -[**] samples

· Blister carton - [**] samples, color printed, actual size

· Shipper to hold 24 blister cartons - [**] samples

Oral Tablets: 10-count blister for sale

· Blister back artwork - black and white, actual size, printed on vinyl adhesive -[**] samples

· Blister carton - [**] samples, color printed, actual size, serialization placement

· Shipper to hold 24 blister cartons - [**] samples

IV Vials: 6 single-dose vials (15 mi)

· Vial label artwork- color, actual size, printed on vinyl adhesive - [**] samples

· Carton for 6 vials - [**] samples, color printed, actual size, serialization placement

· Shipper to hold 4 cartons - [**] samples

IV Diluent Bags: 6 single-use bags (250 mi)

· Bag artwork - black and white, actual size, printed on vinyl adhesive -[**] samples

· Carton for 6 bags - [**] samples, color printed, actual size, serialization placement

· Shipper to hold 4 cartons - [**] samples

Deliverable Date: Prototype samples delivered [**] after receipt of final artwork approvals and customer PO.

PRICE
$[**]

PRICE INCLUDES

· Design services for artwork formatting to customer product specifications

· Up to [**] rounds of artwork revisions for each component.

· Printing set-up, inks, operations & materials

· Digital UV printing, CAD cut, hand assembled & gluing

· Expedited service

· Shipping and Handling

PAYMENT TERMS

Net [**].

If project is awarded to Sharp, Sharp would need a Purchase Order (PO) to commence activities. If the project is cancelled after the project was awarded and activities already commenced, any remaining balance for work activities will be invoiced.

VERSION TRACKING

Version	Summary of Change	Issue Date
1	1st issue	1/9/2017
2	Removed sample and artwork development of 2 -count blister. Adjusted price accordingly.	7/12/2018
3	Added back 2-count Blister design and deliverable timeline	7/13/2018

Our successful growth is due to servicing our customers with multiple products and clinical studies, and being part of their growth in providing effective patient healthcare. We sincerely hope to be seriously considered by you for this opportunity, and for future partnership opportunities.

If any additional information is required, please don’ t hesitate to contact us.

With Kind Regards,

Janice LaPorta
Account Executive

7541 Keebler Way
Allentown, PA 18106

Nabriva Non-Product Quote Clarification
Lefamulin Project #30136R1, #30138R0, #30140R0 & #30184R0 — Revision 2

To:	Mr. Bob Unger, Nabriva Therapeutics
From:	Janice LaPorta
Subject:	Lefamulin Bottles, Blisters, Vials and IV Bags
Quotation Ref:	*#30136R1, #30138R0, #30140R0 and #30184R0 — Version 2*
Date	1/30/2018; Updated 7/12/18

Dear Bob,

Thank you again for your time yesterday. Below please find an updated spreadsheet which includes all non-product costs and timing associated with the launch of Lefamulin.

Changes made:

· Updated the Bottle Tooling to include label & insert die - $[**]

· Updated the Blister Tooling to include insert die - $[**]

· Updated the Vial Kitting Tooling to include label & insert die - $[**]

· Updated the IV Bag Tooling to include a label & insert die - $[**]

· Increased timing for Project Management from [**] to [**].

· Increased Validation per sku to [**] executable documents

Non-Product Costs	Amount		Qty		Total		Est. Timing*
[]**
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**
[]**
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]
[]**	[**	]	[**	]	[**	]	[**	]

Non-Product Costs	Amount		Qty		Total			Est. Timing*
[]**	[**	]	[**	]	[**		]	[**	]
[]**	[**	]	[**	]	[**		]	[**	]
[]**	[**	]	[**	]	[**		]	[**	]

GRAND TOTAL					$	[**	]

The additional tooling costs were noted as TBD in the first proposal.

If Nabriva awards this project to Sharp, Sharp would require a Purchase Order for the full cost of the initial serialization work ($[**]) and the first monthly charge for Project Management ($[**]). Once these PO’s have been received, activities on our end will begin. The balance will be due upon completion of the Non-Product task/service. If the project is cancelled after award and activities already commenced, any remaining balance for work activities will be invoiced.

QUOTE EXPIRY

90 Days from Sent Date

PRODUCTION LOCATION

Allentown, PA

PAYMENT TERMS

Net [**]

LEAD TIMES

Tooling [**] in advance of production (will be confirmed at project kick off)
Receipt of commercial purchase order [**] in advance

VERSION CONTROL TRACKING

Version	Summary of Change	Issue Date	Account Executive
1	1st issue	1/30/18	J. LaPorta
2	Updated pricing and timing; Insert spreadsheet	7/12/18	J. LaPorta

If any additional information is required, please do not hesitate to contact us.

With kind regards,

Janice LaPorta
Account Executive

Exhibit 10.13

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made as of July 24, 2018 by and between Nabriva Therapeutics US, Inc. (the “Company”), and Steven Gelone (the “Executive”) (together, the “Parties”).

RECITALS

WHEREAS, the Company desires to employ the Executive as its Chief Operating Officer, as Chief Operating Officer of its group of companies and for Executive to serve as President and Chief Operating Officer of its parent company, Nabriva Therapeutics plc (the “Parent”); and

WHEREAS, the Executive has agreed to accept such employment on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the Parties herein contained, the Parties hereto agree as follows:

1. Agreement. This Agreement shall be effective as of the date first set forth above (the “Effective Date”). Following the Effective Date, the Executive shall continue to be an employee of the Company until such employment relationship is terminated in accordance with Section 7 hereof (the “Term of Employment”).

2. Position. During the Term of Employment, the Executive shall serve as the Chief Operating Officer of the Company and as President and Chief Operating Officer of the Parent, working out of the Company’s office in King of Prussia, Pennsylvania, and travelling as reasonably required by the Executive’s job duties.

3. Scope of Employment. During the Term of Employment, the Executive shall be responsible for the performance of those duties consistent with the Executive’s position as Chief Operating Officer of the Company and President and Chief Operating Officer of the Parent. The Executive shall report to the Chief Executive Officer of the Company and shall be accountable to the board of directors of the Parent (the “Broad”) and shall perform and discharge faithfully, diligently, and to the best of the Executive’s ability, the Executive’s duties and responsibilities hereunder. The Executive shall devote substantially all of the Executive’s business time, loyalty, attention and efforts to the business and affairs of the Company, the Parent, and their affiliates. Membership on boards of directors of any additional companies will be permitted only with the express approval of the Board. Notwithstanding the previous sentence, the Executive may engage in charitable activities and serve on a charitable board with the approval of the Chief Executive Officer. The Executive agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and the Parent and any changes therein that may be adopted from time to time by the Company and/or the Parent.

4. Compensation. As full compensation for all services rendered by the Executive to the Company and the Parent, and any affiliate thereof, during the Term of Employment, the Company will provide to the Executive the following:

(a) Base Salary. Effective as of the Effective Date, the Executive shall receive a base salary at the annualized rate of $450,000 (the “Base Salary”), paid in equal bi-monthly installments in accordance with the Company’s regularly established payroll procedure. Such Base Salary shall be reviewed by the Company’s compensation committee and the Board in the first quarter of each fiscal year; any adjustment to the Executive’s Base Salary shall be retroactively effective as of the first day of such fiscal year.

(b) Annual Discretionary Bonus. Following the end of each fiscal year and subject to the approval of the Board, the Executive may be eligible to receive a discretionary annual retention and performance bonus of 45% of the Executive’s then current Base Salary (the “Target Bonus”), based on the Executive’s performance and the performance of the Company and the Parent during the applicable fiscal year, as determined by the Board in its sole discretion. All annual bonuses, if any, will be payable no later than March 15 of the year following the year in which they are earned. The Executive must be employed on the date of payment in order to be eligible for any annual bonus, except as specifically set forth below. Any bonus determined by the Board to be payable to the Executive for 2018 shall be prorated to reflect the Executive’s increased Base Salary and Target Bonus percentage as of the Effective Date.

(i) on July 25, 2018, an option (the “Initial Option”) to purchase 77,500 ordinary shares, nominal value $0.001 per share, of Parent (each an “Ordinary Share”), such Initial Option to (1) have an exercise price per share equal to the closing price per share of the Ordinary Shares on the Nasdaq Global Select Market on the date of grant, (2) vest and become exercisable, subject to the Executive’s continued service on each applicable vesting date, at a rate of 25% of the total shares underlying the Option on July 24, 2019 and, following that, as to an additional 2.0833% of the total shares underlying the grant on a monthly basis in arrears, and (3) be subject to the terms and conditions of the Parent’s 2017 Share Incentive Plan, as amended from time to time (the “Plan”) and a share option agreement between the Executive and the Parent;

(ii) subject to approval by the shareholders of the Parent of a proposal to amend the Plan at the Annual General Meeting of the Parent scheduled for August 1, 2018 (the “AGM”), on the first business day following the AGM, an option (the “Additional Option”) to purchase 7,500 Ordinary Shares, such Additional Option to (1) have an exercise price per share equal to the closing price per share of the Ordinary Shares on the Nasdaq Global Select Market on the date of grant, (2) vest and become exercisable, subject to the Executive’s continued service on each applicable vesting date, at a rate of 25% of the total shares underlying the Option on July 24, 2019 and, following that, as to an additional 2.0833% of the total shares underlying the grant on a monthly basis in arrears, and (3) be subject to the terms and conditions of the Plan and a share option agreement between the Executive and the Parent; and

(iii) subject to approval by the shareholders of the Parent of a proposal to amend the Plan at the AGM, on the first business day following the AGM, 32,000 performance-based restricted share units, which PRSUs shall (1) entitle the Executive to receive one Ordinary Share for each PRSU that vests, (2) be subject to vesting such that all of the PRSUs shall be earned upon Board certification of the receipt of U.S. Food and Drug Administration (“FDA”) approval of a new drug application for the Company’s lefamulin product candidate, provided that such FDA approval is received by January 31, 2020 and provided further that 50% of the PRSUs so earned shall vest upon the achievement of the relevant performance metric and 50% of the PRSUs so earned shall vest on the first anniversary of such achievement, in each case subject to the Executive’s continued employment on the applicable vesting date, and (3) be subject to the terms and conditions of the Plan and a performance-based restricted share unit agreement between the Executive and the Parent.

The Executive will be eligible to receive additional equity awards, if any, at such times and on such terms and conditions as the Board shall, in its sole discretion, determine.

(d) Vacation. The Executive shall be eligible for up to 20 days of paid vacation per calendar year. The number of vacation days for which the Executive is eligible shall accrue at the rate of 1.67 days per month that the Executive is employed during such calendar year. At the end of a calendar year, the Executive may carry over to the next year any accrued but unused vacation days, but any such carried over days will be forfeited if not used by six (6) months following the end of the calendar year.

(e) Benefits. The Executive may participate in any and all benefit programs that the Company establishes and makes available to its senior executive employees from time to time, provided that the Executive is eligible under (and subject to all provisions of) the plan documents governing those programs. Benefits are subject to change at any time in the Company’s sole discretion.

(f) Withholdings. All compensation payable to the Executive shall be subject to applicable taxes and withholdings.

5. Expenses. The Executive shall be entitled to reimbursement by the Company for all reasonable business and travel expenses incurred by the Executive on the Company’s behalf during the course of the Executive’s employment, upon the presentation by the Executive of documentation itemizing such expenditures and attaching all supporting vouchers and receipts. Reimbursement will be made no later than 30 calendar days after the expense is substantiated (which must occur within 30 calendar days after the expense is incurred). The expenses eligible for reimbursement under this provision may not affect the amount of such expenses eligible for reimbursement in any other taxable year, and the right to reimbursement is not subject to liquidation or exchange for another benefit.

6. Restrictive Covenants Agreement. The Executive hereby acknowledges that the Proprietary Rights, Non-Disclosure and Developments Agreement previously executed by the Executive remains in full force and effect.

7. Employment Termination. This Agreement and the employment of the Executive shall terminate upon the occurrence of any of the following:

(a) Upon the death or “Disability” of the Executive. As used in this Agreement, the term “Disability” shall mean a physical or mental illness or disability that prevents the Executive from performing the duties of the Executive’s position for a period of more than any three consecutive months or for periods aggregating more than twenty-six weeks. The Company shall determine in good faith and in its sole discretion whether the Executive is unable to perform the services provided for herein.

(b) At the election of the Company, with or without “Cause” (as defined below), immediately upon written notice by the Company to the Executive. As used in this Agreement, “Cause” shall mean a finding by the Board that the Executive:

(i) failed to perform (other than by reason of physical or mental illness or disability for a period of less than three consecutive months or in aggregate less than twenty-six weeks) the Executive’s assigned duties diligently or effectively or was negligent in the performance of these duties;

(ii) materially breached this Agreement;

(iii) materially breached the Executive’s Proprietary Rights, Non-Disclosure and Developments Agreement, or any similar agreement between the Executive and the Company;

(iv) engaged in willful misconduct, fraud, or embezzlement;

(v) engaged in any conduct that is materially harmful to the business, interests or reputation of the Company, except if the Executive had a reasonable and good faith belief that such conduct was in the best interest of the Company; or

(vi) was convicted of, or pleaded guilty or nolo contendere to a crime involving moral turpitude or any felony.

To the extent any of the above grounds, other than the grounds set forth in Section 7(b)(iv) and 7(b)(vi), is capable of being cured, the Company shall provide Executive with written notice of the ground, and thirty (30) days within which to cure such ground.

(c) At the election of the Executive, with or without “Good Reason” (as defined below), immediately upon written notice by the Executive to the Company (subject, if it is with Good Reason, to the timing provisions set forth in the definition of Good Reason). As used in this Agreement, “Good Reason” shall mean:

(i) the Company’s failure to pay or provide in a timely manner any material amounts owed to Executive in accordance with this Agreement;

(ii) a material diminution in the nature or scope of Executive’s duties, responsibilities, or authority;

(iii) the Company’s requiring Executive to relocate Executive’s primary office more than fifty (50) miles from King of Prussia, Pennsylvania; or

(iv) any material breach of this Agreement by the Company not otherwise covered by this paragraph;

provided, however, that in each case, the Company shall have a period of not less than thirty (30) days to cure any act constituting Good Reason following Executive’s delivery to the Company of written notice within sixty (60) days of the action or omission constituting Good Reason.

8. Effect of Termination .

(a) All Terminations Other Than by the Company Without Cause or by the Executive With Good Reason. If the Executive’s employment is terminated under any circumstances other than a Qualifying Termination (as defined below) (including a voluntary termination by the Executive without Good Reason pursuant to Section 7(c), a termination by the Company for Cause pursuant to Section 7(b) or due to the Executive’s death or Disability pursuant to Section 7(a)), the Company’s obligations under this Agreement shall immediately cease and the Executive shall only be entitled to receive (i) the Base Salary that has accrued and to which the Executive is entitled as of the effective date of such termination and to the extent consistent with general Company policy, accrued but unused paid time off through and including the effective date of such termination, to be paid in accordance with the Company’s established payroll procedure and applicable law but no later than the next regularly scheduled pay period, (ii) unreimbursed business expenses for which expenses the Executive has timely submitted appropriate documentation in accordance with Section 5 hereof, and (iii) any amounts or benefits to which the Executive is then entitled under the terms of the benefit plans then-sponsored by the Company in accordance with their terms (and not accelerated to the extent acceleration does not satisfy Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code) (the payments described in this sentence, the “Accrued Obligations”). The Executive shall not be entitled to any other compensation or consideration that the Executive may have received had the Executive’s Term of Employment not ceased, except that if Executive’s employment terminated because of his death or Disability, he or his estate, as the case may be, shall, subject to Section 8(d) hereof, be paid on the later of the Payment Date and the date on which annual bonuses are paid to all other employees, any earned but unpaid annual bonus from any previously completed calendar year notwithstanding the requirement that the individual be employed on the payment date of such annual bonus (such payment, the “Earned but Unpaid Bonus”).

(b) Termination by the Company Without Cause or by the Executive With Good Reason Prior to or More Than Twelve Months Following a Change in Control . If the Executive’s employment is terminated by the Company without Cause pursuant to Section 7(b) or by the Executive with Good Reason pursuant to Section 7(c) (in either case, a “Qualifying Termination”) prior to or more than twelve (12) months following a Change in Control (as defined below), the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d), the Company shall: (i) continue to pay to the Executive, in accordance with the Company’s regularly established payroll procedure, the Executive’s Base Salary for a period of fifteen (15) months; (ii) provided the Executive is eligible for and timely elects to continue receiving group medical insurance pursuant to the

“COBRA” law, continue to pay (but in no event longer than fifteen (15) months following the Executive’s termination date) the share of the premium for health coverage that is paid by the Company for active and similarly-situated employees who receive the same type of coverage, unless the Company’s provision of such COBRA payments will violate the nondiscrimination requirements of applicable law, in which case this benefit will not apply; (iii) pay the Executive any earned but unpaid annual bonus from a previously completed calendar year on the later of the Payment Date and the date on which annual bonuses are paid to all other employees, notwithstanding the requirement that the individual be employed on the payment date of such annual bonus; and (iv) pay the Executive a prorated annual bonus for the year in which the Qualifying Termination occurs, calculated by multiplying 100% of the Target Bonus by a fraction, the numerator of which is equal to the number of days in the calendar year during which Executive was employed and the denominator of which equals 365 (the “Pro-Rated Bonus Payment”), which Pro-Rated Bonus Payment shall be paid in a single lump-sum on the Payment Date (collectively, the “Severance Benefits”).

(c) Termination by the Company Without Cause or by the Executive With Good Reason Within Twelve Months Following a Change in Control . If a Qualifying Termination occurs within twelve (12) months following a Change in Control, then the Executive shall be entitled to the Accrued Obligations. In addition, and subject to the conditions of Section 8(d): (i) the Executive will be eligible to receive the Severance Benefits as set forth in Section 8(b) other than the Pro-Rated Bonus Payment, subject to the same terms, conditions and limitations described therein, (ii) in lieu of the Pro-Rated Bonus Payment, the Executive will be eligible to receive a lump sum payment equal to 100% of the Executive’s Target Bonus for the year in which the Qualifying Termination occurs without regard to whether the performance goals applicable to such Target Bonus had been established or satisfied at the date of termination of employment, payable in a lump sum on the Payment Date, and (iii) the vesting of 100% of the Executive’s then-unvested equity awards shall be accelerated, such that all then unvested equity awards vest and become fully exercisable or non-forfeitable as of the termination date (collectively, the “Change in Control Severance Benefits”).

(d) Release. As a condition of the Executive’s receipt of the Earned but Unpaid Bonus, the Severance Benefits or the Change in Control Severance Benefits, as applicable, the Executive or his estate, as applicable, must execute and deliver to the Company a severance and release of claims agreement in the form to be provided by the Company (the “Severance Agreement”), which Severance Agreement must become irrevocable within 60 days following the date of the Executive’s termination of employment (or such shorter period as may be directed by the Company). The Earned but Unpaid Bonus, the Severance Benefits or the Change in Control Severance Benefits, as applicable, will be paid or commence to be paid in the first regular payroll beginning after the Severance Agreement becomes effective, provided that if the foregoing 60 day period would end in a calendar year subsequent to the year in which the Executive’s employment ends, the Earned but Unpaid Bonus, the Severance Benefits or Change in Control Severance Benefits, as applicable, will not be paid or begin to be paid before the first payroll of the subsequent calendar year (the date the Earned but Unpaid Bonus, the Severance Benefits or Change in Control Severance Benefits, as applicable, commence pursuant to this sentence, the “Payment Date”). The Executive must continue to comply with the Proprietary Rights, Non-Disclosure and Developments Agreement in order to be eligible to continue receiving the Severance Benefits or Change in Control Severance Benefits, as applicable.

(e) Change in Control Definition. For purposes of this Agreement, Change in Control shall mean: (i) an exclusive license of or the sale, the lease or other disposal of all or substantially all of the assets of the Company; (ii) a sale or other disposal (for the avoidance of doubt, the term disposal shall not include a pledge) in any transaction or series of transactions to which the Company is a party of 50% or more of the voting power of the Company, other than any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Company or indebtedness of the Company is cancelled or converted, or a combination thereof; (iii) a merger or consolidation of the Company with or into any third party, other than any merger or consolidation in which the shares of the Company immediately preceding such merger or consolidation continue to represent a majority of the voting power of the surviving entity immediately after the closing of such merger or consolidation; and (iv) a liquidation, winding up or any other form of dissolution of the Company. For purposes of this Agreement, a Change in Control shall also mean the occurrence of any of the transactions described in the immediately preceding sentence in respect of the Parent.

9. Modified Section 280G Cutback. Notwithstanding any other provision of this Agreement, except as set forth in Section 9(b), in the event that the Company undergoes a “Change in Ownership or Control” (as defined below), the following provisions shall apply:

(a) The Company shall not be obligated to provide to the Executive any portion of any “Contingent Compensation Payments” (as defined below) that the Executive would otherwise be entitled to receive to the extent necessary to eliminate any “excess parachute payments” (as defined in Section 280G(b)(l) of the Code) for the Executive. For purposes of this Section 9, the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Payments” and the aggregate amount (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-30 or any successor provision) of the Contingent Compensation Payments so eliminated shall be referred to as the “Eliminated Amount.”

(b) Notwithstanding the provisions of Section 9(a), no such reduction in Contingent Compensation Payments shall be made if (1) the Eliminated Amount (computed without regard to this sentence) exceeds (2) 100% of the aggregate present value (determined in accordance with Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or any successor provisions) of the amount of any additional taxes that would be incurred by the Executive if the Eliminated Payments (determined without regard to this sentence) were paid to the Executive (including state and federal income taxes on the Eliminated Payments, the excise tax imposed by Section 4999 of the Code payable with respect to all of the Contingent Compensation Payments in excess of the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code), and any withholding taxes). The override of such reduction in Contingent Compensation Payments pursuant to this Section 9(b) shall be referred to as a “Section 9(b) Override.” For purpose of this paragraph, if any federal or state income taxes would be attributable to the receipt of any Eliminated Payment, the amount of such taxes shall be computed by multiplying the amount of the Eliminated Payment by the maximum combined federal and state income tax rate provided by law.

(i) “Change in Ownership or Control” shall mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company determined in accordance with Section 280G(b)(2) of the Code.

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in the nature of compensation that is made or made available (under this Agreement or otherwise) to or for the benefit of a “disqualified individual” (as defined in Section 280G(c) of the Code) and that is contingent (within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or Control of the Company.

(d) Any payments or other benefits otherwise due to the Executive following a Change in Ownership or Control that could reasonably be characterized (as determined by the Company) as Contingent Compensation Payments (the “Potential Payments”) shall not be made until the dates provided for in this Section 9(d). Within thirty (30) days after each date on which the Executive first become entitled to receive (whether or not then due) a Contingent Compensation Payment relating to such Change in Ownership or Control, the Company shall determine and notify the Executive (with reasonable detail regarding the basis for its determinations) (1) which Potential Payments constitute Contingent Compensation Payments, (2) the Eliminated Amount and (3) whether the Section 9(b) Override is applicable. Within thirty (30) days after delivery of such notice to the Executive, the Executive shall deliver a response to the Company (the “Executive Response”) stating either (A) that the Executive agrees with the Company’s determination pursuant to the preceding sentence or (B) that the Executive disagrees with such determination, in which case the Executive shall set forth (x) which Potential Payments should be characterized as Contingent Compensation Payments, (y) the Eliminated Amount, and (z) whether the Section 9(b) Override is applicable. In the event that the Executive fails to deliver an Executive Response on or before the required date, the Company’s initial determination shall be final. If the Executive states in the Executive Response that the Executive agrees with the Company’s determination, the Company shall make the Potential Payments to the Executive within three (3) business days following delivery to the Company of the Executive Response (except for any Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). If the Executive states in the Executive Response that the Executive disagree with the Company’s determination, then, for a period of sixty (60) days following delivery of the Executive Response, the Executive and the Company shall use good faith efforts to resolve such dispute. If such dispute is not resolved within such 60-day period, such dispute shall be settled exclusively by arbitration in King of Prussia, Pennsylvania, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The Company shall, within three (3) business days following delivery to the Company of the Executive Response, make to the Executive those Potential Payments as to which there is no dispute between the Company and the Executive regarding whether they should be made (except for any such Potential Payments which are not due to be made until after such date, which Potential Payments shall be made on the date on which they are due). The balance of the Potential Payments shall be made within three (3) business days following the resolution of such dispute.

(e) The Contingent Compensation Payments to be treated as Eliminated Payments shall be determined by the Company by determining the “Contingent Compensation Payment

Ratio” (as defined below) for each Contingent Compensation Payment and then reducing the Contingent Compensation Payments in order beginning with the Contingent Compensation Payment with the highest Contingent Compensation Payment Ratio. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio, such Contingent Compensation Payment shall be reduced based on the time of payment of such Contingent Compensation Payments with amounts having later payment dates being reduced first. For Contingent Compensation Payments with the same Contingent Compensation Payment Ratio and the same time of payment, such Contingent Compensation Payments shall be reduced on a pro rata basis (but not below zero) prior to reducing Contingent Compensation Payment with a lower Contingent Compensation Payment Ratio. The term “Contingent Compensation Payment Ratio” shall mean a fraction the numerator of which is the value of the applicable Contingent Compensation Payment that must be taken into account by the Executive for purposes of Section 4999(a) of the Code, and the denominator of which is the actual amount to be received by the Executive in respect of the applicable Contingent Compensation Payment. For example, in the case of an equity grant that is treated as contingent on the Change in Ownership or Control because the time at which the payment is made or the payment vests is accelerated, the denominator shall be determined by reference to the fair market value of the equity at the acceleration date, and not in accordance with the methodology for determining the value of accelerated payments set forth in Treasury Regulation Section 1.280G-1 Q/A-24(b) or (c)).

(f) The provisions of this Section 9 are intended to apply to any and all payments or benefits available to the Executive under this Agreement or any other agreement or plan under which the Executive receives Contingent Compensation Payments.

10. Absence of Restrictions. The Executive represents and warrants that the Executive is not bound by any employment contracts, restrictive covenants or other restrictions that prevent the Executive from entering into employment with, or carrying out the Executive’s responsibilities for, the Company, or which are in any way inconsistent with any of the terms of this Agreement.

11. Notice. Any notice delivered under this Agreement shall be deemed duly delivered three (3) business days after it is sent by registered or certified mail, return receipt requested, postage prepaid, one (1) business day after it is sent for next-business day delivery via a reputable nationwide overnight courier service, or immediately upon hand delivery, in each case to the address of the recipient set forth below.

To Executive:

At the address set forth in the Executive’s personnel file

To Company:

Nabriva Therapeutics US, Inc.
1000 Continental Drive, Suite 600
King of Prussia, PA 19406 USA
Attention: Theodore R. Schroeder

Either Party may change the address to which notices are to be delivered by giving notice of such change to the other Party in the manner set forth in this Section 11.

12. Applicable Law; Jury Trial Waiver. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania (without reference to the conflict of laws provisions thereof). Any action, suit or other legal proceeding arising under or relating to any provision of this Agreement shall be commenced only in a court of the Commonwealth of Pennsylvania (or, if appropriate, a federal court located within the Commonwealth of Pennsylvania), and the Company and the Executive each consents to the jurisdiction of such a court. The Company and the Executive each hereby irrevocably waives any right to a trial by jury in any action, suit or other legal proceeding arising under or relating to any provision of this Agreement.

13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both Parties and their respective successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business; provided, however, that the obligations of the Executive are personal and shall not be assigned by the Executive.

14. Effect of Section 409A of the Code .

(a) Six Month Delay. If and to the extent any portion of any payment, compensation or other benefit provided to the Executive in connection with the Executive’s employment termination is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Executive is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, as determined by the Company in accordance with its procedures, by which determination Executive hereby agrees that the Executive is bound, such portion of the payment, compensation or other benefit shall not be paid before the earlier of (i) the expiration of the six month period measured from the date of the Executive’s “separation from service” (as determined under Section 409A of the Code) and (ii) the tenth day following the date of the Executive’s death following such separation from service (the “New Payment Date”). The aggregate of any payments that otherwise would have been paid to the Executive during the period between the date of separation from service and the New Payment Date shall be paid to the Executive in a lump sum in the first payroll period beginning after such New Payment Date, and any remaining payments will be paid on their original schedule.

(b) General 409A Principles. For purposes of this Agreement, a termination of employment will mean a “separation from service” as defined in Section 409A of the Code, each amount to be paid or benefit to be provided will be construed as a separate identified payment for purposes of Section 409A of the Code, and any payments that are due within the “short term deferral period” as defined in Section 409A of the Code or are paid in a manner covered by Treas. Reg. Section 1.409A-1(b)(9)(iii) will not be treated as deferred compensation unless applicable law requires otherwise. Neither the Company nor the Executive will have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code. This Agreement is intended to comply with the provisions of Section 409A of the Code and this Agreement shall, to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement will have the meanings

given such terms under Section 409A of the Code if and to the extent required to comply with Section 409A of the Code. In any event, the Company makes no representations or warranty and will have no liability to the Executive or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code but not to satisfy the conditions of that section.

15. Acknowledgment. The Executive states and represents that the Executive has had an opportunity to fully discuss and review the terms of this Agreement with an attorney. The Executive further states and represents that the Executive has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs the Executive’s name of the Executive’s own free act.

16. No Oral Modification, Waiver, Cancellation or Discharge. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar to or waiver of any right on any other occasion.

17. Captions and Pronouns. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa.

18. Interpretation. The Parties agree that this Agreement will be construed without regard to any presumption or rule requiring construction or interpretation against the drafting Party. References in this Agreement to “include” or “including” should be read as though they said “without limitation” or equivalent forms.

19. Severability. Each provision of this Agreement must be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. Moreover, if a court of competent jurisdiction determines any of the provisions contained in this Agreement to be unenforceable because the provision is excessively broad in scope, whether as to duration, activity, geographic application, subject or otherwise, it will be construed, by limiting or reducing it to the extent legally permitted, so as to be enforceable to the extent compatible with then applicable law to achieve the intent of the Parties.

20. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including, without limitation, the Amended and Restated Employment Agreement dated May 26, 2016, the Employment Agreement dated December 1, 2014 and Offer Letter dated October 7, 2014.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year set forth above.

NABRIVA THERAPEUTICS US, INC.		EXECUTIVE:

By:	/s/ Theodore R. Schroeder	/s/ Steven Gelone

Name: Theodore R. Schroeder		Steven Gelone

Title: Chief Executive Officer

EXHIBIT 31.1

CERTIFICATIONS

I, Theodore Schroeder, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nabriva Therapeutics plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Theodore Schroeder

Theodore Schroeder
Chief Executive Officer
(Principal Executive Officer)

Dated: November 6, 2018

EXHIBIT 31.2

CERTIFICATIONS

I, Gary Sender, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Nabriva Therapeutics plc;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Gary Sender

Gary Sender
Chief Financial Officer
(Principal Financial Officer)

Dated: November 6, 2018

EXHIBIT 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nabriva Therapeutics plc (the “Company”) for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Theodore Schroeder, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Theodore Schroeder

Theodore Schroeder
Chief Executive Officer
(Principal Executive Officer)

Dated: November 6, 2018

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Nabriva Therapeutics plc (the “Company”) for the period ended September 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gary Sender, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gary Sender

Gary Sender
Chief Financial Officer
(Principal Financial Officer)

Dated: November 6, 2018